Daimler warns on 2019 profit outlook as diesel issues bite

Daimler must recall 60,000 Mercedes diesel cars in Germany after regulators found that they were fitted with software aimed at distorting emissions tests. (AFP)
Updated 24 June 2019

Daimler warns on 2019 profit outlook as diesel issues bite

  • Group earnings before interest and tax this year are now expected to be at last year’s level
  • Daimler must recall 60,000 Mercedes diesel cars in Germany after regulators found that they were fitted with software aimed at distorting emissions tests

FRANKFURT: Daimler cut its 2019 earnings outlook on Sunday after lifting provisions for issues related to its diesel vehicles by hundreds of millions of euros.
Group earnings before interest and tax this year are now expected to be at last year’s level, the carmaker said, against a previous estimate for a slight increase. Earnings will be affected in the second quarter, it said.
The revision is related to an expected increase in expenses linked to “various ongoing governmental proceedings and measures” with regard to Mercedes-Benz diesel vehicles, the company said.
The increase in the provision is likely to be “a high three-digit million-euro amount,” it added.
A spokesman declined to be more specific on the size of the provision increase and would not elaborate on the nature of the diesel issues behind the decision.
However, Sunday’s profit warning follows news over the weekend that Daimler must recall 60,000 Mercedes diesel cars in Germany after regulators found that they were fitted with software aimed at distorting emissions tests.
The transportation ministry said it was expanding its investigation into further models.
The Stuttgart-based owner of Mercedes-Benz is being investigated for its diesel emissions in Europe and the United States. It issued a similar profit warning on diesel issues in October.
In April, EU antitrust regulators charged BMW, Volkswagen and Daimler with colluding to block the rollout of clean emissions technology.
While Daimler was a whistleblower in that case and said at the time that it expected to avoid fines, BMW booked a provision of more than $1.14 billion (€1 billion).
Daimler also said it was reducing its forecast for the return on sales for Mercedes-Benz vans.
It now sees a return between minus 2 percent and minus 4 percent, below its previous forecast of a return on sales of 0 percent to 2 percent.
On Monday, car executives are due to meet with government officials and experts at the chancellery in Berlin to talk about the future of the car industry.
Daimler is one of a number of German automakers massively expanding in electric vehicles as European regulators clamp down on toxic diesel emissions.


Oil recoups losses as OPEC, US Fed see robust economy

Updated 14 November 2019

Oil recoups losses as OPEC, US Fed see robust economy

  • US-China trade deal will help remove ‘dark cloud’ over oil, says Barkindo

LONDON: Oil prices reversed early losses on Wednesday after the Organization of the Petroleum Exporting Countries (OPEC) said it saw no signs of global recession and rival US shale oil production could grow by much less than expected in 2020.

Also supporting prices were comments by US Federal Reserve Chair Jerome Powell, who said the US economy would see a “sustained expansion” with the full impact of recent interest rate cuts still to be felt.

Brent crude futures stood roughly flat at around $62 per barrel by 1450 GMT, having fallen by over 1 percent earlier in the day. US West Texas Intermediate crude was at $56 per barrel, up 20 cents or 0.4 percent.

“The baseline outlook remains favorable,” Powell said.

OPEC Secretary-General Mohammad Barkindo said global economic fundamentals remained strong and that he was still confident that the US and China would reach a trade deal.

“It will almost remove that dark cloud that had engulfed the global economy,” Barkindo said, adding it was too early to discuss the output policy of OPEC’s December meeting.

HIGHLIGHT

  • US oil production likely to grow by just 0.3-0.4 million barrels per day next year — or less than half of previous expectations.
  • The prospects for ‘US crude exports had turned bleak after shipping rates jumped last month.’

He also said some US companies were now saying US oil production would grow by just 0.3-0.4 million barrels per day next year — or less than half of previous expectations — reducing the risk of an oil glut next year.

US President Donald Trump said on Tuesday Washington and Beijing were close to finalizing a trade deal, but he fell short of providing a date or venue for the signing ceremony.

“The expectations of an inventory build in the US and uncertainty over the OPEC+ strategy on output cuts and US/China trade deal are weighing on oil prices,” said analysts at ING, including the head of commodity strategy Warren Patterson.

In the US, crude oil inventories were forecast to have risen for a third straight week last week, while refined products inventories likely declined, a preliminary Reuters poll showed on Tuesday.

ANZ analysts said the prospects for US crude exports had turned bleak after shipping rates jumped last month.