Mercedes-Benz has reported a 70 per cent plunge in operating profit for the third quarter, with tariffs and heavy restructuring costs found to be key contributors.
In the three months to September 30, the German car giant saw profits drop to €750million (£640million) from €2.5billion (£2.13billion) a year earlier.
The heavy decline was partly due to €1.3billion (£1.1billion) in one-off charges tied to workforce reductions, with the costs stemming largely from a voluntary redundancy scheme launched in Germany in April, part of the company’s “Next Level Performance” efficiency drive.
Group revenue dropped seven per cent to €32.1billion (£27.3billion), dragged down by weaker exchange rates, softer demand in China, and falling unit sales across key markets.
When adjusted for exceptional items, EBIT stood at €2.1billion (£1.79billion), a 17 per cent fall year-on-year. Adjustments included €876million (£745million) in restructuring measures linked to workforce reductions and international cost-cutting efforts.
Chief Executive Ola Källenius said: “Our third-quarter results are in line with our full-year guidance. “Our biggest product and tech launch program is well on track.
“The new CLA and GLC mark the beginning of a series of new models across all segments and drive trains, tailored to specific market and customer needs. We remain focused on enhancing customer experience while driving efficiency across our company.“
The voluntary redundancy scheme brought total optimisation expenses to €1.4billion (£1.19billion) in the first nine months of the year. Other adjustments included €427million (£363million) for legal proceedings and €46million (£39million) for M&A activity.
The German car brand saw car sales slump by 70 per cent
|
MERCEDES-BENZChina remained a major weak spot with sales tumbling 27 per cent due to fierce price competition and subdued consumer sentiment. Mercedes-Benz said the Chinese premium car market was proving “particularly difficult“ for foreign brands.
The latest interim report detailed: “Despite the noticeable impact of US tariff policy on the US trade balance, after a slight decrease in the first quarter, GDP in the United States grew visibly in the further course of the year.
“Economic output in the Eurozone benefited from tariff frontrunning in the first quarter, but increased only marginally thereafter.
“Following a strong first half of the year, growth in the Chinese economy slowed amid persistently weak consumption and the ongoing correction in the property sector.”
The brand suffered losses due to redundancy payouts and a weakened Chinese market
|
MERCEDES-BENZ“The animal that is able to adapt is the one that survives and thrives in evolution,” Mr Kaellenius explained. “The hyper-competition in China is not going away any time soon. This is certainly a multi-year task.”
In September, the EU and US agreed to impose a 15 per cent tariff on European car and parts exports to America, backdated to August 1, which has added further pressure on the industry.
The brand also revealed that it would end production of the EQE Saloon and EQE SUV next year as part of its “realignment” plans for its range of EVs.
Reports suggested that the EQE saloon and EQE SUV will be indirectly replaced by electric models, including the C-Class EQ and GLC EQ.
Gorden Wagener, Chief Design Officer at Mercedes-Benz Group AG, said: “Our new iconic grille is not just a new front for the GLC; it redefines the face of our brand.
“It is the perfect fusion of lasting design codes reinterpreted for the future, making our cars instantly recognisable.”
