Daimler braced for emissions-test impact as profit weakens

FRANKFURT/PARIS (Reuters) - Mercedes maker Daimler blamed U.S.-China tariffs for a 30 percent drop in second-quarter profit and predicted a further decline as new emissions test standards hit sales.

Earnings before interest and tax (EBIT) fell to 2.64 billion euros ($3.1 billion), weakened by Chinese price-cutting on U.S.-made Mercedes models to offset import duties, the company said on Thursday. Revenue dipped 1 percent to 40.8 billion euros.

Daimler last month blamed the U.S.-China trade tariffs when cutting full-year guidance. Rivals Fiat Chrysler and General Motors followed suit this week.

But the German luxury carmaker also cautioned that emissions-related vehicle certification bottlenecks would further dent Mercedes earnings in the current third quarter.

While an apparent easing of EU-U.S. trade tensions boosted the shares of its German rivals on Thursday, Daimler’s stock was up just 0.8 percent at 0718 GMT.

BMW rose 3.2 percent and Volkswagen by 4 percent after Brussels and Washington announced progress on a trade dispute that had threatened to add U.S. autos tariffs to those already slapped on steel and aluminium.

The Mercedes-Benz division’s profit margin narrowed to 8.4 percent in second quarter from a year-earlier 10 percent, also weighed down by a supplier fire and higher spending on autonomous and electrified vehicles. Deliveries fell 1 percent.

Daimler repeated a warning that the new Worldwide Harmonised Light Vehicle Test (WLTP) standards taking effect in September would lead to “some temporary restrictions in the availability of vehicles” as well as higher inventories of unsold cars.

As a result, third-quarter Mercedes earnings will be “significantly below” the 1.9 billion euros recorded in the three months to June 30, the group said on Thursday.

The new standards have already caused a slowdown in sales for carmakers including Volkswagen, which has rented space to store some of the 250,000 vehicles that may be caught up in testing delays.

French supplier Valeo also cut its 2018 outlook on Wednesday, largely citing WLTP disruption.($1 = 0.8522 euros)