That’s before another 1.1 billion to 1.5 billion euros in legal and governmental costs in various markets where Mercedes-Benz diesel cars and vans are sold.
Daimler said that it expects the return on sales at Mercedes-Benz Cars, which includes the Smart brand, to slump to 4 percent in 2019, compared to 7.8 percent in 2018.
The weak earnings contrast with Daimler’s car sales. It sold 2.34 million Mercedes cars in 2019 for a ninth consecutive year of record sales, putting the automaker in pole position to retain the title of world’s biggest-selling premium car brand.
Daimler had a rough year in 2019 related to trade tensions, tariffs and a general slowdown in the global automotive market, while production hiccups affected key SUVs.
Daimler’s diesel pollution levels are being investigated by prosecutors in Stuttgart, Germany, where it is headquartered, as well as by the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB).
Earlier this month, investors sued Daimler for $1 billion in Germany, accusing it of concealing the use of emissions cheating software. Daimler denies wrongdoing.
The profit warning is the third since Ola Kallenius took over from long-standing Daimler CEO Dieter Zetsche in May, and the fifth in around 19 months. Kallenius will present full-year earnings on Feb.11.
Juergen Pieper, cars analyst at brokerage Metzler, said Mercedes’ 4 percent margin was the weakest among German carmakers.
“Daimler is not getting its problems under control fast enough. The company is in the midst of a major crisis”, he said.
Others saw scope for optimism.
“Daimler looks likely to benefit from the strong momentum of upcoming product launches from 2020 onwards, which should help achieve incremental cost savings and pricing power improvement versus peers,” JP Morgan said in a note to client, adding its recommendation for the stock remained “overweight”.
Font: Automotive News Europe
