German carmaker Daimler has warned on profits for the fourth time this year after being forced to make further provisions to deal with a regulatory crackdown on carmakers’ alleged manipulations of diesel emissions.
Despite having already warned on profits on June 23, the Mercedes-Benz maker said it had uncovered new information that would make its earnings before interest and tax for the second quarter of the year even lower than it guided for last month and “significantly below market expectations.”
Daimler said on Friday that it would report a €1.6bn loss for the second quarter, down from earnings before interest and tax of €2.6bn for the same period in 2018.
Friday’s profit warning is the latest sign of trouble in Germany’s vast auto sector and comes amid signs of cooling growth in the eurozone’s powerhouse economy.
The carmaker said that, since June 23, it had reassessed the financial risks from court proceedings and governmental measures relating to Mercedes diesel vehicles in multiple regions, which “led to an increase in expected expenses by around €1.6bn.”
Daimler had also found “new information leading to a revised risk assessment” of an extended global recall of faulty car airbags made by Japan’s Takata.
The warning sent Daimler’s shares dropping 3 per cent in early Frankfurt trading. Other European automotive stocks also took a blow, with the broad Stoxx 600 auto index sliding 1.4 per cent.