In its presentation of preliminary figures for the third quarter of the year, Daimler AG (DAI) has shown a 38% fall in operating profit to €470 million ($700 million) compared to €648 million ($966 million) in the prior-year quarter. Group revenue for the quarter declined 18% to €19.3 billion ($29 billion) from €23.7 billion ($35 million) in the prior-year quarter. The company will release the net income figures on Oct 27.

Daimler posted an operating profit of €355 million ($529 million) in the Mercedes-Benz Cars division, €127 million ($189 million) in Daimler Trucks, €1 million ($1.5 million) in Mercedes-Benz Vans, €23 million ($34 million) in Daimler Buses and €101 million ($150 million) in Daimler Financial Services.

Daimler’s industrial business (all except the Financial Services division) generated a free cash flow of €2.3 billion ($3.4 billion) in the first nine months of the year. This raised the net to €6.7 billion ($10 billion) at Sept. 30, 2009.

The free cash flow was affected by an increase in liabilities due to the higher production volume after the production break in August as well as a positive management of accounts receivables. Daimler anticipates a positive free cash flow in the industrial business for full year 2009.

We recommend the shares of Daimler as Neutral.

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