The car manufacturer Mercedes-Benz DE0007100000 has continued to struggle due to weak business in China at the beginning of the year and is warning of the consequences of US import tariffs.

The DAX-listed company announced on Wednesday that the impact of US trade policy on demand cannot currently be reliably assessed given the volatile nature of developments and possible countermeasures. However, if the current trade policy persists, operating results, financial resources, and profitability in the divisions are likely to suffer significantly. The Stuttgart-based company also experienced another drop in profits in the first quarter. The share price initially remained virtually flat.

Mercedes shares were down half a percent on the Tradegate trading platform before trading on Xetra. The stock has had a difficult time with investors in recent months, losing more than a quarter over the past year. So far this year, the price performance has been balanced.

JPMorgan analyst Jose Asumendi wrote that earnings before interest and taxes (EBIT) were somewhat weaker than expected in the market sentiment survey compiled by the company due to the van division. However, the passenger car division performed as expected. Jefferies expert Philippe Houchois interpreted the company's outlook statements as a withdrawal of the previous forecast. UBS expert Patrick Hummel shared a similar view, commenting that this was of little help to investors. After all, the passenger car division had benefited from strong cost discipline.

The company stated that, without taking into account the tariffs that have come into effect, the previous outlook statements would still stand. Mercedes had previously warned that a US import tariff of 10 percent could reduce the operating margin of the passenger car business by one percentage point. At the beginning of April, US President Donald Trump then imposed a 25 percent surcharge on imports from the EU. Analysts therefore assume that the current situation will reduce profitability by approximately 2.5 percentage points. Excluding the tariffs, Mercedes previously expected an adjusted return on sales of 6 to 8 percent in the passenger car business, and 10 to 12 percent for the van business.

In the first quarter, profits plummeted by almost 43 percent to €1.73 billion, the company said. Revenue fell by a good 7 percent to €33.2 billion, due to the already reported decline in global sales. Earnings before interest and taxes (EBIT) fell by almost 41 percent to €2.29 billion due to the difficult situation. In the important passenger car division, the adjusted operating profit margin shrank by 1.7 percentage points to 7.3 percent.