FRANKFURT — Automaker Daimler AG said Wednesday fourth-quarter net profit fell 49 per cent to 1.64 billion euros (US$1.87 billion) as the company's Mercedes-Benz luxury car business was buffeted by diesel woes and global trade conflict.

Revenue rose 7 per cent to 46.6 billion euros and the company said demand for its products remained strong.

The company's luxury car division, the mainstay of its earnings, saw profitability fall as it faced multiple challenges. The U.S.-China trade war meant new import taxes on cars made in the U.S. and sold in China. Bottlenecks in getting cars certified for emissions procedures also impacted the business. The operating profit margin on sales at Mercedes, a key earnings indicator, fell to 7.3 per cent from 9.5 per cent in the same quarter a year earlier.

CEO Dieter Zetsche, presenting his last annual results before handing off to successor Ola Kallenius in May, said that "for Daimler, 2018 was a year of strong headwinds."

Diesel engines came under new scrutiny from government since Volkswagen was caught rigging cars to cheat on emissions tests and other manufacturers' cars were found to have higher emissions in everyday driving than in testing. The German government has pushed carmakers to update engine software on already-sold cars to reduce diesel emissions. Companies encountered delays getting cars certified under new, tougher emissions testing introduced Sept. 1.

Lower profits at the Mercedes-Benz division outweighed a strong performance from the company's trucks division, which includes the Freightliner brand. Truck division operating earnings rose 27 per cent to 710 million euros.

For the full year, net profit fell to 7.6 billion euros from 10.6 billion in 2017. Revenues rose 2 per cent to 167.4 billion euros.