Tue, Jun 25, 2019 - Page 10 News List

Daimler warns over profit outlook

Reuters, FRANKFURT, Germany

Daimler AG on Sunday cut its earnings outlook for this year after lifting provisions for issues related to its diesel vehicles by hundreds of millions of euros, sending its shares lower yesterday.

Group earnings before interest and tax this year are now expected to be at last year’s level, the carmaker said, against a previous estimate for a slight increase.

Earnings would be affected in the second quarter, it said.

The revision is related to an expected increase in expenses linked to “various ongoing governmental proceedings and measures” with regard to Mercedes-Benz diesel vehicles, the company said.

The increase in the provision is likely to be “a high three-digit million euro amount,” it added.

A spokesman declined to be more specific on the size of the provision increase and would not elaborate on the nature of the diesel issues behind the decision.

However, Sunday’s profit warning follows news over the weekend that Daimler must recall 60,000 Mercedes diesel cars in Germany after regulators found that they were fitted with software aimed at distorting emissions tests.

The German Federal Ministry of Transport and Digital Infrastructure said it was expanding its investigation into further models.

The Stuttgart-based owner of Mercedes-Benz is being investigated for its diesel emissions in Europe and the US. It issued a similar profit warning on diesel issues in October last year.

In April, EU antitrust regulators charged BMW AG, Volkswagen AG and Daimler with colluding to block the rollout of clean emissions technology. Daimler was a whistleblower in that case and said at the time that it expected to avoid fines.

Daimler also said it was reducing its forecast for the return on sales for Mercedes-Benz vans. It now sees a return between minus-2 percent and minus-4 percent, below its previous forecast of a return on sales of 0 to 2 percent.

Car executives were due to meet yesterday with government officials and experts at the chancellery in Berlin to talk about the future of the car industry.

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