Daimler expects its Mercedes-Benz cars division this year to post earnings before interest and taxes (EBIT) lower than the figure logged in 2011, due to the continued decline in vehicle demand in Europe and China. Daimler chief executive Dieter Zetsche also expects the Mercedes’ EBIT in the second half of 2012 to be inferior to the results posted in the first six months of the year.
Mercedes logged a 10-percent drop in EBIT for the first half of 2012 to EUR2.57 billion. Zetsche blamed the lower forecast to the deteriorating overall environment in Europe, which is recording more negative developments than expected. Daimler CEO also noted the “significantly sharpening” competition in China.
According to Zetsche, Mercedes has been implementing efficiency measures that are being packaged into a savings drive to be called "Fit for Leadership." Albrecht Denninghoff, an analyst at Silvia Quandt Research, told Reuters that the lowered forecast means that Daimler has acknowledged that the incentive level is high, making the carmaker unable to maintain its earnings level.
Daimler made a forecast in July that Mercedes division would post an operating profit for 2012 at the same level as 2011’s EUR5.2 billion. Zetsche, however, reaffirmed full-year forecasts for the entire Daimler group.