Daimler AG (DMLRY) shares fell to the bottom of the German market Wednesday after the luxury carmaker posted a sharp decline in fourth quarter profits amid ongoing trade disputes in some of its biggest export markets.
Daimler said operating profits for the three months ending in December came in at €2.67 billion, missing analysts' forecast and falling 22% from the same period last year. Mercedes Benz sales actually increased by 4%, the company said, but pricing and margins were hit by tariffs imposed by China on cars made in the United States, where Daimler has significant production facilities.
"For Daimler, 2018 was a year of strong headwinds. This is also reflected in our financial results and our share price," said Daimler CEO Dieter Zetsche. "Added to this were increased tariffs on vehicles imported to China from the United States and delivery stoppages for individual diesel models. Vehicle certification also took longer than usual in some cases and had an impact on availability."
Daimler shares were marked 2.65% lower by mid-afternoon in Frankfurt and changing hands at €51.51 each. Domestic rival Volkswagen AG (VLKAY) , meanwhile, slipped 0.12% to €151.9 while fellow luxury carmaker BMW AG (BMWYY) was seen 0.1% lower at €73.54.
European carmakers were also under pressure from comments made during President Donald Trump's State of the Union Speech to Congress last night, where he urged lawmakers to pass the United States Reciprocal Trade Act, "so that if another country places an unfair tariff on an American product, we can charge them the exact same tariff on the exact same product that they sell to us."
The remarks were seen as a direct broadside to Europe, which applies a 10% levy to U.S.-made cars against the 2.5% level put in place by Washington.
The U.S. Commerce Department is set to publish its final report into whether imported cars and other automotive parts pose a threat to national security under section 232 of the Trade Expansion Act on February 17, the same area used to justify tariffs on steel and aluminium imports by the White House last year.