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Operating profit has slumped at German carmaker Mercedes-Benz driven by the cost of restructuring, weak demand in China, US tariffs and provisions for potential car finance mis-selling in the UK.
In the period between July and September, the group recorded profit before interest and tax of €750mn, a 70 per cent decline on the same period the previous year. But the company maintained its full-year guidance and shares rose 6 per cent at the start of trading on Wednesday.
The profit fall was influenced by the cost of a major restructuring programme launched this year. Workforce cuts in Germany and restructuring overseas cost €876mn in the quarter, the company said.
Mercedes-Benz also made new provisions of a “mid-three-digit million euro amount” to cover the cost of claims related to potential car finance mis-selling in the UK. The British financial regulator the FCA this month presented a draft scheme redress scheme for customers affected.
The unadjusted operating profit figure was below analyst estimates compiled by Visible Alpha, which had expected EBIT of €1.5bn.
Mercedes-Benz has struggled with falling sales in China, where domestic carmakers have been winning market share from European rivals. The company’s global unit sales fell 12 per cent year on year in the third quarter, led by a 27 per cent drop in China.
The carmaker said that US tariffs imposed by President Donald Trump had also hit its profits in the third quarter, as had fluctuations in the exchange rate. Mercedes’s unit sales in the US fell 17 per cent in the quarter.
Sales in Europe have been more robust, increasing by 2 per cent in the third quarter.
Overall, the group reported revenues of €32.1bn in the third quarter, a decline of 6.9 per cent on the same period last year.
Battery-powered vehicles made up 21.8 per cent of its sales in the third quarter, a rise fuelled partly by the launch of new all-electric models.
Chief executive Ola Källenius said in a statement that the company remained “focused on enhancing customer experience while driving efficiency across our company”.