German carmaker Daimler reports falling profits for fiscal 2019

Daimler profits plunge in 2019 on 'dieselgate' costs

Daimler profits plunge in 2019 on 'dieselgate' costs

Despite its Mercedes-Benz luxury vehicle unit setting a new sales record in 2019, Daimler AG reported a 64% drop in full-year profits to 2.7 billion euros, or $2.9 billion, from 7.6 billion euros, or $7.8 billion, in 2018.

Daimler said its net profit fell to €2.7 billion, down from €7.6 billion the year earlier, despite record deliveries of Mercedes cars that saw the brand retain its title as the world's top-selling premium automaker.

Daimler's vans unit was especially hard hit, reporting an operating loss of 3.1 billion euros, while at the flagship cars division operating profit was slashed in half, to 3.4 billion euros.

Daimler Group posted a net profit of £2.3 billion (Rs 21,198 crore) in 2019, compared to £6.4bn (Rs 58,989 crore) the previous year.

That was down from 7.6 billion euros a year earlier.

Källenius said: "The future of the Daimler lies in CO2-neutral mobility as well as in consistent digitisation, leveraging its full potential in our products and processes".

Mercedes eliminated its X-Class pick-up truck and restructured its mobility services unit in 2019, which means additional charges of 828 million and 405 million euros, respectively.

On top of those costs, massive investments in new technology such as battery-powered and automated cars weighed on profitability. Kaellenius said restructuring at the vans division would deliver results this year but cautioned Daimler's passenger auto operations face a tough couple of years as the company launches electric and hybrid vehicles.

"We are determined.to significantly improve profitability", said Kallenius, who took the reins at Daimler after the 13-year reign of Dieter Zetsche.

Looking ahead, Daimler said group unit sales for 2020 were likely to come in "slightly below" the previous year, while revenue was expected to be "at the level of 2019".

Mercedes-Benz is readying a major push into electric and hybrid cars, with the proportion of electrified vehicles in its fleet set to jump to 9% from 2% in 2020 with production of an electric A-Class, electric van and electric SUV. Group EBIT would, however, be "significantly above" 2019.

The firm stated it aims to maintain property, plants and equipment and R&D spending at the same stage as the a year ago.

It will look for financial savings of over 1.4 billion euros by the end of 2022 via cuts in administrative and personnel costs.

"The focus in the coming years will be on the significant improvement of our margins as well as the cash flow", said Chief Financial Officer Harald Wilhelm in a statement. "Our goal is to ensure solid net liquidity to protect the necessary investments, and at the same time, to pay attractive dividends".

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