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Bloomberg
Daimler AG cut its profit forecast for the third time in a year, this time blaming the burden of handling longstanding proceedings around diesel emissions a month after a new guard took the helm at the world’s biggest luxury carmaker.
The German manufacturer is facing investigations in Europe and the US over allegedly excessive pollution from its diesel vehicles. German authorities last year slapped Daimler with recalls and the company agreed to software upgrades for millions of cars in Europe, while escaping fines so far.
The company boosted provisions to deal with governmental proceedings and diesel measures by a “high†three-digit million euro amount. This will cut Daimler’s full-year profit forecast to level with last year, according to a stock filing.
The additional burden will hit second-quarter earnings, and full-year profit before interest and tax is now forecast to be “in the magnitude of the previous year,†after targeting slightly higher earnings in 2019. The Stuttgart-based automaker had already warned of an extremely challenging business environment amid trade woes and slowing economic growth.
Daimler’s latest guidance cut, following two profit warnings related to trade, new emissions tests in Europe and a legal dispute on air conditioning coolant last year, marks a bumpy start for new Chief Executive Officer Ola Kallenius and Chief Financial Officer Harald Wilhelm.
Their veteran predecessors Dieter Zetsche and Bodo Uebber had outlined plans for “comprehensive countermeasures†earlier this year to restore profi- tability with cost cuts. The manufacturer has so far given little away on that push and the financial fallout of its diesel-engine woes remains difficult to predict.
Global automakers are wres-tling with increasing regulatory scrutiny and pressure on earnings amid record development expenses to roll out electric and self-driving vehicles. Governments have stepped up their oversight on diesel emission in wake Volkswagen AG’s 2015 cheating to dupe tests in 11 million diesel vehicles worldwide.