Daimler cuts its dividend as its earnings decline



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The luxury car maker said Mercedes-Benz Cars' operating profit fell 9.5% in the fourth quarter of 2017 to 7.3% and said its dividend would rise from 3.65 euros per share to 3.25 euros euros.

The bond lost 2.32% to 51.68 euros, around 9:15 GMT, on the Frankfurt Stock Exchange, one of the biggest falls of the Dax, which fell 0.61% at the same time.

"Daimler has an urgent need to (take) efficiency measures," says ISC Evercore analyst Arndt Ellinghorst. "At the moment, the profitability of Mercedes-Benz cars and trucks is lagging behind its peers."

Daimler said it is working on "countermeasures" to increase its profits but is not able to provide details of possible cost reductions as they are still being developed.

By 2019, the margin of Mercedes-Benz Cars should be between 6% and 8% and that of Mercedes Vans between 5% and 7%, he added.

"With our forecast for Mercedes-Benz cars and vans, we are below our long-term margins targets that we can not be satisfied with." Our goal is to return to our goal of a margin of 8-10% to 2021, "says CEO Dieter Zetsche in a statement.

Daimler expects a slight increase in sales volume, sales and operating revenue for 2019.

BENEFITS BELOW EXPECTATIONS

Earnings before interest and taxes (EBIT) fell in the fourth quarter to 2.67 billion euros, while analysts expected 2.92 billion.

Sales of Mercedes-Benz passenger cars rose 4% from October to December, but Mercedes-Benz explained that the increase in customs duties on cars imported into China from the United States and the problems encountered in the delivery of diesel models weighed on demand and prices.

In 2018, Mercedes-Benz exported about 30,000 GLE and GLS SUVs from the United States to China. Daimler does not plan to manufacture such models in China to mitigate the impact of tariffs, Dieter Zetsche said.

Research and development spending rose 4.5 percent to 9.1 billion euros last year as the automaker is preparing to launch its first all-electric sports utility this year.

In 2018, Mercedes-Benz became the best-selling luxury brand, with 2.31 million new vehicle registrations, ahead of BMW (2.12 million) and Audi (1.81 million).

(Catherine Mallebay-Vacqueror for the French service, edited by Bertrand Boucey.)

by Edward Taylor

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