Daimler motors ahead with turnover of pounds 31bn

Daimler-Benz, Germany's biggest industrial group, yesterday provided further proof it was on the road to recovery from record losses in 1995 by indicating that sales grew strongly in the first nine months of 1996 and predicting higher earnings in the second half of the year.

Daimler said turnover in the first nine months expanded to DM75.9bn (pounds 30.6bn), up 11 per cent on an adjusted basis, an increase that came largely on the back of its car and truck unit, Mercedes-Benz.

Juergen Schrempp, chairman, hailed the sales increase as evidence that his plans for streamlining the company and targeting shareholder value were paying off. "This development confirms the course of focusing on a growth strategy and stronger earnings," he said.

Analysts agreed, saying the tough measures Daimler had undertaken should see profits in the second half easily above the DM827m achieved at the operating level in the first six months.

"These figures are quite positive," said Lothar Lubinetski, analyst at Enskilda Corporate. "They show Daimler is finally on the right track." Shares in Daimler, which have climbed steadily since the summer, edged up to DM93.20.

Sales at Mercedes-Benz, which for years has been Daimler's cash cow, climbed 8 per cent to almost DM57bn in the first nine months of the year. Demand for Mercedes models such as the E-class and the new SLK roadster sports car were behind stronger car business, but Daimler warned that the company's truck division still faced an uphill battle in a tough market.

The company's aircraft unit, Daimler-Benz Aerospace, reported lower sales of DM8.28bn than a year ago, but Daimler said that on an adjusted basis - accounting for restructuring at Dasa - turnover climbed 18 per cent.

Dasa has been Daimler's Achilles' heel, producing most of last year's red ink and fighting a tough battle through its involvement in the Airbus consortium against market leader, Seattle-based Boeing Corp.

Daimler's information and financial services unit, Debis, saw sales increase to DM9.76bn from DM8.57bn.

The figures mark the latest chapter in Daimler's recovery after reporting a massive DM5.7bn loss in 1995 - the largest loss ever reported by a German company.

But slashing unprofitable businesses and other streamlining measures helped Daimler return to profit in the first half of this year.

Although the company has already closed several unprofitable units, it is considering a massive restructuring aimed at further increasing profitability and hopes to finalise such plans at a supervisory board meeting on 23 January.

Although investors have welcomed the restructuring plans, the company overhaul has reportedly led to strife within Daimler.