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• Daimler’s Q4CY10 PAT came at EUR 1.05 bn versus a loss of EUR 0.35 bn a year
ago. However, it missed the consensus expectation by ~20% with margin
disappointment across the segment.
• EBIT margin declined sequentially 370bps to 5.9%. Mercedes division’s EBIT
dropped to 8.3% versus 9.5% in Q3CY10, whereas the decline was sharper in
the truck division to 5.7% from 7.8% a quarter ago.
• The company has attributed the decline in Mercedes division’s EBIT to certain
non recurring housekeeping expenditures of EUR 100 mn, adjusted for which the
division’s EBIT margin came in at 9%.
• Sales outlook: Premium car demand in China and US continues to be strong.
Within Europe, France and Germany are growing while concerns persist in the
rest of Europe. Incentive levels are low and order book position is robust.
• Margin outlook: Daimler is not anticipating any major margin headwind and is
confident of achieving 10% EBIT margin in the Mercedes division by CY13E.
• The company is paying EUR 2 bn dividend after foregoing it in 2009 despite
increase in capex guidance by EUR 1.5 bn, which indicates management’s
confidence on business going ahead.
To conclude: The bullish outlook for Mercedes division supports our positive view on
Tata Motors (TTMT), on which we have ‘BUY’ recommendation. We believe TTMT’s
JLR division should continue to surprise the street on both margins as well as
volumes. Q4FY11 earnings and Evoque launch in Q1FY12 are likely positive triggers.
Currently the Daimler stock is not under our coverage.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
• Daimler’s Q4CY10 PAT came at EUR 1.05 bn versus a loss of EUR 0.35 bn a year
ago. However, it missed the consensus expectation by ~20% with margin
disappointment across the segment.
• EBIT margin declined sequentially 370bps to 5.9%. Mercedes division’s EBIT
dropped to 8.3% versus 9.5% in Q3CY10, whereas the decline was sharper in
the truck division to 5.7% from 7.8% a quarter ago.
• The company has attributed the decline in Mercedes division’s EBIT to certain
non recurring housekeeping expenditures of EUR 100 mn, adjusted for which the
division’s EBIT margin came in at 9%.
• Sales outlook: Premium car demand in China and US continues to be strong.
Within Europe, France and Germany are growing while concerns persist in the
rest of Europe. Incentive levels are low and order book position is robust.
• Margin outlook: Daimler is not anticipating any major margin headwind and is
confident of achieving 10% EBIT margin in the Mercedes division by CY13E.
• The company is paying EUR 2 bn dividend after foregoing it in 2009 despite
increase in capex guidance by EUR 1.5 bn, which indicates management’s
confidence on business going ahead.
To conclude: The bullish outlook for Mercedes division supports our positive view on
Tata Motors (TTMT), on which we have ‘BUY’ recommendation. We believe TTMT’s
JLR division should continue to surprise the street on both margins as well as
volumes. Q4FY11 earnings and Evoque launch in Q1FY12 are likely positive triggers.
Currently the Daimler stock is not under our coverage.
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