PARIS (Reuters) - Daimler AG (DAIGn.DE) Chief Executive Dieter Zetsche called into doubt the 2013 profit target for the German car group’s core Mercedes-Benz business on Thursday, pointing to a tougher environment for vehicle sales.
Speaking at the Paris auto show, Zetsche said Mercedes’ 10 percent EBIT margin (earnings before interest and tax) goal had always been conditional on the business environment, which he said was becoming more challenging.
“As long as we don’t change it, what we have said is relevant,” the Daimler CEO said. “But ... we always said (the guidance) was explicitly within the framework of a given environment.”
This included factors such as gross domestic product, market developments and exchange rates.
“So it was always qualified in that sense. These parameters in recent times definitely have not improved and therefore what lies ahead of us is certainly becoming more challenging,” he said.
Zetsche added that next year’s results would also depend on the extent of an efficiency and streamlining program, dubbed “Fit for Leadership”, whose cost cuts have yet to be determined.
“We are not excluding any part of the company in the scrutiny for efficiencies,” he said.
Zetsche said he would be able to provide more detail about the 2013 target for Mercedes later this year after the company decides on the scale of cost cutting, adding that management was in very early discussions with worker representatives.
Daimler admitted in February that 2012 would be a “transitional” year with flat profits for both Mercedes and the group. But it sought to keep investors happy with the prospect that Mercedes would still meet the 10 percent target for next year first announced in May 2010.
Zetsche was forced to warn last week that it would fall short of its 2012 target for flat annual profits at Mercedes due to a deteriorating market in Europe and China.
“On that basis we will not be able as further guided to come to a level of about 5 billion,” he said. Last year, Mercedes posted 12 percent EBIT growth to 5.2 billion euros ($6.68 billion).
Zetsche declined to give a view on the future of aerospace and defense company EADS EAD.PA, in which Daimler holds a 15 percent direct stake and which is in talks about a merger with Britain’s BAE Systems (BAES.L).
“We made it very clear that we want to focus on our automotive business,” he said. “It is not our key responsibility to determine the future strategy of the aerospace industry.”
Writing by Jonathan Gould; Editing by James Regan