Daimler warns of €1.5bn hit to profits from Dieselgate litigation
Daimler has warned that its 2019 profits, already forecast to be the lowest in a decade, will be hit by up to €1.5bn in Dieselgate-related litigation costs, compounding the Mercedes-Benz owner’s struggle to fund a shift to battery-powered vehicles.
In an ad hoc announcement, the Stuttgart-based group warned that earnings before tax and interest, excluding legal expenses, would be halved, from just over €11bn in 2018, to €5.6bn in the last financial year.
It added that losses at the Mercedes-Benz Vans division had ballooned to €2.4bn.
The results mark the largest annual decline for the automaker since the height of the financial crisis, as it undergoes a radical restructuring to prepare for strict EU emissions regulations.
If Daimler, which has seen sales of gas-guzzling SUVs soar in recent years, fails to achieve a fleet-wide measure of around 100g CO2 per km by 2021, it could face upwards of €1bn in fines from Brussels.
Last year, the carmaker said it would axe more than 10,000 jobs in an effort to save more than $1bn in personnel costs, as it struggles to pay for the development of electric vehicles.
The premium brand was also a casualty of the decline in the global car industry, and in particular the slowdown in China, by far its largest market.
The company is also facing a slew of legal claims in relation to the alleged manipulation of diesel emissions levels in the US, Canada and Germany.
In September 2019, Daimler agreed to pay an €870m fine issued by prosecutors in Stuttgart over allegations that almost 700,000 of its diesel vehicles failed to comply with regulations, although it continued to challenge the German Federal Motor Transport Authority’s justification for recalling the cars affected.
Earlier this month, more than 200 institutional investors filed a claim in a court close to Daimler’s headquarters, seeking €900m in damages from the Mercedes-Benz owner for failing to disclose the use of diesel emissions cheat devices, which led to a slump in the company’s share price.