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Daimler profit soars, but trucks dim 2016 outlook

Despite a strong third quarter, German premium carmaker Daimler has lowered its full-year profit forecasts for 2016, with lower truck sales countering growing demand for its flagship Mercedes-Benz cars.

For the July through September period, Daimler reported a surge in net profit by almost 13 percent on Friday, earning the German premium carmaker 2.7 billion euros ($2.9 billion) on sales of 39 billion euros.

Growth at Daimler was powered by the cars division, whose Mercedes and Smart brands saw 12 percent growth in sales. Chinese buyers were especially keen to get behind the wheel of a Mercedes, with unit sales increasing 20 percent there.

"Daimler remains on track to achieve our forecast for the full year, despite volatile sales and finance markets, the carmaker's finance chief Bodo Uebber said in the earnings report.

However, sales "in the magnitude of the previous year" means the company is less confident of achieving "a slight increase" it announced in July, when it released its second quarter results.

The announcement was a disappointment for investors, causing Daimler shares to slump by more than 3 percent in morning trading at the Frankfurt Stock Exchange on Friday.

Susan Joho, analyst with Julius Bär, said the car company had fulfilled high market expectations in the quarter. "But the future looks more sobering because Daimlers outlook is weak," she told the news agency Reuters.

Truck slump weighs

Daimler Chief Executive (CEO) Dieter Zetsche blamed "weakening demand in the largest markets for trucks" for the fall in confidence.

Trucks are an important division for the company, which holds the top spot worldwide in the sector with brands including Mercedes-Benz and Freightliner.

Lower demand in North America, Brazil, Turkey, the Middle East, and Indonesia saw the division's sales fall 19 percent as unit sales plunged by around 30,000 vehicles.

Beyond the languishing trucks businesses, Daimler like other carmakers faces upheaval as pressure to develop electric vehicles increases and new challengers like California's Tesla step onto the scene. In response, CEO Zetsche has committed the company to introduce at least 10 electric vehicles in the coming years.

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uhe/jd (Reuters, AFP, dpa)

 

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