Diesel refit puts brakes on Daimler profits in third quarter

Agence France-Presse

Posted at Oct 20 2017 03:35 PM

The Mercedes star logo of an E Coupe is pictured before the annual news conference of Daimler AG in Stuttgart, Germany, February 2, 2017. Michaela Rehle, Reuters/File Photo

FRANKFURT - 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 percent compared with the same period last year, to 2.2 billion euros ($2.6 billion).

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

Operating, or underlying profit fell 14 percent, to 3.5 billion euros.

A massive vehicle recall costing 230 million euros 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.

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.

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

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

Looking ahead 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.

© Agence France-Presse