Mercedes-Benz EQV 300 electric vehicle. (Photo by Sean Gallup/Getty Images)
Luxury vehicle maker Mercedes’ parent Daimler shocked investors Wednesday with its 3rd profit warning for 2019, prompting speculation it might have to shake up its management, seek a merger maybe with BMW, or raise new capital.
Daimler said profits were under pressure at Mercedes because of diesel scandal costs, while margins at its van and truck subsidiaries were also falling.
Daimler said in a statement that 2019 earnings before interest and tax (EBIT) are likely to slump to 5.6 billion euros ($6.2 billion) from 11.1 billion ($12.3 billion) in 2018. Daimler said it might have to find between 1.1 and 1.5 billion euros ($1.7 billion) following law suits relating to diesel vehicles which it hadn’t yet included in its estimates. Daimler had warned about this cost in October, without giving details.
By midday in Europe, Daimler shares were down nearly 1% at 45.74 euros, according to Reuters’ data, after plunging initially following the news. Daimler shares had risen close to 60 euros in April last year, before the series of profit warnings.
Daimler said the return on sales at Mercedes for 2019 will fall to 4% compared with 7.8% the previous year, while at vans it will be minus 15.9% after plus 2.3%, and trucks will slip to 6.1% from 7.2%.
An official financial statement on 2019 for Daimler is scheduled for February 11.
Investment researcher Evercore ISI, in a research note headlined “Management shake-up in need”, said new management blood may be required.
“This is now Daimler’s third significant warning in less than 9 months. What’s truly remarkable is the fact that CEO Ola Kaellenius hasn’t taken more action with respect to his divisional leadership teams. Broadly speaking, the same people are in charge. We have raised this before,” Evercore ISI analyst Arndt Ellinghorst said.