Mercedes-Benz maker Daimler reported Friday a sluggish start to the year, with first-quarter profits falling back compared to 2018 as a slew of problems hit its different divisions.
Net profit at the group shed 9% year-on-year, to 2.1 billion euros ($2.4 billion), with executives pointing to slower car sales, supply chain issues and costly outlays for research and development as the reasons for the slump.
Operating, or underlying profit fell even more dramatically, losing 16% to 2.8 billion euros, on revenues almost flat at 39.7 billion.
“We cannot and will not be satisfied with this — as expected — moderate start to the year,” outgoing chief executive Dieter Zetsche said in a statement.
But the flamboyantly-moustachioed auto boss left Daimler’s annual targets for this year untouched.
The Stuttgart-based group predicts a “slight increase in unit sales” across its cars, trucks and vans units will help inch up revenue and operating profit compared with 2018.
Looking to the group’s different divisions, unit sales dropped 7% at Mercedes-Benz cars in the first three months, to 555,300 vehicles.
Model changeovers and supply bottlenecks in some markets outside Germany helped brake performance, as well as “intense competition”, Daimler said.
Meanwhile, the trucks unit upped unit sales and revenue slightly, but spent more on research and development and suffered from higher costs, slicing into profits.
There was a similar picture at the vans division, with higher sales offset by greater costs, while the buses unit suffered falling unit sales and revenues as quality control changes held up deliveries.
“We had a comparatively weak start to the year and face numerous challenges along the entire value chain in all our automotive divisions,” finance director Bodo Uebber said.
CEO Zetsche said the group had to take both “short-term cost-cutting measures and long-term strategic decisions” that could mean new costs to turn things around.
He reiterated a plan to give Daimler’s different business areas more autonomy within the firm which bosses hope will free them up to rake in higher profits.
The reorganisation will have to be seen through by designated successor and present research chief Ola Kallenius — set to take the reins from next month.