Mercedes reports narrower-than-forecast profit slump in first quarter

[BERLIN] Mercedes-Benz on Wednesday reported a slump in first-quarter operating profit but beat market expectations, as the German premium carmaker battles to shore up dwindling margins and revive weak demand in key markets like China.

The automaker reported first-quarter earnings before interest and tax (EBIT) of 1.9 billion euros (S$2.83 billion), down 17 per cent year on year but higher than the average analyst estimate of 1.6 billion euros, according to a poll conducted by Visible Alpha.

Steep tariffs, China woes and a rocky transition to electric vehicles have weighed heavily on German carmakers like Mercedes, whose CEO Ola Kaellenius has turned to sweeping redundancies and cost cuts to stem losses while rolling out a cascade of new models.

The Stuttgart-based company posted first-quarter revenue of 31.6 billion euros, missing analyst estimates for 31.8 billion euros.

The adjusted return on sales for Mercedes’ core cars division was 4.1 per cent, within a full-year target of between 3 and 5 per cent, but down from 7.3 per cent in the same quarter last year. REUTERS