FRANKFURT, Germany (AP) – Daimler AG, maker of Mercedes-Benz cars, saw profit slump in 2019 and turned in a loss for the fourth quarter, underlining the pressures on the auto industry from economic headwinds and the need to invest in electric cars to meet tougher European Union (EU) limits on greenhouse gases
The company also saw deductions to earnings from regulatory troubles regarding the emissions of its diesel cars.
Net profit for the full year fell to EUR2.71 billion (USD2.94 billion) from EUR7.58 billion. In the fourth quarter of the year the Stuttgart-based company lost EUR11 million, compared with a profit of EUR1.64 billion in the year-earlier quarter.
CEO Ola Kallenius said, “We cannot be satisfied” with the results but added that the company was on track to cut costs and improve its earnings performance. Earnings slipped despite an increase in unit sales and revenue at the Mercedes-Benz division, a main pillar of the company’s profits.
Revenue increased by one per cent to EUR93.87 billion. But operating earnings at the division fell by more than half to EUR3.35 billion from EUR7.21 billion in 2018 as the company spent more on new models and technology and set aside more for diesel troubles. The company’s diesel emissions practices are under investigation in the United States (US) and Germany and it faces civil lawsuits over cars that litigants claim emitted more pollutants than advertised.
Daimler said in November that it intended to cut EUR1.4 billion in costs by the end of 2022 and said that thousands of positions will be eliminated though it has not specified a number.
Kallenius said that the management team was “committed to unlock cash flow so that we can make the investments we need” as the company moves toward carbon-neutral mobility.
The EU is introducing tougher limits from 2021 on automobile emissions of carbon dioxide, the primary greenhouse gas blamed by scientists for trapping the sun’s energy in the atmosphere and causing global warming. Automakers are being forced to roll out more low- or zero emissions vehicles to meet fleet average requirements even though such cars are only a small part of the market so far. Failure to meet the requirements means heavy fines.