Mercedes-Benz, a leading automotive manufacturer, saw a boost in its shares after announcing stable second-quarter profits. The company’s shares rose by as much as 5.9% following the announcement, before easing to 2.9% by late morning trade.

Cost Cuts and Chinese Competition

Mercedes’ profit guidance for its core car business and posted an above-forecast 4.0% adjusted return on sales in the second quarter, comfortably within the 3% to 5% range. However, the company faces intense competition from Chinese rivals, which has cast a shadow over its core business.

The results were a rare respite for investors in the German automotive sector, which has been battered by mounting tariff costs and intensifying competition from Chinese rivals. Rival BMW slashed its outlook in June as a downturn in the Chinese car market intensified pressure on sales.

European Market and Production

Mercedes’ second-quarter operating profit rose 22% to €1.5 billion ($1.7 billion) despite a 3% revenue decline, helped by cuts to administrative and research & development spending, as well as strong earnings at its financial services and vans units. The company is also boosting its production presence in cheaper Eastern European countries such as Hungary and Poland.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.