Mercedes-Benz maker's shares down after third profit warning

The fallout from over-producing diesel vehicles has continued to haunt automobile giant Daimler, after it was forced to lower profit expectations again.

Shares of Mercedes-Benz's manufacturer dropped as much as 4.5% today after the company issued its third downgrade this financial year.

It said at the weekend that 2019 group earnings before interest and tax were now expected to be at last year's level, against a previous estimate of a slight increase.

German rivals Volkswagen and BMW were also hit.

Daimler said the downward revision relates to an expected increase in expenses linked to "various ongoing governmental proceedings and measures" with regard to Mercedes-Benz diesel vehicles.

It said earnings will be affected in the second quarter, as it raises its provision to deal with its diesel vehicles by hundreds of millions of euros.

Declining to give a specific value to the expected drag on profits, Daimler said the provision increase is likely to be "a high three-digit million euro amount".

A spokesman also declined to elaborate on the nature of the diesel issues behind the decision.

It issued two similar profit warnings on diesel issues last year, as well as blaming the US-china trade war for revising expected earnings.

Daimler's profit warning follows news over the weekend of a recall on 60,000 Mercedes diesel cars in Germany, after regulators found that they were fitted with software aimed at distorting emissions tests.

This was in addition to the 238,000 Daimler vehicles it was told to recall almost exactly a year ago.

The German transportation ministry said it was expanding its investigation into further models.

The Stuttgart-based manufacturer is being investigated for its diesel emissions in Europe and the US.

In April, EU antitrust regulators charged BMW, Volkswagen and Daimler with colluding to block the roll out of clean emissions technology after an investigation that began in September 2018 .

While Daimler was a whistleblower in that case and said at the time that it expected to avoid fines, BMW booked a provision of more than €1bn euros (£890m).

On Monday, car executives were due to meet with government officials and experts at the chancellery in Berlin to talk about the future of the car industry.

Daimler is one of a number of German automakers scaling up in electric vehicle production, as European regulators clamp down on toxic diesel emissions.