Slump in car sales decreases Daimler's Q1 profits

Source: Xinhua | 2019-04-28

Pre-tax profits (EBIT) of Daimler decreased "significantly" by around 500 million euros to a total of 2.8 billion euros (3.1 billion U.S. dollars) in the first quarter (Q1) of the 2019 fiscal year, the German luxury car maker announced on Friday.
Car sales of Daimler were down by 4 percent to 773,800 vehicles sold in Q1. Turnover of the German automotive group declined slightly to 39.7 billion euros, about 100 million euros less than in the same period one year ago.
"We had a comparatively weak start to the year and face numerous challenges along the entire value chain in all our automotive divisions," commented Bodo Uebber, chief financial officer at Daimler, adding that this would have had a "negative impact on sales and earnings".
In all of Daimler's automotive divisions, operational earnings in the first quarter were down in a year-on-year comparison.
EBIT of Daimler's core brand Mercedes-Benz Cars declined by 37 percent to about 1.3 billion euros due to "lower unit sales and changes in the sales structure."
Although Mercedes-Benz still sold well over half a million vehicles in the first quarter, the 555,300 vehicles sold marked a 7 percent decline in car sales for Daimler. This decrease would have been caused by "the general market development, model changes, constraints on vehicle availability in some international markets and intense competition," according to Daimler.
Earnings of Daimler's truck division were "negatively impacted" by additional costs, mainly resulting from higher raw-material prices and supply-chain bottlenecks.
Mercedes-Benz Vans suffered from "upfront expenditures" for new technologies and products while delays due to a "changed internal certification process" for coaches and intercity buses caused problems at Daimler's Buses.
Earnings of Daimler Financial Services, however, more than doubled in Q1 of fiscal year 2019 to 1.2 billion euros. Reason for this strong increase were the merger of the mobility services of Daimler and the BMW Group, which contributed with 718 million euros in earnings to Daimler's financial service division.
"We cannot and will not be satisfied with this - as expected - moderate start to the year," stated Dieter Zetsche, chief executive officer (CEO) of Daimler. Zetsche, who is set to retire in May after 13 years as CEO of Daimler, added that "we now have to work hard to achieve our targets for 2019."
For 2019, Daimler is expecting its total turnover to increase "slightly". Based on the "expected market development and the current assessments" of the company's divisions, Daimler is also anticipating EBIT for 2019 to be "slightly" above the prior-year level.
"Achieving the financial targets for 2019 has not become easier since the first quarter," said Daimler CEO Zetsche. Throughout the company, Daimler would need to "increase availability to deliver, reduce costs and strengthen measures to increase efficiency and flexibility", emphasized Zetsche. (1 euro currenty equals 1.11 U.S. dollars)