Daimler hit by Germany slump, CEO forecasts high demand in the fourth quarter

FRANKFURT (Reuters) – Daimler (DAIGn.DECEO Dieter Zetsche said on Thursday that customer demand remains strong, even though regulatory intervention in diesel vehicles and a 13 percent decline in sales of Mercedes-Benz vehicles in Germany weighed on earnings in the third quarter.

FILE PHOTO: The Daimler is seen during a press conference on the second day of the Paris Motor Show in Paris, France, October 3, 2018. REUTERS / Regis Duvignau / File Photo

"The automotive industry, including Daimler, is still in a very challenging environment and the continued high demand from our customers makes us confident for the fourth quarter," said Zetsche in a statement.

Earnings before interest and taxes (EBIT) fell 27 percent in the third quarter to 2.49 billion euros (2.85 billion dollars). The EBIT of Mercedes-Benz Cars declined by 35 percent to 1.37 billion euros.

The profit slide is accompanied by continuing tensions between the German government and automakers about whether to build expensive emission-reducing exhaust systems for older diesel vehicles, and an ongoing US emissions investigation.

Sales of Mercedes-Benz Cars, a division with the Smart brand, are expected to reach the previous year's level, Daimler said after a decline in deliveries in the third quarter by 6 percent.

The result was also impacted by a provision made following a court ruling confirming a ban on R134a air conditioning fluid used in Mercedes-Benz vehicles, Daimler said.

Daimler said last week that full-year operating income would fall more than 10 percent as a result of "governmental policies and measures in different regions," which is the company's second profit warning in four months.

In May, German public prosecutor's offices investigated Daimler's offices as part of a fraud investigation into possible manipulation of diesel exhaust emissions, and the US authorities asked Mercedes-Benz to explain the emission levels of certain vehicles.

Reporting by Edward Taylor; Editing by David Goodman

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