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Daimler Cuts Profit Forecast for its Truck Division

Published On May 20, 2016By Lisa Pradhan

Owing to a weaker than expected market condition, Daimler has decided to cut its profit forecast for its truck division. The move comes in the wake of its other plans such as more job cuts in its Brazil truck division, and the company’s significant investment of a huge sum owing to another airbag recall.

As per the company’s statement released recently, the airbag recall would cost the company about 500 million euros. Daimler also revealed that it would go ahead with aggressive job cuts at its Brazil truck division which would result in extra costs of 100 million euros towards voluntary severance packages. Due to all these factors, earnings before interest and taxes (EBIT) from operations and sales of Daimler trucks is expected to be significantly lower in 2016 as compared to 2015.

Before the predictable flow of cash towards the airbag recall and job cuts, Daimler had anticipated EBIT from ongoing business the previous year and an insignificant decrease in unit sales. Last year, trucks were a fifth of Daimler’s EBIT and accounted for a quarter of total sales.

Daimler also said that these aspects will not contradict its previous forecast for a slightly higher group EBIT this year as compared to the previous year.

See Also:

Daimler Trucks India Sales Up by 29% in 2015

Daimler Foresees Sound Growth with Infrastructural Developments in India

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