By DAVID McHUGH
FRANKFURT, Germany (AP) â¿¿ Daimler AG warned Wednesday that profits this year would be lower than last year's as it reported a 60 percent slide in first-quarter earnings amid slumping auto sales in Europe.
The maker of Mercedes-Benz luxury cars said net profit fell to 564 million euros ($733 million) from 1.42 billion euros in the same quarter a year ago. Revenue was down 3 percent at 26.1 billion euros.
Profits fell short of the 810 million euros expected by analysts surveyed by financial information provider FactSet. The company's share price was steady at â¿¬40.90 in morning trading in Europe.Daimler laid much of the blame on the economic problems afflicting many countries in Europe. The economy of the 17 countries that use the euro currency is in a recession and struggling to reduce excessive levels of government debt. CEO Dieter Zetsche said "many markets developed worse than expected for economic reasons, especially in Western Europe. " Daimler kicked off what could be a rough earnings quarter for European carmakers, as the region's sales have slumped alarmingly in the first three months of the year. U.S.-based Ford Motor Co. reports earnings later Wednesday. European auto sales fell 9.8 percent in March, the 18 monthly drop in a row, measured on a year on year basis, according to the European car industry association ACEA. Consumers are reluctant or unable to spend, as governments cut spending to deal with their debt problems. That has dented growth rates across Europe and pushed unemployment higher. The economic fallout is worst in indebted countries in southern Europe such as Italy and Spain. But sales have also fallen in better-off Germany, home market for Daimler's flagship Mercedes-Benz luxury brand. Sales for all auto companies fell 13 percent there in March. Stuttgart-based Daimler said it expected the U.S. and Chinese markets to grow but warned that European car sales would decline further this year. The company said that "the German market cannot detach itself from this development and is expected to fall significantly short of the previous year's level." Daimler also said the market for trucks would fall 5 percent due to the slow economy.