BERLIN, July 26 (Xinhua) -- Net profits slumped at Daimler AG during the second quarter of 2018 due to negative tariff effects and one-off costs associated with a recent legal settlement, according to earnings figures published on Thursday by the Stuttgart-based company.
Quarterly earnings before interest and taxes (Ebit) at the German carmaker fell by an annual rate of 30 percent to 2.64 billion euros (3.1 billion U.S. dollars) while net profits declined by 29 percent to 1.73 billion euros.
Daimler's gross revenue was put at 40.75 billion euros in Q2, down by one percent compared to the same period last year.
Amongst others, the DAX-listed company attributed the development to weaker profitability of its flagship Mercedes-Benz brand in China.
China has recently announced that it will significantly reduce tariffs on vehicles imported from Europe as of July, a circumstance which led many consumers to hold off with purchasing new cars until the measures take effect or demand discounts from carmakers.
"A temporary fall in prices inclusive of tariffs had a significant impact on the decline in earnings," a statement by Daimler read.
While this specific effect is likely only to be short-lived, Daimler has voiced concerns that protectionist policies adopted by U.S. President Donald Trump, and a resulting response from China, could hurt its performance in the major Chinese market in the longer term as well.
Daimler currently manufactures most of its Mercedes-Benz SUVs range in the United States and recently became the first automotive producer in Germany to issue a profit warning in response to Trump's "America First" doctrine.
The German carmaker also cited new global certification processes for the exhaust-systems testing of light vehicles, recalls of vans affected by the ongoing diesel emissions scandal as having contributed to its gloomier outlook for the year.
Aside from tariff effects and recalls of Mercedes-Benz "Vito" diesel-powered vans which were fitted illicit defeat devices to understate their nitrogen oxide (NOx) emissions, Daimler also shouldered a sizeable one-off cost in a recent legal settlement with the German federal government.
The carmaker agreed to make a payment of 418 million euros in order to end a long-standing legal dispute over the delayed start of a new toll collect system in Germany.
In spite of the headwinds encountered in Q2, Daimler still expects its annual gross revenue and sales to rise incrementally in the course of 2018.
"We want to bolster and improve upon our position with several new models and technologies," chief executive officer (CEO) Dieter Zetsche said on Thursday.
A few days ago, Daimler secured a new credit line of over 11 billion euros to boost its electric- and autonomous vehicle development.
Addressing investors on Thursday, chief financial officer (CFO) Bodo Uebber consequently expressed confidence that the company would retain its ability to "invest in the future" thanks to its "good liquidity and financial situation".
Daimler is planning to make multi-billion-euro investments in new technologies like electric and self-driving vehicles as it seeks to weather far-reaching structural changes in the automotive industry. The company recorded gross revenue of 164.3 billion euros in 2017 and employed over 289,000 staff across the world.
