FRANKFURT — Daimler raised its 2020 profit outlook on Friday as a 24 percent jump in demand for luxury cars in China in the third quarter helped to turn around margins at its Mercedes-Benz cars division.
The adjusted return on sales at Mercedes-Benz Cars and Vans rose to 9.4 percent during the quarter, up from 7 percent a year earlier and above the minus 1.5 percent margin in the second quarter.
In a statement Daimler said it now expected full-year earnings before interest and taxes to reach prior-year levels, compared with the previous expectation of a drop in earnings. It anticipates markedly higher industrial free cash flow but also warned that group revenue will decline significantly because of the coronavirus pandemic.
The company’s adjusted EBIT rose to 3.48 billion euros ($4.11 billion) in the third quarter, up from 3.14 billion euros in the year-earlier period. Daimler released preliminary results last week.
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 it sold 45,000 hybrid and electric cars in the third quarter and expects sales to rise in the fourth quarter. These cars delivered a positive contribution to margin and would allow the automaker to meet European Union emissions goals.