German luxury carmaker Daimler said profits, boosted in 2011 by a record performance from Mercedes-Benz, would come under pressure during the current "transition year" as it accelerates investment in new models.

Daimler expects car sales to rise by more than 4 percent to a new record in 2012, but the ramp-up of a new plant, spending on greener technology, and a new range of luxury compact cars will leave its mark on operating profit.

"Although these efforts will have a positive medium-term effect, they will burden our finances somewhat this year," Chief Executive Dieter Zetsche told reporters at the company's annual news conference on Thursday.

Earnings before interest and taxes (EBIT) rose 39 percent in the fourth quarter, in line with estimates, but it offered an unexpectedly high dividend after net income jumped by over half to 1.79 billion euros, significantly more than Reuters polled.

That boosted shares, which were trading 5 percent higher at 46.90 euros by 1330 GMT. The company's outlook reassured nervous investors prepared for a weaker 2012 performance at Mercedes.

The stock has lost almost 20 percent of its value over the past year, with analysts criticizing management's inability to deliver structural profitability comparable to rivals BMW and Audi.

Daimler said full-year earnings before interest and taxes (EBIT) were likely to be level with 2011, while revenue would grow. Dividends would continue to improve steadily in the coming years, according to Zetsche.

"Daimler looks for 9 billion euros in 2012 including all launch and ramp-up costs. This is strong... we were expecting Daimler to aim for over 8 billion in clean group EBIT," wrote analysts at Credit Suisse on Thursday.

"If guidance is plugged in, the street needs to raise 2012 earnings estimates by circa 8 percent."

Daimler's market capitalization recently fell below that of BMW for the first time but has since regained the lead. Rivals Audi and BMW are due to publish their annual results next month.

Advertising agency Publicis said on Thursday carmakers and banks were trimming marketing budgets and other clients delaying spending decisions, providing further signs that the global economy remains in a fragile state.

Renminbi onshore

Daimler's finance chief said one of the major uncertainties for this year's profit target stemmed from foreign exchange rates, which could cost the export-driven company a couple of hundred million euros even with hedging.

"Banks currently give us a range of forecasts for the US dollar-euro cross for this year that spans 20 cents, so no one really has an idea where it's going to end up," Bodo Uebber told Reuters.

Daimler aims to smooth out fluctuations in currencies via a system of rolling hedges stretching into 2014, using everything from plain vanilla forwards through options to so-called "collars" that secure exposure within a specific band.

It currently has about 80 percent of its overall currency risks for 2012 already hedged, or locked in, and another 40-50 percent for next year.

While the largest chunk of its forex risk stems from the current $15-16 billion net exposure, anywhere between 30-40 percent of that amount actually relates to China due to its currency peg.

Since the business is growing at a brisk pace there, Daimler's head of Treasury says an inconvertible yuan causes a problem for Mercedes when it supports sales by offering customers more loans and leasing deals.

Issuing offshore renminbi-denominated debt -- or "dim sum" bonds -- to refinance doesn't help, however, according to Michael Muehlbayer, Senior Vice President for Treasury.

"Industrial companies like Caterpillar can issue onshore renminbi bonds, but we don't need to fund the construction of a new plant - we can do that out of our own cashflow," said Muehlbayer.

"What we really would like is to fund our financial services business in China by issuing onshore renminbi bonds, and that will eventually come at some point," he continued.