Daimler has updated its earnings forecast for the full year of 2012 to reflect a decrease in expected operating profits, as the German carmaker has to cope with dwindling demand in Europe and increased competition in China. Daimler now expects its 2012 earnings before interest and taxes (EBIT) to drop 11 percent to EUR8 billion ($10.4 billion), compared to its previous profit target of around EUR9 billion.
The parent of Mercedes-Benz disclosed that it would fail to achieve it 2013 operating margin goals due to toughening market conditions. Daimler chief executive is planning to cut costs by EUR2 billion by the end of 2014, according to a slide show presented at the carmaker’s Web site. Its fellow German carmaker and rivals expect differently from their own operations.
Volkswagen recently confirmed that it is on pace to match its operating profit in 2011, while BMW expects to post an increase in pre-tax profit for full year 2012.
Arndt Ellinghorst, an analyst with Credit Suisse, told Automotive that in light of the relative strength of VW and BMW, he is shocked by the weakness of Daimler, adding that its management is “disappointing once more." Daimler has grown 12 percent this year, giving it a market value of EUR40.4 billion. VW and BMW grew 30 and 17 percent respectively in 2012. Daimler inadvertently released news earlier than planned after a U.S. spokeswoman accidentally e-mailed the earnings.