Daimler to implement cost-cutting measures to offset sharp loss in 2019

The Mercedes brand retained its title as the world's top-selling premium automaker in 2019

The Mercedes brand retained its title as the world's top-selling premium automaker in 2019

Mercedes saw record sales to retain its title as the world's top-selling premium automaker but net profit fell to 2.7 billion euros from 7.6 billion hurt by 4.2 billion euros in charges related to diesel-related probes and legal proceedings.

Shares in the German auto manufacturer climbed 2% after the earnings, which had been flagged in preliminary figures on January 22. To offset its extra costs Daimler is restructuring, scrapping its Mercedes-Benz X-Class pick-up truck and downsizing its mobility services unit past year, meaning further charges of 828 million and 405 million euros, respectively. Mercedes-Benz Vans (4%), Daimler Buses (6%) and Daimler Mobility (3%) said sales or business increases past year; however, the Daimler Truck unit offset some of those gains with a drop of 6%, but the slide in profits was fairly small.

For the fiscal year of 2019, earnings before interest and taxes (EBIT) of German carmaker Daimler fell by more than 60 percent to 4.3 billion euros (4.7 billion US dollars), the company announced on Tuesday.

The 50-year-old Swede, formerly the company's research and development chief, took over as CEO last May.

"We are going to restore the financial health of this company and take the measures we have to take to get back on track", Kaellenius said.

He added: "To achieve that, we have substantially ramped up our investments into new technologies".

"(M) easures to cut costs and to increase cash flows are necessary", he said.

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"Daimler is under more pressure than ever after the catastrophic results for 2019", NordLB bank analyst Frank Schwope commented. "We are determined to materialise our technological leadership and at the same time to significantly improve profitability".

Looking ahead, Daimler said group unit sales for 2020 were likely to come in "slightly below" the previous year, while revenue was expected to be "at the level of 2019".

While Mercedes-Benz Cars sold a record 2,385,400 cars, the group was hit by the performance of its Vans division, which recorded a £2.6bn (Rs 23,962 crore) loss.

Daimler Trucks & Buses expects a significant revenue decrease while Daimler Mobility division forecasts revenue at the prior-year level.

The Stuttgart-based carmaker said it would seek to cut administrative and personnel costs by more than €1.4 billion by the end of 2022 to help offset expenses from legal proceedings and investments in new technologies. Group EBIT would, however, be "significantly above" 2019.

"The focus in the coming years will be on the significant improvement of our margins as well as the cash flow", said Chief Financial Officer Harald Wilhelm in a statement.

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