Daimler lifts 2020 profit outlook as Mercedes-Benz margins rebound

In this Thursday, April 30, 2020 file photo, an employee attaches a Mercedes emblem as he works on a Mercedes-Benz S-class car at the Mercedes plant in Sindelfingen, Germany. (AP)
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Updated 24 October 2020

Daimler lifts 2020 profit outlook as Mercedes-Benz margins rebound

  • Daimler said its outlook is based on the premise that conditions will continue to normalize and that no further setbacks occur as a result of the pandemic

FRANKFURT: German automaker Daimler raised its 2020 profit outlook on Friday as a 24 percent jump in demand for luxury cars in China in the third quarter, a new record, helped turn around margins at its Mercedes-Benz cars division.

Benefiting from improved pricing and a fall in fixed costs, adjusted return on sales at its Mercedes-Benz Cars & Vans division rose to 9.4 percent, up from 7 percent a year earlier and rebounding from minus 1.5 percent in the second quarter.
The car and truck maker said it now expected full-year earnings before interest and taxes (EBIT) to reach prior-year levels, compared with its previous expectation of a drop in earnings.
Daimler said it sold 45,000 hybrid and electric cars in the third quarter and expects sales to rise in the fourth quarter.

HIGHLIGHTS

• Expects full-year EBIT to reach 2019 levels

• Deliveries of luxury cars may fall in 2020

• China boosts Mercedes-Benz margins

These cars delivered a positive contribution to margin and would allow the carmaker to meet European Union emissions goals.
“We appreciate the fact the Mercedes can deliver very high margins whilst selling an increasing number of electrified vehicles (EVs). This should calm down some of the fears concerning alleged material profitability erosion from EVs,” Arndt Ellinghorst, analyst at Bernstein Research, said on Friday.
The company’s adjusted EBIT rose to €3.48 billion ($4.11 billion) in the quarter, up from €3.14 billion a year earlier.
However, quarterly deliveries of Mercedes Benz Cars and Vans were down 4 percent as the COVID-19 pandemic continued to weigh on demand, prompting Daimler to reiterate that it expects group unit sales and revenue in 2020 to be significantly lower than the previous year.
Daimler said its outlook is based on the premise that conditions will continue to normalize and that no further setbacks occur as a result of the pandemic.


Fishing rights top Brexit talks agenda

Updated 30 November 2020

Fishing rights top Brexit talks agenda

  • A no-deal scenario is widely expected to cause economic chaos

LONDON: Last-ditch Brexit trade talks continued in London on Sunday with fishing rights remaining an “outstanding major bone of contention,” according to British Foreign Minister Dominic Raab.

EU chief negotiator Michel Barnier told reporters that “work continues, even on a Sunday,” as he arrived for the second day of talks.

Barnier had arrived in London on Friday following a spell in self-isolation after a member of his team contracted coronavirus and ahead of the resumption of talks with British counterpart David Frost on Saturday.

Both men warned that a deal could not be reached without major concessions from the other party.

There are only five weeks to go until the end of the current transition period, during which trade relations have remained largely unchanged.

The two key sticking points remain post-Brexit access to British fishing waters for European vessels and the EU’s demand for trade penalties if either side diverges from common standards or state aid regulations rules.

Raab told Sky’s Sophy Ridge on Sunday that this could be the final week of “substantive” talks, with time running out to agree and ratify a deal.

“There’s a deal to be done,” he said.

“On fishing there’s a point of principle: As we leave the EU we’re going to be an independent coastal state and we’ve got to be able to control our waters,” he added.

Barnier told envoys last week that London was asking that European access to UK waters be cut by 80 percent, while the EU was willing to accept 15 to 18 percent, according to a Brussels source.

A British official called the demands “risible,” according to the domestic Press Association, adding that the “EU side knows full well that we would never accept this.”

“There seems to be a failure from the Commission to internalize the scale of change needed as we become an independent nation,” said the source.

However, Raab was cautiously optimistic over the “level playing field” issue, saying “it feels like there is progress toward greater respect” for Britain’s position.

A failure to reach an agreement would see Britain and the EU trading on World Trade Organization terms, with tariffs immediately imposed on goods traveling to and from the continent.

As it stands, Britain will leave Europe’s trade and customs area on Dec. 31, with no prospect of an extension.

A no-deal scenario is widely expected to cause economic chaos, with customs checks required at borders.

Concern is particularly acute on the border between EU member Ireland and the British province of Northern Ireland, where the sudden imposition of a hard border threatens the delicate peace secured by 1999’s Good Friday Agreement.

The talks have already dragged on much longer than expected and time is running out for ratification of any deal by the European Parliament by the end of the year.