UK Markets closed

Daimler cuts full-year forecast after profit drop


German automaker Daimler (Xetra: 710000 - news) on Wednesday lowered its full-year profit forecast after large investments and generally weak markets hit its bottom line in the first three months of this year.

Daimler said in a statement that it booked net profit of 536 million euros ($697 million) in the period from January to March, a drop of 60 percent from the 1.347 billion euros it booked a year earlier.

Operating profit, as measured by earnings before interest and tax (Ebit), tumbled 56 percent to 917 million euros on a 3.0-percent decline in revenues to 26.102 billion euros, the statement said.

Overall unit sales were little changed at 501,600 vehicles worldwide, compared with 502,086 a year earlier.

"In the first three months of this year, many markets developed worse than expected for economic reasons, especially in western Europe. Nonetheless, we maintained our unit sales and revenue almost at the levels of the prior-year quarter and gained market share in many segments," said chief executive Dieter Zetsche.

Chief financial officer Bodo Uebber said the decline in earnings reflected "both a shift in the regional structure of unit sales and a changed model mix at Mercedes-Benz Cars and Mercedes-Benz Vans, as well as a decrease in unit sales by Daimler Trucks."

Daimler "is now in the middle of the most comprehensive growth offensive in its history. To these ends, we are investing large amounts in products, technologies and markets, which, in combination with the generally weak markets, led to a moderate start to the year 2013 in terms of earnings," Uebber said.

Looking ahead, Daimler lowered its full-year profit forecast, saying it expected full-year operating profit to be "below the previous year's level."

This was in view of "lowered market expectations and the weaker than expected Ebit in the first quarter."

Nevertheless, it is still sticking to its forecast for a rise in revenues, Daimler added.

The carmaker's shares fell on the lower earnings forecast, showing a loss of 1.83 percent on the Frankfurt stock exchange on Wednesday in a generally firmer market.

Separately, Daimler announced that it would invest more than 300 million euros to boost assembly capacity at its Romanian subsidiary Star Transmission.

Daimler said its transmission plant at Stuttgart-Hedelfingen "is today already at full capacity." That site "has reached its maximum possible expansion level and no meaningful options for further expansion of the facilities exist there," it explained.

Star Transmission, set up in 2001, currently employs a workforce of 800 at a site in Cugir, in central Romania.