Daimler Truck and Bus lowers earnings prediction


The German giant has adjusted its 2016 outlook on the back of multiple shrinking markets

Daimler Truck and Bus lowers earnings prediction
Daimler Truck and Bus chief Dr Wolfgang Bernhard.

 

A period of sustained contraction in the world’s major truck markets has German manufacturer Daimler re-evaluating its 2016 predictions and suggesting its earnings from ongoing business and unit sales will be "significantly lower in 2016 than in 2015."

While the truck maker, which includes Mercedes-Benz, Freightliner, Fuso, and Western Star in its stable, believes this year will still be "one of Daimler Trucks’ most profitable years," developments in North America and the Middle East are weakening the company’s outlook.

However as last year was a significant step for Daimler, with the company breaking its earnings before interest and tax (EBIT) record by earning €2.7 billion (A$4.2 billion), a high watermark was set.

Daimler Truck and Bus chief Dr Wolfgang Bernhard says the change in outlook comes on the back of recent market turbulence.

"The situation of global truck markets has been challenging for several months and has recently got worse," he says.

"Especially in the NAFTA region, but also in the Middle East, demand is weaker than previously expected.

"We have therefore adjusted our outlook for the rest of this year."

Bernhard and Daimler "continue to anticipate a high level of earnings in the full year," he says, "due not least to the successful continuation of our efficiency actions."

In terms of numbers, Daimler suggests the North American heavy-duty market will shrink by 15 per cent in 2016.

These numbers will not be countered by a growing market in Europe, the company says, because competitive pricing schemes in the continent are "intense".

In other regions, oil demands are hampering the outlook in the Middle East and the markets in Brazil, Indonesia, and Turkey are falling even further than predicted at the beginning of the year.

"The outlook for those markets has been worsening since the beginning of the year and continues to worsen," Daimler says.

"The Brazilian market will contract by about 20 per cent, now that the political and thus also economic situation there has deteriorated once again.

"The same applies to Indonesia, where Daimler Trucks anticipates a decrease of about 15 per cent.

"Demand in Turkey will also be substantially lower than last year, due not only to purchases being brought forward to 2015, but also to very negative geopolitical conditions."

In Brazil, Daimler has begun a series of severance offers totalling €100 million (A$154.9 million).

 

 

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