Record Sales, Lackluster Earnings As Mercedes-Benz Shoves Cash Into Evs
Mercedes-Benz sold a record 2,385,400 passenger vehicles around the globe in 2019, topping the previous year’s tally by some 3,400 units, and subsequently brought in more money while doing it. Revenue rose 3 percent, the automaker said in its end-of-year earnings report, but that intake didn’t translate into more profit.
Far from it.
As the automaker embarks on a cost-cutting campaign aimed at freeing up cash for electric vehicle development, among other things, the German manufacturer announced its net profit dropped to $2.95 billion from $8.29 billion in 2018. As a result, shareholders can expect a paltry dividend payout.
“While our results in 2019 reflect ongoing strong customer demand for our attractive products, we cannot be satisfied with our bottom line. Above all, material adjustments affected our financial results last year,” said Ola Källenius, board of management chairman for Daimler AG and Mercedes-Benz, in a statement.
“The future of the Daimler Group lies in CO2-neutral mobility as well as in consistent digitization, leveraging its full potential in our products and our processes,” he continued. “To achieve that, we have substantially ramped up our investments into new technologies. We are determined to materialize our technological leadership and at the same time to significantly improve profitability. To this end, measures to cut costs and to increase cash flows are necessary.”
A German newspaper reported yesterday that the automaker may cut up to 15,000 jobs in an push to streamline its business. Daimler is not alone in its efforts, though European manufacturers face the most immediate threat to their bottom line, given the EU’s new emissions standard — and the rush into electrification that sprung up in its wake.
Now, about that dividend. The price of going green amounts to 98 cents per share — that’s the payout proposed by the automaker’s supervisory and management boards at its annual general meeting, slated for April 1st. The previous year’s dividend was $3.55.
Total payout will amount to $1.09 billion, down significantly from 2018’s $3.82 billion.
While the automaker predicts continued growth in demand for premium vehicles (unlike mainstream cars), the need to purge its fleet of carbon dioxide emissions will carry a steep price tag. Hence the cost-cutting.
“Those measures include the significant reduction of material and administrative costs and the reduction of personnel costs by more than €1.4 billion by the end of 2022,” the automaker stated. “The aim is to cut jobs worldwide in a socially responsible manner, including the reduction of management positions.”
As for product, Mercedes-Benz plans to launch a small electric crossover, the EQA, this fall, joined by the EQV electric van. There’s also a next-generation S-Class on the way. Plug-in hybrids and 48-volt mild hybrids will proliferate throughout the model range, Mercedes-Benz said, as it seeks to quadruple sales of PHEVs and EVs in the current year.
[Image: Murilee Martin/TTAC]
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