Daimler AG , the German maker of luxury cars and trucks, struck a gloomy note on the global economy, saying a continuation of the U.S.'s weak recovery, lack of political agreement on raising the country's debt ceiling, budget cuts in Europe and energy market volatility could hamper growth.
"At the beginning of the second half of 2011, although the world economic upswing still seems to be intact, the outlook has distinctly worsened," the Stuttgart-based company said on Wednesday. "We generally assume that the global economic upswing will continue until the end of the year, although at a more moderate rate."
Daimler said it expected moderate growth in the US, but cautioned: "There would be a serious setback for the US economy if no political agreement on raising the federal debt ceiling could be reached quickly. That would trigger considerable irritation in the capital markets and would have global effects through higher price volatility."
Although the car maker was more optimistic on emerging-market growth, Daimler said countries such as China "will have to perform a balancing act between the desired economic cooling off and excessive monetary and fiscal-policy countermeasures."
The group was also bullish on its own performance, predicting that its revenues would significantly exceed the equivalent of $145-billion (U.S.) this year thanks to strong demand for its premium vehicles, while earnings before interest and taxation would also top last year's €7.3-billion.
"It seems the negative comments relate to a broader macro-economic view but the positive comments relate to Daimler's specific business," said Max Warburton at Bernstein Research.
The world's biggest truck maker by sales and maker of Mercedes-Benz luxury cars enjoyed one of its best quarters in the three months to the end of June, generating EBIT of €2.6-billion, an increase of 23 per cent on the previous year and beating analysts' forecasts of about €2.5-billion. Earnings per share jumped 28 per cent to €1.51.
Revenues for the quarter were €26.3-billion, short of analysts' average expectations of €28-billion.
Mercedes and rivals BMW and Volkswagen's Audi, are seeing a boom in demand from emerging markets, particularly China, where high-end German vehicles are proving popular among the newly wealthy. However, investors are also on high alert for any sign of a cooling in demand.
Dieter Zetsche, chief executive, said he still viewed China very positively and it remained a "growth locomotive" for the company.
"Daimler developed very dynamically in the second quarter in terms of unit sales, revenue and earnings," Mr Zetsche said. "We are not at our limit. We can do more."
Daimler sold 527,600 cars and commercial vehicles in the second quarter, an increase of six per cent on the prior year. Record sales at its Mercedes-Benz division reflected strong sales of mid-sized vehicles and sport utility vehicle. The carmaker's profit margin rose to a record 10.7 per cent, from 9.8 per cent a year earlier.
Meanwhile, a significant increase in unit sales in Europe and the U.S. helped boost earnings at its truck unit, but truck sales in Asia declined by 32 per cent, mainly because of the impact of the Japanese earthquake.
"These are strong results, but we had hoped for more due to Mercedes' regional mix and truck progress. Instead we have numbers that simply buttress expectations for full year 2011," said Mr Warburton.
Daimler's cash buffer remained robust, in spite of large capital investments in new manufacturing facilities and paying €2-billion in dividends for 2010. Net liquidity of the industrial businesses was €11.5-billion at the end of June.
The company plans to contribute up to €2-billion to its German pension plan assets later this year, subject to supervisory board approval. Daimler and Rolls Royce this week won European Commission approval for their purchase of Tognum, the German engine-maker. Their joint bid last month captured 94 per cent of Tognum's shares and valued the company at €3.4-billion.