Daimler AG’s (Daimler) Q2CY12 PAT at EUR1.4bn (down 11% YoY, up 6.7% QoQ) was in line with consensus estimate. Worldwide growth in car sales (up 3.6% YoY and 9.5% QoQ) was primarily driven by US and Asia, and that too by compact car and SUV segments. China sales, which had dipped in Q1CY12, recovered during the quarter, but growth was lower than peers (Audi, BMW). Rising discounts in China were also a major concern. The company expects growth momentum to continue on back of new launches. On the trucks front, NAFTA and Asia continued to support strong sales. Overall, Daimler expects growth momentum to continue in rest of CY12 in cars and trucks led by NAFTA and Asia regions.
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Q2CY12 numbers a mixed bag
Daimler’s Q2CY12 PAT at EUR1.4bn (down 11% YoY, up 6.7% QoQ) was in line with consensus estimate. EBIT margin improved sequentially across major segments (due to favourable currency movement), but was much lower YoY, especially in the car segment, due to high expenses in new products and technologies, which also partially resulted in fall in net industrial liquidity. R&D cost (as % of revenue) was stable at 3.6%, but capex (as % of revenue) stood higher at 4.5%.
CY12 guidance maintained
The company expects risks to global economic recovery to heighten in the second half. Daimler maintains its earlier guidance of surpassing global market growth of 4% in global cars sales on back of new launches and strong demand in NAFTA, China and other emerging markets; though rising discounts in China will be a concern. In trucks, the company expects moderate decline in global sales due to shrinking truck market in China. But it stated that growth momentum will be maintained led by NAFTA, Asia and Europe.
Tata Motors: Growth on firm demand, new launches, currency gain
Tata Motors’ premium SUV business is benefitting from strong demand in NAFTA and Asia, especially China. JLR is also benefitting from weak local currency i.e., GBP for JLR while EUR for Daimler. Additionally, JLR also has a strong product pipeline where new Range Rover, new Range Rover sports and mini Jaguar are likely to be launched over the next four quarters.
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