After an expected EUR 2.48 loss/share in FY09E, we expect Daimler to return to profit in 2010E (EUR 0.84 EPS): MBC’s return to profitability should not be affected by the expiry of incentive programmes and trucks should benefit from restructuring as demand stabilises at low level. At price revenue of 0.39x (2009E) Daimler shares are valued at a 20% discount to the average 10-year high (0.44x) and a 55% premium to the average 10-year low (0.25x). (See pp.5-7.)
Management update on Chrysler and FY09 guidance. Our 2009E estimate is more cautious: a EUR 734m group trading profit
implies a net loss of EUR 644m or EUR 0.52 per share, a negative EUR 0.4bn industrial FCF and a net debt of EUR 6.65bn by YE09E.
We have upgraded our FY09 estimate to a EUR 1.59bn group operating loss (vs. EUR 1.71bn previously) following the new guidance for Faurecia. We confirm our estimate that the auto division will incur a EUR 1.75bn operating loss on a 11.5% decline in sales (fully cons. comps.). At price revenue of 0.10x (2009E), Peugeot shares are valued at a 27% discount to the avg. 10-year low. (See pp 4-5.)
Renault announced a ‘significantly positive FCF’ for 1H09, despite an expected loss. European performance remains greatly disappointing. 1H09 sales decline -16.5%; rate of decline halved qoq to 11.0% in 2Q09.
Car market is set for an extended V-shaped recession. Our baseline scenario of an 11.7% correction to 11.68m in 2010 is based on the assumption that the schemes in Italy and France will be extended into part of 2010, the German scheme will expire at year-end as planned, and that car manufacturers will continue to aggressively discount.
Peugeot – looking for a suitable partner. Industrial logic of three-way merger Fiat-Chrysler-PSA has more negatives than positives.
Group headline results worse than expected: BMW incurred a EUR 1.2bn pre-tax loss in 4Q08 and reported a EUR 351m profit (0.7% margin) in FY08.
Chrysler losses depress group EBIT and earnings. Mercedes-Benz Cars incurs 4Q08 loss from operations.