Daimler AG (XTER:DAI), a leading global vehicle manufacturer, was the quarter’s top contributor, returning 9%. Daimler’s third-quarter results released late in October showed overall revenue growth of 10% from the year-ago period. Additionally, free cash flow reached approximately EUR 3.4 billion, which was nearly twice the EUR 1.8 billion from one year ago. For the full fiscal nine months, revenues in its core Mercedes-Benz division were stronger than our forecast, driven by unit sales increases mainly in China and the U.S. Despite continued weakness in Germany, Western Europe improved in the third quarter. We recently met with CFO Bodo Uebber to discuss details of Daimler’s previously announced long-term strategy, which includes increasing the number of Mercedes-Benz dealerships and unit sales in China and capitalizing on recent dealership improvements (better sales training, new technology systems) to steadily boost division profits, as well as initiatives to strengthen business in other divisions. We think that Daimler’s management team is taking the right steps that will result in continued benefits to shareholders.
From David Herro (Trades, Portfolio)'s Oakmark International Fund 4Q 2014 Letter.
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