Daimler issues 2008 profit warning

AFP - [email protected]
Daimler issues 2008 profit warning

The financial crisis and weakening global economies are hitting German car maker Daimler, which warned of weaker 2008 profits for a second time on Thursday amid "a high degree of uncertainty" over the outlook.


Daimler said it had switched into a third-quarter net profit, but operating results slumped and it advised shareholders that auto sales this year would be disappointing.

"We are facing a very challenging situation," a statement quoted chairman Dieter Zetsch as saying.

The group posted a third-quarter net profit of $213 million ($273 million) following a sharp loss of €1.5 billion in the same period a year earlier, but that figure reflected exceptional items.

Daimler also said that operating profit had plunged by 66 percent to €648 million in the three-month period, and that sales were off by 7.4 percent at €23.8 billion.

Slumping economies and the financial crisis "had a substantial impact on automobile markets worldwide in the third quarter," a Daimler statement noted.

The company revised its 2008 outlook lower for the second time since July and said it would temporarily suspend a share buyback programme. Daimler shares lost 6.53 percent to €22.55 in midday trading on the Frankfurt stock exchange.

The company forecast an operating profit of "more than €6 billion" in 2008, down from more than €7 billion seen previously.

It also expected to see decreased sales, while stressing that "forecasts are connected with a high degree of uncertainty in the current environment."

It blamed the weaker outlook on "the worsening banking crisis," which it said "increasingly affected real economies." The Mercedes division that groups Daimler's auto products reported a drop of 92 percent in operating profit to €112 million, in part owing to slumping sales and also because of losses from leasing activities that are important to luxury car makers.

Daimler assumed that for the full year, "the worldwide market for motor vehicles will be significantly smaller than in 2007." In industrialised countries, "overall demand will be far lower than last year," the German group said.

Other divisions fared somewhat better, meanwhile. The heavy truck unit, in which Daimler recently announced a North American shake-up, posted a 6.0 percent increase in operating profit to €510 million and a 4.0 percent increase in sales. Sales of busses, vans, and other vehicles, which are often undermined by exceptional items, reported a sales increase of 5.0 percent.

Overall however, the Daimler group said its operating profit in the first nine months of the year had plunged by 36 percent.



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