FRANKFURT: German luxury carmaker Daimler reported a surprise increase in first-quarter operating profit, helped by its financial services business that offers loans and leases to car buyers and is benefiting from low interest rates.
The margin at Daimler's Mercedes brand, the metric most comparable with profitability at rivals BMW and Audi, slid about 90 basis points to 8.4 per cent, results showed yesterday.
That was partly due to temporarily lower pricing in China as the company made way for new models of cars such as the normally lucrative S-Class.
By comparison, Volkswagen said earlier that premium brand Audi's margin widened 80 basis points to 11.4pc over the period. BMW will report its results on Thursday. The fact that Daimler's profit was boosted from operations outside its core car manufacturing - including a contribution from its stake in aerospace group EADS - weighed on the stock, which underperformed European rivals.
A cash burn of nearly 21 million euros ($28m) per day due to a seasonal increase in stocks of unsold vehicles also unsettled some investors.
The picture is mixed for carmakers, with strong growth in the US offset by a sluggish Europe, where austerity measures are dragging many economies into recession and depressing consumer confidence. Growth in some Asian markets is slowing from previous high levels, but overall demand for premium cars like the Mercedes-Benz GLK sports utility vehicle are holding up better than the price-sensitive mass market models.
Mercedes sold about 20pc more cars in China during the first quarter, but its local joint venture swung to a small loss. A spokesman said that was due to a production shutdown to retool the Beijing plant to build the GLK as a third model. For all of 2011, the joint venture had contributed 142m euros to profits.
Group earnings before interest and tax (EBIT) rose 5pc to 2.13 billion euros ($2.82bn), better than the 5pc drop to 1.93bn estimated in a poll.
Daimler said it still expected its ongoing operations to report EBIT at the same level as last year, when it earned 9bn euros - guidance so far deemed credible by the market.