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.


Flydubai launches first scheduled Dubai-Tel Aviv flight

Updated 23 min 58 sec ago

Flydubai launches first scheduled Dubai-Tel Aviv flight

  • The Dubai carrier will fly the route twice daily
  • Israeli airlines El Al and Israir are both expected to launch their commercial services between the cities next month

DUBAI: Budget airline flydubai on Thursday launched direct flights to Tel Aviv, the first scheduled commercial service between the two cities, following the normalization of ties between the UAE and Israel.
Israeli Prime Minister Benjamin Netanyahu will be on hand for the arrival of the inaugural flight after its nearly four-hour trip, his spokesman said.
“PM Netanyahu will attend this morning the welcoming ceremony for the first @flydubai commercial flight that will arrive at Ben-Gurion International Airport,” Ofir Gendelman said in a tweet.
“These are the fruits of peace Dear Emirati tourists, welcome to Israel!”
The United Arab Emirates in September signed a landmark US-brokered deal to formalize relations with Israel, the first such agreement by an Arab state in the Gulf.
With their economies hard hit by the coronavirus pandemic, the UAE and Israel are hoping for rapid dividends from the normalization deal, including an influx of tourists as Dubai enters its winter high season.
“The start of scheduled flights will contribute to economic development and create further opportunities for investment,” flydubai CEO Ghaith Al-Ghaith said when the service was announced earlier this month.
The Dubai carrier will fly the route twice daily, and Israeli airlines El Al and Israir are both expected to launch their commercial services between the cities next month.
Etihad Airways, based in the UAE capital Abu Dhabi, has said it will begin flying to Tel Aviv in March 2021.
The UAE became only the third Arab country to normalize ties with Israel, following Egypt in 1979 and Jordan in 1994.
The two countries have already signed treaties on visa-free travel — although that is yet to come into force — along with accords on investment protection, science and technology.
Since the historic agreement, Bahrain and Sudan have followed suit and agreed to forge ties.
The agreements shattered a longstanding Arab consensus that there should be no normalization with Israel until it reaches a comprehensive peace deal with the Palestinians.
After the UAE deal was announced by President Donald Trump in August, El Al flew a delegation of US and Israeli officials — led by Trump’s son-in-law Jared Kushner — to Abu Dhabi in a historic direct service between the two countries.
That was followed by an official visit by a UAE delegation to Tel Aviv as well as a string of charter flights carrying business groups.