June 16, 2021

Daimler 2019 profit down by half, diesel scandal weighs

2 min read

FRANKFURT: German luxury car maker Daimler on Wednesday issued its third profit warning for 2019, as costs related to the diesel scandal, heavy investment in electric vehicles and production issues weighed on earnings.

Daimler said that its 2019 earnings before interest and tax are expected to slump to 5.6 billion euros (US$6.2 billion) from 11.1 billion euros a year earlier.

Following its preliminary assessment, 2019 expenses for ongoing governmental and court proceedings relating to diesel vehicles amount to 1.1-1.5 billion euros, impacting its core Mercedes-Benz Cars unit – costs which are not yet included in the preliminary figure.

Daimler shares initially fell, then turned positive and were back down 0.1per cent at 0845 GMT.

The carmaker said that it expects return on sales at Mercedes-Benz Cars to slump to 4per cent in 2019, compared to 7.8per cent in 2018, while it would decrease to minus 15.9per cent from plus 2.3per cent at its vans unit and to 6.1per cent from 7.2per cent at its trucks unit.

One-off costs of 300 million for a review of its vans product portfolio as well as of another 300 million for the realignment of Daimler’s Your Now mobility services are included in the preliminary figure, it added.

New Daimler Chief Executive Ola Kaellenius is set to announce full-year earnings on February 11.

The weak earnings contrast with Daimler’s car sales. It sold 2.34 million Mercedes-Benz passenger cars in 2019 for a ninth consecutive year of record sales, putting the German carmaker in pole position to retain the title of biggest-selling premium car brand.

The carmaker had flagged an expected slump in 2019 earnings in October and at the time said that legal proceedings tied to diesel emissions may result in additional expenditures.

(Reporting by Arno Schuetze; editing by Thomas Seythal)