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Diesel refit brakes Daimler profits in third quarter

2017-10-24 11:19

Image: AFP / Thomas Kienzle

Frankfurt am Main - Profits at the world's biggest luxury carmaker Daimler slipped in the third quarter, the company reported Friday , sapped by a recall and measures to reduce harmful emissions from diesel cars.

Between July and September, net profit attributable to shareholders at the Mercedes-Benz maker fell 16% compared with the same period last year, to €2.2-billion.

Operating profit fell 14%

The fall in profits came even as the Stuttgart-based firm sold 9% more vehicles, at 824 100 units, and increased revenue 6% to €40.8-billion euros, slightly outperforming expectations from analysts surveyed by Factset.

Operating, or underlying profit fell 14%, to €3.5 billion.

A massive vehicle recall costing €230-million and a refit of older diesel engines to reduce harmful nitrogen oxides emissions, costing €223-million, undermined earnings at flagship car division Mercedes-Benz, the group said.

Mercedes to recall thousands of cars, part of huge Daimler airbag fix

In August, German carmakers agreed with the federal government to refit millions of older diesel vehicles to reduce emissions, after reports that secret agreements between the firms -- the throbbing heart of Europe's biggest economy -- had undermined technology to limit nitrogen oxides.

Meanwhile, Daimler has also requested leniency in the European Commission's investigation into the suspected cartel between Germany's biggest auto firms.

"It remains to be seen whether the Commission will launch a formal procedure. We will continue to cooperate fully with the authorities," finance director Bodo Uebber said.

"Daimler has disappointed in the third quarter with significantly lower profits," even though "at the operative level things have been going very well for a long time," analyst Frank Schwope of Nord/LB bank commented.

'Could theoretically mean billions in costs' 

But looking ahead, the fallout if the firm is found to have manipulated emissions tests or taken part in an illegal cartel "could theoretically mean billions in costs," he added.

Away from the diesel scandal, the group's trucks, vans and buses divisions all increased unit sales.

Operating profits fell at the vans and buses units as they faced higher raw material prices and unfavourable moves in exchange rates, particularly with Latin American currencies.

Looking to the full year, the group maintained its forecast that revenue and operating profit "will increase significantly" compared with 2016.

Daimler hopes to boost profits even as it spends more to meet growth targets and invests heavily in research and development, especially for electric and autonomous vehicles.

The Mercedes and Smart unit has been investing heavily in new technologies, promising a flotilla of new electric and hybrid models in the next few years. 

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