Daimler AG, reeling from allegations of decades-long collusion with other German carmakers, missed second-quarter operating-profit estimates amid a drop at its commercial-vehicle divisions and spending on new automotive technology.
Earnings before interest and taxes climbed 15 percent to 3.75 billion euros ($4.4 billion) from 3.26 billion euros a year earlier, the Stuttgart, Germany-based company said Wednesday in a statement. That was less than the 3.9 billion-euro average of five analyst estimates compiled by Bloomberg. Sales increased 6.5 percent to 41.2 billion euros.
Any positive boost from buyers flocking to Mercedes’s new suite of sporty models is likely to be overshadowed by this month’s revelation that regulators are looking at whether decades of technology talks among German auto manufacturers constitute an antitrust violation. That’s opened another set of challenges, which also include the threat of diesel driving bans, industrywide recalls rooted in Volkswagen AG’s emissions-cheating scandal and heavy investment burdens to develop electric vehicles. Daimler said a week ago that it will recall 3 million autos to fix exhaust-system software, booking the costs in the third quarter.
The Mercedes-Benz Cars division, which also includes the Smart city-car brand, posted a 70 percent surge in second-quarter Ebit, while profit fell 13 percent at the Daimler Trucks business, the company’s second-biggest earnings contributor, and 11 percent at the vans operation. The company reiterated forecasts that full-year Ebit and revenue will increase significantly.
First-half research and development costs jumped 19 percent as the manufacturer gears up to bring out battery-powered autos. Daimler said in March that it will release 10 new electric vehicles by 2022, three years earlier than a previous target, and its working to adapt an engine plant to produce batteries.
Daimler Trucks outlined plans in April to reduce fixed costs by 400 million euros, in part through employee buyouts to cut the workforce. The project will result in 500 million euros in spending this year and next.
Carmakers’ shares have dropped since Spiegel magazine reported Friday that Daimler and Volkswagen informed authorities last year of discussions they’d had since the 1990s that also included BMW AG. Over the weekend, the European Union’s antitrust overseer confirmed it’s studying possible collusion among auto producers, together with Germany’s regulator. Daimler Chief Executive Officer Dieter Zetsche declined to comment on the issue during a conference call Wednesday beyond saying the car industry is facing negative news.
Manufacturers could face fines ranging from several hundred million to a low billion euros, according to Evercore ISI. While they’ve declined to comment on the allegations, Volkswagen and Daimler’s disclosure to regulators reportedly could help the companies reduce penalties or escape them entirely. BMW said industry talks involved setting up infrastructure for refilling an exhaust-treatment fluid.
Volkswagen, which is scheduled to report quarterly earnings Thursday, is convening an extraordinary supervisory board meeting Wednesday after worker representatives demanded an explanation about carmakers’ discussions. Employees are a powerful presence in major German companies as they hold half the seats on supervisory boards. Daimler’s labor leaders have also demanded that the carmaker come clean on the allegations.