* Q1 EBIT plunges to 917 mln euros from 2.1 bln euros
* Many markets developed "worse than expected" - CEO
* H2 results to rebound on new models, cost cuts
* Daimler shares fall in rising market
By Andreas Cremer
BERLIN, April 24 German automaker Daimler
scrapped its earnings forecast on Wednesday after
first-quarter profit plunged more than half due to a prolonged
slump in European markets and self-inflicted problems in China.
Struggling to match rivals' scale and efficiency in smaller
cars, as well as their success in China, Stuttgart-based Daimler
has fallen further behind German peers BMW and
Premium-market leader BMW and VW, whose Audi division pushed
Daimler's Mercedes brand into third place in the global luxury
race in 2011, both expect group earnings to be flat this year.
Daimler said on Wednesday it expected 2013 earnings before
interest and tax (EBIT) from continued operations to be below
last year's 8.125 billion euros, a level it had previously aimed
to reach again this year.
But after it warned on April 10 that this goal might not be
tenable, many analysts had already cut their estimates, lowering
consensus for the year to about 7.3 billion euros, according to
a Reuters poll.
First-quarter EBIT from ongoing business plunged to 917
million euros ($1.19 billion) from 2.1 billion euros the year
before, even missing the low of 930 million euros in the range
of analysts' estimates.
"Many markets developed worse than expected for economic
reasons, especially in western Europe," Chief executive Dieter
Zetsche said in a statement.
The return on sales at Mercedes-Benz Cars deteriorated
further to 3.3 percent from 8.2 percent a year earlier, which
finance chief Bodo Uebber blamed on a slump in high-margin
European markets such as France.
Daimler said it now expected to take longer to reach its
margin target due to the tough market environment, even though
it aimed to achieve a significant portion of its 2 billion euros
in cost cuts by the end of next year.
Still, second-half group results should improve on the first
six months, the CEO said, citing growing momentum from cost
reductions and model overhauls such as the new flagship S-Class
saloon as well as the new CLA four-door coupe.
Shares in Daimler were down 0.7 percent at 40.60 euros by
0804 GMT, while its peers in the European car sector
were up 0.1 percent.
CFO Uebber warned there could still be setbacks to business
in Europe this year. "The crisis is not yet over, and that is
having a negative effect on investments and purchasing
behaviour," he told journalists during a conference call.
Analysts have repeatedly questioned whether Mercedes can
achieve its long-term goal of overtaking its two German rivals
to become the world's largest luxury manufacturer by 2020 so
long as its sales growth in China continues to lag theirs.
Audi boosted Chinese sales 30 percent last year to 405,838
cars, while BMW brand deliveries surged 40 percent to 326,444.
Conversely, Mercedes sales in China, where it is striving to fix
problems caused by internal competition between its two
distributors, edged up just 4 percent to 206,150 cars.
"China revenues (at Mercedes-Benz) are unlikely to improve
materially until at least the second half, if not the fourth
quarter," London-based Stuart Pearson at Morgan Stanley wrote in
a research note published after the results.