Mercedes parent firm sees new emission charges of up to €1.5 bil

FRANKFURT: Mercedes-Benz parent company Daimler said Wednesday that additional charges related to diesel emissions would weigh on its 2019 profits by between €1.1 billion and €1.5 billion.

In preliminary financial results, it said operating profit not including the “anticipated additional expenses for ongoing governmental and court proceedings and measures relating to Mercedes-Benz diesel vehicles” amounted to €5.6 billion last year.

That was down from €11.1 billion in 2018.

The effect would mean the 2019 results as a whole would fall “below earnings expectations,” Daimler added.

The news pushed Daimler’s stock to the bottom of the blue-chip DAX index around 9.45am in Frankfurt, falling 0.5% to €46.18.

The Stuttgart-based group had already warned earlier that operating profit would be “significantly below” the 2018 figure, even though 2019 revenues would be “slightly above” the previous year’s total of €167.4 billion.

Even without the new charges, the vans division is estimated to have made an operating loss of €2.4 billion.

Preliminary operating profit at the cars division was slashed almost in half, to €3.7 billion compared with €7.2 billion in 2018.

Daimler was forced to set aside €4.2 billion of provisions in April-June last year, covering a massive recall of cars allegedly fitted with software to cheat emissions tests.

The charge pushed it into its first quarterly loss in 10 years in the second quarter.

So far, German motor vehicle authority KBA has ordered that almost one million Daimler vehicles must be recalled, but the carmaker says none of the “motor control functions” highlighted by officials are illegal.

The company nevertheless agreed to pay an €870-million fine in September for having sold vehicles that did not conform with legal emissions limits since 2008.