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Mercedes car profits help offset Q3 trucks slump at Daimler

Daimler's third-quarter operating profit rose 23 percent as higher earnings from passenger cars offset falling demand for trucks, helping the group to keep to its forecast for higher annual profit.

Earnings before interest and tax (EBIT), adjusted for special items, climbed to 4.01 billion euros ($4.37 billion) in the three months through September, above the 3.8 billion euros forecast in a Reuters poll mainly thanks to margin improvement at the Mercedes-Benz cars division.

However, falling demand for trucks in North America and a slump in sales in markets like Brazil forced Daimler to lower its full-year forecast for revenue.

Instead of expecting a slight increase in revenue, the Stuttgart-based company said it now expects it to remain flat, sending its shares more than 2.5 percent lower in early trade.

"Daimler's turnaround of the Mercedes brand has been exceptional but we feel that this is well understood and leaves little room for positive surprises or indeed unrecognized earnings momentum," Arndt Ellinghorst, analyst at Evercore ISI, said in a note on Friday.

Swedish truckmaker Volvo <VOLVb.ST> on Friday forecast a slide in heavy-duty truck markets on both sides of the North Atlantic next year.

Daimler said the return on sales at Mercedes-Benz Cars rose to 11.4 percent, from 10.4 percent in the year-earlier period, thanks to sales of the new E-class and demand for sports utility vehicles.

Mercedes wants to overtake German rival BMW <BMWG.DE> to claim the title of biggest selling luxury carmaker.

The profitability of the Mercedes-Benz Cars division rose 23 percent, helped by an 11 percent increase in car sales that was driven by demand for sports utility vehicles and the new E-Class.

However, Daimler Trucks and Daimler Buses could not match the prior-year quarter's earnings, in part due to a sharp fall in demand in key markets like Brazil.

Daimler nonetheless stuck with its group forecast for adjusted full-year group profit (EBIT) to slightly beat 2015 levels.

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