Daimler profit and revenue fell in the first quarter after sales of cars and trucks below expectations in Europe. The German group has worsened the estimates presented in February for results throughout 2013.
Net profit decreased by 60% to €564 million in the first quarter compared to the same period of last year, while operating earnings fell by 56% to €917 million, below market expectations of €1.06 billion. Sales declined 3% to €26.1 billion.
The car manufacturer expects earnings before interest and taxes (EBIT) to fall this year, after in February it anticipated an adjusted operating profit of €8.1 billion. The group warned in April that it could revise the target for the current year due to the deteriorating situation in some major markets.
“Many markets developed worse than expected for economic reasons,” said Wednesday chief executive officer of Daimler, Dieter Zetsche.
According to Daimler, the decline in the first quarter is due to the negative effect of the current product mix as customers preferred the entry-level cars to the premium cars with higher profit margins. The German group has planned the re-launch of several premium cars.
Truck sales have also decreased as companies have limited their expenses.
Germany was one of the European markets with the worst development in the first quarter. The German car market, still very important for the group, could not detach from the broader development in Europe, according to Daimler. Competition in Europe – usually a reference to the need to introduce incentives for sales – is fierce, says the German group.
Daimler group was surpassed by BMW and Audi lately due to its underperforming sales model in China, which the group is trying to improve.
Daimler has a range of older models, for which it heavily invests in innovation. The car manufacturer wants to overcome rivals in sales by 2020, but the investment pulls down profits and push the group to cut costs.
Daimler expects profits in the second half to be better than the results of the first six months, while Mercedes-Benz aims at a sales advance higher than the estimated 2-4% for the global market.
Daimler, owner of Mercedes-Benz Cars, will expand the production capacity of Star Transmission, because the factory in Stuttgart is already operating at full capacity. Company’s supervisory board approved on Wednesday measures to expand production capacity of auto parts for Mercedes-Benz Cars.
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