Daimler third-quarter profit falls on diesel costs, special items

BERLIN (Reuters) - Daimler's third-quarter operating profit declined, as the cost of making diesel engine cars run cleaner and other special items outweighed record sales of Mercedes-Benz luxury models.

Earnings before interest and tax (EBIT) at the German automotive group plunged 14 percent to 3.46 billion euros ($4.08 billion) in the July-to-September period, Daimler said on Friday, in line with the 3.43 billion-euro consensus forecast in a Reuters poll of banks and brokerages.

Daimler last quarter spent 223 million euros to update over 3 million current and older Mercedes diesel models in Europe to curb pollution and help avert driving bans.

A recall of more than 1 million passenger cars and sport-utility vehicles worldwide to address potential unintended air bag deployments announced this week will add another 230 million euros in costs, it said.

The cars and trucks manufacturer stuck with its guidance for a significant increase in group EBIT this year.

It said it now expected EBIT at its trucks division to also significantly exceed year-ago levels, having previously guided for flat EBIT.

Earnings at Daimler Trucks, the group's second-largest unit by revenue, jumped by a third to 614 million euros, benefiting from strong momentum in North America where heavy-truck orders rose to the highest in over two years in September.

Daimler said it expects EBIT at its financial services division to significantly beat year-earlier levels, having previously guided for earnings to rise only slightly.

Third-quarter deliveries of Mercedes luxury cars rose 7.9 percent to a record 573,026 models, powered by strong demand for sport-utility vehicles such as the GLA and GLC models and the E-Class.

That beats the 1.2 percent gain to 499,467 autos at rival BMW, which Mercedes last year eclipsed as the world's biggest premium automaker by sales, and the 3.6 percent rise to 471,850 cars at Volkswagen's Audi brand.

($1 = 0.8471 euros)

(Reporting by Andreas Cremer; Editing by Maria Sheahan)