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Electro-switch and diesel woes drag Daimler down

Jill Petzinger
·Germany Correspondent, Yahoo Finance UK
·2-min read
STUTTGART, GERMANY - FEBRUARY 10: The corporate headquarter of Daimler AG is seen prior to Daimler's annual press conference to announce financial results for 2019 on February 10, 2020 in Stuttgart, Germany. Daimler, one of Germany's biggest and most prestigious companies, had a difficult 2019, due partially to ongoing lawsuits related to its previous diesel emissions manipulations. (Photo by Thomas Niedermueller/Getty Images)
Daimler's bottom line was hammered in 2019 by €4.2bn worth of charges in fees and fines related to the ‘dieselgate’ scandal. (Thomas Niedermueller/Getty Images)

The financial fallout from the diesel emissions-cheating scandal continued to hurt German luxury carmaker Daimler (DAI.DE) last year. The Mercedes-Benz owner, which issued three profit warnings in 2019, today reported weak results for the 2019 financial year, with earnings before taxes and interest plunging by 60% from the previous year, to €4.3bn (£3.6bn, $4.7bn).

The Stuttgart-based carmaker saw profits shrink from €7.6bn to €2.7bn in the year, despite record deliveries.

“While our 2019 results reflect the continued strong demand for our attractive products, we can’t be satisfied with the profit,” said Daimler chief executive Ola Källenius.

The company also slashed its dividend to €0.90 per share — the lowest since the financial crisis — and has also cut staff bonuses.

Read more: Daimler plans to 'cut up to 15,000 jobs'

Daimler has retained its crown as the world’s best-selling premium carmaker, selling a record 3.34 million units last year. But its bottom line was hammered by €4.2bn worth of charges in fees and fines related to the ‘dieselgate’ scandal. It also booked €828m in restructuring costs in the vans division.

Daimler is ramping up a drastic cost-cutting plan this year, with the aim of saving over €1.4bn by 2022. It will slash up to 15,000 jobs from its workforce of around 300,000 over the next couple of years in a move to save money. It will also stop manufacturing its X-class pickup in May this year.

Daimler is under major pressure to increase its electric-car portfolio. With Tesla snapping at its heels and planning to build a huge plant near Berlin, all German carmakers are pouring billions into the switch to electro-mobility. Daimler is late to the game however, although it has said it will bring out 20 new plug-in hybrid and fully-electric Mercedes models by 2022.