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Daimler first quarter hurt by China slowdown, raw material costs

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By Reuters
Daimler first quarter hurt by China slowdown, raw material costs
FILE PHOTO: A Mercedes Benz logo is pictured outside of Mercedes Benz branch in Stuttgart, Germany, April 15, 2019. REUTERS/Ralph Orlowski/File Photo   -   Copyright  Ralph Orlowski(Reuters)

FRANKFURT (Reuters) – Daimler’s first-quarter operating profit fell 16 percent despite a 718 million euros one-off gain, it said on Friday, as a 4 percent drop in sales of Mercedes-Benz cars, higher raw material costs and investments weighed on earnings.

Earnings before interest and tax (EBIT) dropped to 2.80 billion euros, below the 2.89 billion expected by analysts. [nL5N2275IK]

Daimler reiterated it expected slight growth in unit sales, revenue and EBIT this year, but only after cost-cutting measures are implemented.

“We cannot and will not be satisfied with this, as expected, moderate start to the year. We now have to work hard to achieve our targets for 2019,” Chief Executive Dieter Zetsche said in a statement to accompany his final quarterly results as boss.

Daimler said the return on sales at Mercedes-Benz cars fell to 6.1 percent, down from 9 percent a year earlier, due to a 3 percent fall in China sales and growth in lower-margin compact vehicles.

Daimler financial services saw a 718 million euros one-off gain thanks to a valuation gain following the merger of the mobility services divisions of Daimler and BMW.

(Reporting by Edward Taylor; editing by Tassilo Hummel and Jason Neely)