Daimler warns of results well below expectations in the second quarter

FRANKFURT (Reuters) – Luxury car maker Daimler (DAIGn.DE) warned investors Friday that they were expecting a loss in the second quarter, saying that an increase in the extensive recall provisions regarding the Takata airbags was partly at the origin of the situation.

The automaker warned investors that it expected a loss before interest and taxes of 1.6 billion euros in the second quarter, after a profit of 2.6 billion euros recorded a year earlier, a decrease 2.5% stake at 07:15 GMT.

The news came after Daimler reduced its profit forecast in June for the third time in 12 months.

Daimler said it is now expected that the profit before interest and taxes (EBIT) of the group will be significantly lower than that of the previous year, compared to an earlier EBIT forecast of the same order of magnitude than the year before.

Provisions for an extended recall regarding Takata airbags will increase by about 1 billion euros, said Daimler.

The automaker also received 1.6 billion euros as a result of a rebadessment related to ongoing government and legal proceedings and measures relating to Mercedes-Benz diesel vehicles.

"A decision taken by the Management Board in the review of the product portfolio and prioritization today will affect the results of the Mercedes-Benz Vans division in the second quarter of 2019. About 0.5 billion euros, "said Daimler. added.

Daimler also said that lower-than-expected growth in the automotive markets had an impact, as did the slowdown in product ramp-up that affected availability throughout the year.

Mercedes-Benz car sales dropped 7% in the first quarter partly due to bottlenecks related to the manufacture of the clbad A compact car in Aguascalientes, Mexico, the Mercedes-Benz van in Charleston, SC South and Mercedes-Benz GLE vehicle sport utility vehicle in Tuscaloosa, Alabama.

Daimler's announcement comes after automakers Johnson Electric Holdings (0179.HK) and Sensirion (SENSI.S) cut their profit forecast on Thursday, pointing to a slowdown in car sales and pessimism about the recovery prospects of the Chinese auto sector.

Car manufacturers have been fighting diesel emissions since 2015, when the German automaker Volkswagen (VOWG_p.DE) admitted to cheat during pollution testing by diesel engines in the United States.

The pressure came at a time when the sector also needs to invest heavily in autonomous electric vehicles, due to slowing growth in China, weak markets in Europe and rising global trade tensions.

In May, the German competitor BMW (BMWG.DE) warned of profits, citing higher than expected investment, while Volkswagen said the return on sales of its pbadenger car division would be in the lower part of its target.