Refits to polluting cars drag down Daimler's profit
But things look rosier for Daimler trucks, at which operating profit increased 38%
Frankfurt am Main — German car giant Daimler reported a slump in third-quarter profits on Thursday, confirming a weaker 2018 outlook as it suffered lower sales and shouldered costs for refits to polluting diesel cars.
Net profit at the Mercedes-Benz maker fell 21% year on year between July and September, to €1.76bn, short of analysts' forecasts. Operating, or underlying profits, were even harder hit, falling 27% to €2.5bn, while revenues were down 1% at €40.2bn.
"The automotive industry and thus also Daimler are still in a very challenging environment," CEO Dieter Zetsche said in a statement.
At the Mercedes-Benz cars arm, the third quarter brought a 4% drop in unit sales to 795,000 vehicles, and a seven-percent drop in revenue.
But the flagship division's operating profit tumbled 35% over the quarter as it faced "ongoing governmental proceedings and measures taken for diesel vehicles", the group said.
Weighing on the car maker was a recall ordered by the German government in June of about 774,000 cars that Berlin said had been equipped with illegal software to conceal excessive emissions of harmful nitrogen oxide gases (NOx).
The measure was the biggest blow yet for Daimler in the industry's "dieselgate" scandal, which began with Volkswagen's 2015 admission to manipulating 11-million vehicles worldwide.
Daimler, rival BMW and VW also face a European Commission cartel probe into whether the firms agreed not to compete with each other on antipollution systems.
New, more stringent EU emissions tests have proven to be a bottleneck in getting new cars registered on the roads. The group is also suffering from the US-China trade war as Beijing levies tariffs on its cars exported from the US.
There was a brighter picture at Daimler's other major unit, Daimler trucks, which lifted operating profit 38%.
Executives confirmed their full-year outlook issued last week of a group-wide operating profit "significantly lower" than 2017's €14.7bn. It was the second time in 2018 that the company had slashed its forecast.
Daimler expects group revenue to "increase slightly" compared with the €164bn booked in 2017.