Daimler lifts profit forecast as Mercedes' sales accelerate

FRANKFURT (Reuters) - German luxury car manufacturer Daimler AG (DAIGn.DE) raised its forecasts on Wednesday, predicting a significant rise in operating profit this year after a surge in sales of Mercedes-Benz luxury cars and sports utility vehicles, boosted by the launch of new models.

Daimler said it now expected significant growth in volume sales, revenue and group earnings before interest and tax (EBIT) this year after its first-quarter net profit doubled to 2.8 billion euros (£2.39 billion).

"We are very confident for the remainder of the year to achieve our financial as well as our strategic goals," Daimler's Chief Financial Officer Bodo Uebber said in a statement.

In February Daimler had said it expected only slight growth in group EBIT, but record sales of Mercedes passenger cars in the first quarter helped the Stuttgart-based carmaker produce forecast-beating results.

Mercedes launched the new version of its E-Class saloon last year, with volume sales since gaining traction. In March alone sales of the new model rose by 65 percent and Daimler said on Wednesday it now expected a significant rise in sales of Mercedes-Benz Cars for the full year.

Daimler's group EBIT jumped 87 percent to 4.01 billion euros in the first quarter, thanks in part to 690 million euros in one-off gains.

EBIT at Mercedes-Benz Cars rose 60 percent to 2.23 billion euros, delivering a return on sales of 9.8 percent after the division reported a 15 percent rise in first-quarter sales.

Daimler raised its forecast for its financial services division, saying it now expects a slight increase in EBIT this year.

Daimler published key first-quarter earning figures earlier this month, revealing that profits were lifted by the revaluation of a stake in mapping company HERE, as well as by the sale of some real estate and the reversal of an impairment charge on its stake in Chinese carmaker BAIC (1958.HK).

A stricter interpretation of EU financial reporting guidelines has forced Daimler to start giving forecasts based on unadjusted numbers, increasing the scope for one-off gains and losses to distort consensus in the short term.

DIESEL PROBE

Daimler also reiterated on Wednesday that recent steps taken by the U.S. authorities to investigate diesel emissions pollution and so-called auxiliary emission control devices could lead to significant penalties and vehicle recalls.

In view of the tough penalties imposed by the U.S. authorities on rival German carmaker Volkswagen (VOWG_p.DE) for conspiring to cheat on diesel-emission tests, and after U.S. authorities issued a notice of violation against Fiat Chrysler, Daimler said it could face similar risks. [L8N1HY21U]

"It cannot be ruled out that the authorities might reach the conclusion that Mercedes-Benz diesel vehicles have similar functionalities," Daimler said in its quarterly report.

The inquiries and investigations were continuing , Daimler said, and the outcome could not be predicted.

"If these or other inquiries, investigations, legal actions and/or proceedings result in unfavourable findings, an unfavourable outcome or otherwise develop unfavourably, Daimler could be subject to significant monetary penalties, remediation requirements, vehicle recalls, process improvements and mitigation measures," the company said.

Authorities in various countries have widened investigations into the possible use of illegal diesel emissions-control software since Volkswagen agreed to pay the largest-ever U.S. criminal fine levied on an automaker in January.

In March the Stuttgart prosecutor launched an investigation into Daimler employees on suspicion of fraud and misleading advertising tied to vehicle emissions.

In January the U.S. Environmental Protection Agency accused Fiat Chrysler Automobiles NV (FCHA.MI) of illegally using hidden software to allow excess diesel emissions to go undetected.

(Reporting by Edward Taylor; Editing by Greg Mahlich)