Daimler's Mercedes sales drive higher but charges put brakes on profit

Daimler's Mercedes sales drive higher but charges put brakes on profit

Daimler reported a 64per cent fall in 2019 net profit, its largest drop in a decade, despite record high Mercedes-Benz sales as CEO Ola Kaellenius signed off on more than 5 billion euros (US$5.46 billion) in legal and restructuring charges.

FILE PHOTO: The logo of German car manufacturer Mercedes-Benz is seen at Brussels Motor Show
FILE PHOTO: The logo of German car manufacturer Mercedes-Benz is seen at Brussels Motor Show, Belgium January 9, 2020. REUTERS/Francois Lenoir/File Photo

STUTTGART, Germany: Daimler reported a 64per cent fall in 2019 net profit, its largest drop in a decade, despite record high Mercedes-Benz sales as CEO Ola Kaellenius signed off on more than 5 billion euros (US$5.46 billion) in legal and restructuring charges.

Shares in the German automaker rose 2per cent after the earnings which had been flagged in preliminary figures on Jan. 22.

Mercedes retained its title as the world's top-selling premium automaker but net profit fell to 2.7 billion euros from 7.6 billion reflecting 4.2 billion euros in charges related to diesel probes and legal proceedings.

Mercedes scrapped its X-Class pick-up truck and restructured its mobility services unit last year, meaning further charges of 828 million and 405 million euros, respectively.

GETTING BACK ON TRACK

Kaellenius said restructuring at the vans division would deliver results this year but cautioned Daimler's passenger car operations face a tough could of years.

"We are going to restore the financial health of this company and take the measures we have to take to get back on track," Kaellenius said. "Yes, it will take some time on some of the issues. There are no quick fixes."

The 50-year-old Swede is the company's former research and development chief and took over as CEO last May.

He is tasked with safeguarding Daimler's success as the industry undergoes sweeping changes including tougher environmental rules and a costly shift to electric power.

That challenge is seen in Daimler's share performance, with the stock down 12per cent year to date versus an 84per cent rise in electric car producer Tesla , Refinitiv Eikon data shows.

Mercedes-Benz will launch an electric A-Class and an electric van this year.

The company said it aims to keep property, plants and equipment and R&D spending at roughly the same level as last year.

It will look for savings of more than 1.4 billion euros by the end of 2022 through cuts in administrative and personnel costs.

"Our goal is to ensure solid net liquidity to protect the necessary investments, and at the same time to pay attractive dividends," Chief Financial Officer Harald Wilhelm said.

Alongside taking hefty charges to end 2019, the company slashed its dividend by 72per cent to 0.90 euros per share.

(Reporting by Edward Taylor; editing by Michelle Martin and Jason Neely)

Source: Reuters

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