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Daimler said on Wednesday it expects to report an operating loss and a big drop in sales for the second quarter although the German carmaker is cautiously optimistic that other markets will follow the strong recovery it has seen in China.

Daimler said sales of its Mercedes-Benz brand dropped by almost 19% to around 870,000 cars in the first half, although the brand achieved its best second quarter so far in China in terms of sales.

"We are cautiously optimistic that other markets will gradually follow this development," Chief Executive Ola Kaellenius told a virtual annual shareholders meeting.

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"As soon as demand picks up again, we can increase production again quickly and efficiently."

Daimler, which reports second-quarter results on July 23, said it expected a significant decline in sales for the period, a negative adjusted group operating profit and a negative free cash flow in the industrial business.

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It said the development of sales in the passenger car business in recent weeks added to its sense of cautious optimism.

This story has been published from a wire agency feed without modifications to the text.