By Rachel More
BERLIN (Reuters) -German carmaker Mercedes’ operating profit plunged by more than two-thirds in the third quarter, the company said on Wednesday, hit by hundreds of millions of euros in redundancy payouts, as it faces intense competition in the U.S. and China.
Group earnings before interest and taxes came in at 750 million euros ($875 million) in the July-to-September period, down 70% year on year.
Adjusted for 1.3 billion euros in one-off effects, largely due to restructuring costs, including a voluntary redundancy programme launched in Germany in April, the slump in earnings was less severe, down 17% year on year at 2.1 billion euros.
The company maintained its guidance for the full year but warned of a “dynamic” environment, adding it would push ahead with efficiency measures across the group.
Mercedes’ troubles are spread across its most important markets: tariffs weigh in the U.S., sales are falling in the highly competitive Chinese market and European emissions targets have prompted an uneasy shift towards margin-squeezing electric vehicles (EVs).
Mercedes is undergoing restructuring measures to save 5 billion euros globally by 2027.
Overall, the company booked 876 million euros in expenses for restructuring programmes in the third quarter, up from 560 million euros in the prior three-month period.
Mercedes faces particular challenges in the Chinese premium and luxury market, where a price war driven by local carmakers is hitting demand.
Earlier this month, Mercedes reported a 27% drop in its car sales in China in the third quarter.
($1 = 0.8575 euros)
(Reporting by Rachel More; Editing by Christoph Steitz, Kirsti Knolle; Editing by Muralikumar Anantharaman)
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