Wednesday 6 February 2019 8:22 am

Daimler profits slide as Mercedes-Benz maker warns of 'strong headwinds'

Profits tumbled at Mercedes-Benz maker Daimler in 2018, the manufacturer revealed today, as it warned of “difficult political and economic conditions”.

Read more: DEBATE: Is Brexit likely to be the biggest factor behind Nissan decision?

The figures

Daimler saw net profit plummet 29 per cent year on year to €7.58bn, down from €10.62bn in 2017, after the latter figure was inflated by a €1bn benefit from Trump’s US tax changes.

Revenue grew two per cent to €167bn as sales also ticked up two per cent to 3.4m units.

Cash flow grew 45 per cent to €2.89bn but overall net liquidity slipped two per cent to €16.28bn for the year.

Earnings per share dropped as the company warned it faces “strong headwinds”, down from €9.61 in 2017 to €6.78 this year.

Daimler’s dividend also fell to €3.25 per share, compared to €3.65 for 2017.

Why it’s interesting

The maker of Mercedes cars warned that challenging economic and political environments were to blame for the drop in earnings, saying demand for its vehicles remains strong.

However, both Daimler’s Mercedes-Benz cars and vans divisions could not match last year’s earnings as higher raw material costs, legal expenses and measures on diesel engines weighed them down.

Currently Mercedes cars’ predicted profit margin for 2019 stands between six and eight per cent, while vans are even lower at between five and seven per cent.

Saying “we cannot and will not be satisfied with this,” board chairman Dieter Zetsche, said Daimler will seek to boost profit margins for both to between eight and 10 per cent by 2021.

It comes as car manufacturers face vast industry challenges, with Toyota today warning of the impact of a no-deal Brexit as Nissan prepares to move production of its X-Trail car from Sunderland to Japan for a variety of reasons.

Jaguar Land Rover meanwhile has committed to axing 4,500 jobs as part of a £2.5bn turnaround plan.

Read more: Jaguar Land Rover confirms 4,500 job cuts

What Daimler said

Zetsche said: “For Daimler, 2018 was a year of strong headwinds. This is also reflected in our financial results and our share price. Nonetheless, we faced those headwinds and made substantial progress on key areas for the future. That was not least the result of our strong core business. But for all the divisions, it applies: a profitable business is a prerequisite for continuing to invest in new technologies and products in the future.”

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