Daimler's fourth quarter adjusted EBIT up on Mercedes sales gains

STUTTGART (Reuters) – Daimler (DAIGn.DE) said sales momentum at its Mercedes division would help it achieve significantly higher revenue and operating income this year, as it reported a 10 percent jump in fourth-quarter operating profit.

The global rollout of a new version of its top selling C-Class sedan helped Mercedes raise its operating margin, lifting earnings before interest and tax (EBIT) adjusted for one-offs to 2.82 billion euros (£2.10 billion), above the 2.66 billion euros average forecast in a Reuters poll.

In the fourth quarter, the return on sales from ongoing business at Mercedes-Benz Cars came in at 8.7 percent, up from 8.0 percent in the same period last year.

Chief Executive Dieter Zetsche said strategic decisions taken years ago are now starting to pay off. ” This progress is the result of consistent hard work… Daimler is on an upward curve,” he said in a statement on Thursday.

Daimler said it would propose a dividend of 2.45 euros a share, its highest ever, raising its payout ratio to 37.6 percent of net profit. In the coming years, Daimler said it aimed to raise its payout ratio to around 40 percent.

Earnings momentum will continue next year, Daimler said, with significant growth in revenue, EBIT and unit sales from ongoing business.

DZ Bank auto analyst Jasko Terzic welcomed Daimler’s optimism for the year ahead.

“Outlook came in ahead of expectations. It seems to us that Daimler’s assumption for the general market development is a bit more bullish than statements seen so far from other companies,” Terzic wrote in a note on Thursday.

Daimler shares fell 0.6 percent in early trading, in line with the German blue-chip DAX (.GDAXI).

(Reporting by Edward Taylor; Editing by Kirsti Knolle and Georgina Prodhan)