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Daimler says Q2 earnings robust despite chips shortages

Daimler said strong sales and robust pricing for its vehicles boosted its second-quarter earnings.

Earnings before interest and taxes were 5.19 billion euros ($6.14 billion) in latest three-month period on a preliminary basis, the company said Thursday in a statement. In the second quarter of last year, the company reported a loss of 1.68 billion euros.

Adjusted earnings for the last quarter were 5.4 billion euros ($6.42 billion).

The pricing power of its Mercedes-Benz luxury cars overcame lower production volumes due to a global chip shortage, which limited factory output. The shortage of chips led the company to prioritize larger vehicles that are more profitable than smaller ones, which were more exposed to production disruptions.

“We continue to deliver a strong financial performance in all divisions despite the ongoing low availability of semiconductors, which negatively impacted our production and sales in the second quarter,” CEO Ola Kallenius said in the statement.

The automaker forecast in April that its main Mercedes-Benz unit will be more profitable than it has been in years, thanks to resurgent demand for cars and trucks in the midst of the global pandemic.

The world’s biggest luxury-vehicle maker expects a 12.8 percent annual return on sales for its cars and vans division.

Its Mercedes car business has fallen short of double-digit margins every year following Daimler’s 2007 sale of Chrysler.

A year after the auto industry’s worst crisis in decades, business for German premium-car makers has roared back to record levels, driven by red-hot demand in their largest market, China.

Getting earnings back on track will be pivotal to financing investments in electrification and software development as the industry segues to more technologically advanced, battery-powered vehicles.

Mercedes this year revved up its electric-car rollout with the new EQS sedan, the battery-powered sibling to its flagship S-Class, as traditional automakers broaden their attack on Tesla.

Daimler will be building eight full-electric cars in Europe, the U.S. and China next year.

The company also is preparing to spin off of its sprawling truck division later this year.

Daimler expects the move to help it better tackle diverging technology trends in the passenger-car and commercial-vehicle industries.

Full quarterly results will be released on July 21.

Reuters contributed to this report

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