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Daimler issues FY'19 profit warning, says diesel legal costs could reach €1.5B

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Daimler issues FY'19 profit warning, says diesel legal costs could reach €1.5B

German car, truck and bus maker Daimler AG on Jan. 22 issued a profit warning for its full-year 2019 earnings and said it may incur up to €1.5 billion in costs in the period for diesel-related legal proceedings.

The Mercedes-Benz owner reported preliminary full-year 2019 operating profit of €5.6 billion, down sharply from €11.1 billion in 2018 and below the S&P Global Market Intelligence mean consensus estimate of €6.70 billion.

The company warned that this does not include a further €1.1 billion to €1.5 billion of additional expenses it expects to cover costs related to legal proceedings relating to diesel vehicles in several markets.

Daimler previously indicated that it expected group operating profit to be "significantly below" the previous year.

Without the impact of the diesel costs, the Mercedes-Benz cars unit reported preliminary operating profit of €3.7 billion, down from €7.2 billion in 2018, yielding a return on sales of 4%. This came amid a global downturn in car sales in 2019, particularly in China.

Daimler's trucks division's operating profit was €2.5 billion, down from €2.8 billion in the previous year, with a return on sales of 6.1%.

Mercedes-Benz Vans reported a €2.4 billion operating loss compared with a €300 million profit in 2018.

Daimler Buses reported an operating profit of €300 million with a 6% return on sales, in line with the previous year's results.

Daimler Mobility, which includes its car-sharing joint venture with rival BMW, achieved an operating profit of €2.1 billion, up from €1.4 billion in 2018.

Daimler will report full fourth-quarter earnings Feb. 11. In morning trading Jan. 22 its shares were 1.5% lower at €45.70.