Daimler first-quarter profit hurt by higher costs, drop in deliveries - Mercedes Benz SLK Forum
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#1 Old 04-26-2019
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Daimler first-quarter profit hurt by higher costs, drop in deliveries

FRANKFURT -- Daimler's first-quarter operating profit fell 16 percent, weighed down by a 4 percent drop in sales of Mercedes-Benz cars, higher raw material costs and investments into its heavy trucks division.

Earnings before interest and tax (EBIT) dropped to 2.8 billion euros ($3.12 billion), Daimler said on Friday.

Daimler said the return on sales at Mercedes cars fell to 6.1 percent. The company said the margin was hit by problems launching a new SUV platform at its U.S. plant in Vance, Alabama, that caused production delays for its GLE, as well as a 3 percent fall in China sales and higher growth in lower-margin compact vehicles.

Daimler said it had also incurred costs after ceasing production of its X-class pickup in Argentina. Markets in South America were not ripe for a premium pickup, Chief Financial Officer Bodo Uebber said.

Daimler reiterated it expected slight growth in unit sales, revenue and EBIT this year, but only after cost-cutting measures are implemented. At the same time Daimler lowered the outlook of its vans division saying the EBIT margin range would be 0 to 2 percent, rather than 5 percent to 7 percent.

"We cannot and will not be satisfied with this, as expected, moderate start to the year. We now have to work hard to achieve our targets for 2019," CEO Dieter Zetsche said in a statement.

The company is reportedly considering cutting about 10,000 jobs through voluntary measures as part of 6 billion euros ($6.7 billion) savings in cutbacks at the cars operations by 2021.

Zetsche earlier flagged a weak first-quarter return on sales at the Mercedes-Benz Cars unit, squeezed by expenses for the GLE changeover and ramping up a joint Mexican factory with Nissan.

Daimler financial services saw a 718 million euros one-off gain thanks to a valuation gain following the merger of the mobility services divisions of Daimler and BMW.

Investors will look beyond first-quarter woes and focus on CEO-designate Ola Kallenius taking over in May, Bloomberg Intelligence analyst Michael Dean said in a report.

"We anticipate his new strategic plan will be unveiled this summer," Dean said.


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