Daimler warns that annual profits for 2019 may take a hit amidst the diesel emissions scandal

German multinational automotive corporation, Daimler, had previously issued a warning for an imminent decline in profits in 2019. On Wednesday, the luxury automaker reiterated the warning and highlighted issues like diesel scandal and production complications that may contribute to the reduced profit. Daimler also added that its sizeable investment directed at switching to electric vehicles may also weigh on the overall annual profit.  

In terms of figures, the car manufacturer stated that before interest and tax, its annual profit for 2019 may be capped at around €5.6 billion as compared to a significantly higher €11.1 billion in 2018.

Daimler’s Preliminary Assessment Doesn’t Account For Legal Costs

As per Daimler’s preliminary assessment, costs related to the diesel scandal may amount to as much as €1.1 to €1.5 billion for the German luxury car manufacturer. This legal and governmental expenditure is expected to hit the Daimler’s primary unit, Mercedes-Benz, the hardest. The preliminary figure, as per the announcement, does not account for the legal costs.

According to Daimler’s estimate, the return on sales of its vans is expected to drop sharply to -15.9% in 2019. In 2018, the figure was noted at 2.3%. At the Mercedes-Benz cars unit, the company added, it would decline to 4% in 2019 as compared to 7.8% in 2018. Lastly, trucks will see a slump to 6.1% versus 7.2% in 2018.

The preliminary figure, on the other hand, does include the one-off $300 million cost aimed at getting Daimler’s Your Now mobility services back on track and another $300 million for the review of the vans product portfolio.

Daimler To Announce Full-Year Performance Results On February 11^th

Daimler’s recently appointed Chief Executive, Ola Kaellenius, is expected to reveal the company’s full-year performance results on February 11^th. As per the sources, things aren’t, however, entirely grim at Daimler. The count of Mercedes-Benz cars that the company sold in 2019 came out at 2.34 million that marks the ninth year in a row for Daimler to post record-high sales in this unit. Following 2019’s record sales, the company is certain to keep its title of the largest worldwide seller of luxury cars.  

Originally, Daimler had warned its annual profits to take a hit in 2019 in October when it anticipated that the legal costs associated with the diesel emissions scandal are likely to expand the company’s expenditures in the upcoming months. At the time of writing, Daimler is trading around €45.76 in the stock market that marks almost the same level at which it started the year 2019.