European Corporate Roundup for Friday

Features Dow Jones Newswires

European corporate news is in focus Friday, with auto makers Daimler and Volvo reporting mixed profit updates.

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German auto maker Daimler, which produces the Mercedes-Benz brand of luxury cars, reported a sharp fall in third-quarter profit as its flagship car was hammered by airbag-related recalls and the cost of fixing emissions controls on diesel vehicles.

Daimler said net profit fell to EUR2.18 billion ($2.58 billion) from EUR2.60 billion a year ago, while earnings before interest and taxes--the measure most closely watched by investors--declined 14% to EUR3.46 billion. Profit was hit by currency fluctuations and charges, including EUR230 million to cover recalls connected to airbag issues and EUR223 million to fix or swap tainted diesel vehicles.

Earnings were also hit by costs from the launches of Mercedes' new flagship S-Class, X-Class light-utility vehicles and the company's first electric heavy truck.

The biggest impact on earnings, however, was from mounting costs related to the industry's diesel-emissions woes.

"Around 60% of the vehicles affected in Germany have been updated," Chief Finance Officer Bodo Uebber told reporters on a conference call.

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Total revenue--including Mercedes-Benz, Daimler Trucks and a growing stable of car-sharing and ride-hailing operations--rose 6% to EUR40.8 billion.

The downbeat results from Daimler--the first of Germany's big auto makers to report this earnings season--could signal more bad news to come as the fallout from the diesel emissions-cheating scandal that began with Volkswagen in 2015 continues to spread throughout the industry.

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Swedish truck maker Volvo reported a forecast-beating increase in third-quarter net profit, boosted by rising truck orders and a continued rebound in its construction-equipment unit.

Overall demand was stellar during the quarter, with truck orders up 32% on the year and construction equipment orders up by 45%.

Shares in Volvo top the Stoxx 600 Europe after the better-than-expected earnings, while the 2018 outlook for the company is solid, said UBS.

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Ericsson shares have been boosted in early trade as investors react with relief to in-line third-quarter earnings and both an improving top-line and margins within its networks business, said UBS.

The net loss at Sweden's Ericsson widened sharply in the third quarter amid increasing restructuring charges and provisions as the company continued to navigate tough markets and a huge strategic shakeup.

The supplier of wireless-communications gear reported a net loss for the three months ended Sept. 30 of 4.45 billion Swedish kronor ($547.5 million) compared with a loss of SEK233 million a year earlier, missing analysts' expectations for a loss of SEK1.35 billion, according to a FactSet poll. Revenue was down 6.4% at SEK47.8 billion.

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Metro, the German wholesale and food retail company, said that sales in the fourth quarter rose modestly on a like-for-like basis due to positive acquisition effects and the company's strong online business.

Sales in the fourth quarter rose 0.5% to 9.2 billion euros ($10.88 billion) compared with EUR9.1 billion for the period last year. This rise was offset by currency effects, with sales in the local currency increasing by 1.6%.

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TomTom reported a swing to a loss for the three months ended Sept. 30 and said that it has reduced its revenue guidance for the full year.

The Dutch company posted a net loss of 5.3 million euros ($6.3 million) for the third quarter, compared with a net profit of EUR595,000 a year earlier, citing a one-off charge of EUR15.4 million related to the restructuring of its consumer-sports division.

TomTom's third-quarter performance was above consensus when adjusted for the one-off restructuring charge for its consumer-sports division, both UBS and ING said.

The company's automotive and licensing businesses combined performed 3% above consensus, UBS said.

(END) Dow Jones Newswires

October 20, 2017 07:56 ET (11:56 GMT)