Daimler (ETR:DAI) Given a €80.00 Price Target by equinet Analysts

Marco Green
June 24, 2018

German luxury carmaker Daimler on Wednesday cut its profit forecast for 2018, blaming new tariffs on cars exported from the United States to China, amid lingering fears of a trade war between the world's biggest economies.

But Daimler, the owner of Mercedes-Benz, said this year's earnings from auto sales were expected to be "slightly below the previous year". It had previously pencilled in a slight rise.

In a tit-for-tat response to the U.S. moves, Beijing announced 25% import tariffs on $50bn of USA products last week, including cars, which kick in on 6 July, following a similar move from Donald Trump.

The Trump administration has threatened further tariffs on another up to $400bn worth of Chinese goods if China continues to retaliate.

The company said late Wednesday that it now sees fewer SUV sales and higher costs at its Mercedes-Benz Cars division than previously expected as a result of the tariffs, and "this effect can not be fully compensated by the reallocation of vehicles to other markets".

The company projects annual EBIT at Mercedes-Benz Vans division to be significantly below the previous year's level, and at Daimler Buses division to be in the magnitude of the previous year.

Daimler said the Chinese tariffs will result in "fewer than expected SUV sales and higher than expected costs", which won't be completely passed on to customers.

Kia Motors fell as much as 2.9 per cent, while Hyundai Motors fell as much as 1.9 per cent to their lowest levels in over 28 months.

It cited several other factors that also contributed to the gloomier outlook, including a new worldwide certification process for light vehicles, a recall of diesel vans, and declining demand for its buses in Latin America.

Other reports by Click Lancashire

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