Daimler Cuts Dividend As Profit Dives, Merger Pressure Mounts.
„Given these disruptive times it might be time for Daimler to think abfout a merger“
Luxury vehicle and truck and van maker Mercedes’ parent Daimler slashed its dividend and reported net profit more than halved in 2019, renewing speculation that it might be forced to seek a merger.
Last month Daimler announced its 3rd profit warning for 2019 and said it might have to find between 1.1 and 1.5 billion euros ($1.7 billion) following law suits relating to diesel vehicles which it hadn’t yet included in its estimates. Daimler had warned about this cost in October, without giving details.
Daimler announced Tuesday the dividend was cut to 0.9 euros a share from 3.25 euros in 2018, while 2019 net profit fell to 2.7 billion euros ($3 billion) from 7.6 billion euros ($8.3 billion) the previous year. This despite Mercedes retaining its title as the world’s top selling upmarket automaker.
Daimler shares actually rose bit, up 0.3% to 43.14 euros, given that most of this bad news was already known. Daimler shares had risen close to 60 euros in April last year, before the series of profit warnings.
Norddeutsche Landesbank Girozentrale analyst Frank Schwope described the results as ‚catastrophic“ and said the company was falling behind in the race to introduce electric cars.
„Given these disruptive times it might be time for Daimler to think abfout a merger,“ Schwope said.
„There are basically 3 options. 1) The German-German solution with BMW, 2) the German-French-Japanese solution with the already intertwined partners Renault-Nissan, and 3) the German-Swedish-Chinese solution with the major shareholder (in Daimler) Geely and the sister company Volvo. For Daimler it’s 5 minutes to midnight so it’s high time for changes,” Schwope said.
Daimler said it will launch an electric A class sedan and electric van this year. Daimler also confirmed its cost cutting plan would reach 1.4 billion euros ($1.5 billion) by the end of 2022. It booked charges of 4.2 billion euros ($4.6 billion) for diesel investigations.
Last month Daimler said the return on sales at Mercedes for 2019 will fall to 4% compared with 7.8% the previous year, while at vans it will be minus 15.9% after plus 2.3%, and trucks will slip to 6.1% from 7.2%.
Investors have called for a management shakeup and shareholders feaer they might be asked to stump up more capital.
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