Daimler has said it now expects earnings to fall this year, following a 60% slump in first quarter profits and a 3% decline in revenue.
Net profit in the first quarter was off 60% on last year at EUR564m as Daimler’s financial results felt the impact of declining markets in Europe and a weak showing in China.
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The company had warned earlier this month that it was reassessing prospects for the year in the light of weaker than expected sales in Europe.
Daimler’s first-quarter revenue of EUR26.1bn was 3% lower than in the first quarter of last year. Adjusted for changes in currency exchange rates, there was a decrease of 1.5%, Daimler said.
“In the first three months of this year, many markets developed worse than expected for economic reasons, especially in Western Europe,” said Dieter Zetsche, Daimler board chairman.
The company’s Mercedes-Benz Cars division was also hit by slower sales in China where it has lagged behind fast-growing rivals BMW and Audi. Mercedes-Benz recently reorganised its China operations in response to weak sales there.
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By GlobalDataThe car side of the business also saw earnings reduced by costs related to expenditure on product, capacity expansion as well as new technologies and vehicles.
While Mercedes-Benz Cars posted a level of sales close to last year’s in the first quarter (341,500 units versus 338,300 in the first quarter last year), revenue fell by 6% to EUR14.1bn and the division’s EBIT of EUR460m was 62% off the same period last year.
Mercedes expects a boost later in 2013 from the new CLA and S-Class plus the updated E-class.
“The response to our new products such as the CLA and the E-Class is excellent, and at Daimler Trucks, our successful product offensive is largely completed. On the basis of the new products, the ongoing efficiency programs and our assumptions for future market developments, we expect earnings in the second half of this year to be higher than in the first half, due in particular to the launch of the new S-Class,” said Zetsche.
The trucks division also experienced a big earnings decline as sales fell by 6% in the first quarter to 101,400 units. The division’s EBIT of EUR116m was down by 70% on last year.
Daimler said that it expects Mercedes-Benz Cars anticipates full-year EBIT below the level of 2012, with the trucks and vans divisions “in the magnitude of the prior year”. Daimler expects an EBIT improvement for all its automotive divisions and for the Group as a whole in 2014.
There was some reassurance for the workforce as Daimler said that it “assumes that the size of its worldwide workforce will remain largely stable compared with the end of 2012”.
