FRANKFURT (Reuters) – Daimler (DAIGn.DE) cut its profit forecast for its trucks division due to slumping sales in the United States and Brazil, sparking analyst concerns over its ability to read the market.
Daimler Trucks said late on Thursday it expected earnings before interest and taxes (EBIT) from continued operations and unit sales to fall significantly in 2016.
It had previously expected EBIT from ongoing operations to remain steady at 2015 levels and unit sales to fall slightly.
“Daimler has finally decided to change its unrealistic guidance for trucks, which has not done any good to improve credibility over the last few months,” Citi analyst Michael Tyndall said in a note on Friday.
Daimler Trucks accounted for about a fifth of group EBIT and about a quarter of total sales last year.
The North American heavy-duty trucks segment has cooled after a plunge in oil prices and metals-related business put a damper on industrial activity and haulage volumes prompting rival like Volvo to warn investors about a downturn.
“Daimler’s warning will no doubt also revive unwelcome memories of past mistakes and credibility concerns,” Exane BNP analyst Stuart Pearson said. “Unfortunately it is hard to deny that Daimler now has something of a track record of failing to read the cycle.”
Daimler also said it would step up job cuts at its trucks division in Brazil, which is expected to result in 100 million euros ($ 112 million) of extra costs for voluntary severance packages.
Goldman Sachs analysts said Daimler’s revised guidance “leaves room for a positive surprise should end markets improve”.
Shares in Daimler were flat at 57.41 euros by 0734 GMT, underperforming the blue-chip DAX index’s (.GDAXI) 1.1 percent rise by and a 0.7 percent firmer autos sector index (.SXAP).
Separately, Daimler said it was setting aside about 500 million euros in provisions this year for a precautionary recall of vehicles in the United States and Canada, which contain airbags made by Takata Corp (7312.T).
A Daimler spokeswoman said the recall would involve 200,000 cars over the period May 2016 until December 2019.
Daimler said neither the lower outlook for its trucks division nor the recall would affect its forecast for a slight rise in 2016 group EBIT from last year.
(Reporting by Harro ten Wolde, Edward Tayloe and Hans Seidenstuecker; Editing by Keith Weir and Susan Thomas)
