Daimler lowered its forecast for full-year operating profit to "more than €7 billion" from a previous outlook slightly above the 2007 figure of €7.7 billion ($12 billion).
But it said sales should nonetheless increase slightly this year, though foreign exchange effects and the rising costs of materials would likely prevent that from translating into higher profits.
For the second quarter of the year, Daimler posted a six-percent increase in sales to €25.4 billion, but said net profit fell by one-quarter to €1.395 billion from €1.849 billion in the same period last year.
"Strong unit sales and further efficiency improvements in all of our divisions led to very good results in a difficult environment," the statement quoted Daimler chairman Dieter Zetsche as saying in reference to the results.
Investors were not impressed however, and shares in the auto maker plunged by 10.86 percent to €37.94 on the Frankfurt stock exchange in midday trading.
The Dax index of leading shares had lost 1.35 percent overall.
The second quarter was marked by several exceptional items, including a charge of €373 million linked to Daimler's former US unit Chrysler.
The German car company also had to pay €640 million to increase its stake in the German auto parts maker Tognum.
Daimler's Mercedes-Benz division was nonetheless able to post a small 1.0 percent increase in operating profit to €1.2 billion, the company said.