Autos

Daimler slashes its dividend following profit warning

Key Points
  • Daimler said its net profit fell to 2.7 billion euros, down from 7.6 billion euros in the year earlier, despite record deliveries of Mercedes cars that saw the brand retain its title as the world's top-selling premium automaker.
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Daimler on Tuesday cut its dividend to 0.90 euros ($0.9818) a share after 2019 earnings more than halved, weighed down by restructuring and legal charges in what amounts to the third profit warning for new CEO Ola Kaellenius.

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

The Stuttgart-based carmaker said it would seek to cut administrative and personnel costs by more than 1.4 billion euros by the end of 2022 to help offset expenses from legal proceedings related to diesel pollution and investments into new technologies.

Speaking to CNBC's Annette Weisbach Tuesday, Kaellenius said over the same timescale, the cost of transforming Daimler's business would likely reach 2 billion euros.

He added that while historical one-off costs had affected bottom line earnings in 2019, underlying sales had also been soft and that there was now a renewed focus on cash flow.

Sprinter Van being assembled at the Mercedes-Benz Vans plant, in Ladson, S.C. 
Meghan Reeder | CNBC

"That is why we are taking measures both on the cost side in terms of efficiencies and restructuring to strengthen our profitability going into the future," he said.

Kaellenius said because of coronavirus fears, the firm had extended the Lunar New Year break at both its Beijing plants and salesrooms by one week. The CEO said a decision had been made to restart operations "cautiously" on Monday but it was too early to say how the loss of business would affect first-quarter profit or production.

The German carmaker cut its dividend proposal to 0.90 euros a share, down from 3.25 euros a share in 2018.

Net profit fell to 2.7 billion euros, down from 7.6 billion euros in the year-earlier period and earnings before interest and taxes dropped to 4.3 billion euros, from 11.1 billion in 2018.

—CNBC's David Reid contributed to this report.