Damiler cancels dividend on unexpected losses
Spending on a reorganization at the truck division and charges stemming from disposals at the financial unit led to a $478 million quarterly loss, Daimler said today in a statement. Analysts had predicted a profit of $345.5 million.
A revamped E-Class Mercedes-Benz sedan isn't doing as well as Daimler hoped and faces tough competition from Bayerische Motoren Werke AG's new 5-Series car, which seems to be getting better reviews, said Stephen Pope, chief global equity strategist at Cantor Fitzgerald in London. The firm lowered its recommendation on Daimler shares to sell from buy today.
Daimler plunged as much $4.23, or 9.4 percent, to $40.62, the biggest intraday drop since March 30, and was down 5.2 percent in Frankfurt trading. The stock has declined 16 percent this year, valuing the manufacturer at $45.1 billion.
Restored dividend planned
The automaker hasn't canceled the dividend since at least 1999, its first full year as the combined DaimlerChrysler AG following a merger, which was dissolved in 2007. Daimler, which paid 60 cents a share on 2008 earnings, aims to resume payouts for 2010 and subsequent years as profit is restored, Chief Financial Officer Bodo Uebber said today at the annual news conference in Stuttgart, Germany, where Daimler is based.
The decision to halt the dividend foreshadows 2010 cash burn, said Adam Jonas, a London-based analyst at Morgan Stanley, in a research report.
Daimler's financial services unit took a charge of 100 million euros ($135.72 million) in 2009 related to exiting non-auto leasing businesses. The truck unit had a charge of 340 million euros for restructuring operations in Japan and North America, while the company had expenses of 388 million euros due to lower interest rates and 164 million euros for pensions. At least 75 million euros for the trucks reorganization was charged in the fourth quarter, as was most of the financial-services expense.
The fourth-quarter loss narrowed from a year-earlier deficit of 1.53 billion euros. Earnings before interest and taxes totaled 448 million euros compared with a loss of 1.95 billion euros a year earlier, holding back the Ebit loss for the full year to 1.51 billion euros. Uebber said a writedown on tax assets contributed to the net loss.
Sales beat estimates
Sales in the quarter fell 11 percent to 21.3 billion euros. Revenue exceeded the 20.8 billion-euro average analyst estimate.
The manufacturer said it expects to increase vehicle sales in 2010 and to report Ebit exceeding 2.3 billion euros. That compares with a 2.9 billion-euro average Ebit estimate of 26 analysts.
The earnings target isn't that impressive, Pope said.
Daimler slashed spending by 5.3 billion euros last year by building fewer vehicles and cutting pay in response to the recession. The reduction exceeded an original target of 4 billion euros. The automaker racked up 3.8 billion euros in losses during a nine-month span before reporting a profit in the third quarter.
Daimler began deliveries of the new E-Class last March and introduced a convertible variant in early 2010. The car, which overtook rival models from BMW and Volkswagen AGs Audi brand, will confront renewed competition when Munich-based BMW, the world's largest luxury-car maker, rolls out an overhauled version of the 5-Series next month.
Attack plan
Mercedes-Benz has an attack strategy aimed at outpacing industry sales growth of 3 percent to 4 percent this year and closing the gap with BMW while fending off Audi, Thomas Weber, Daimler's head of development, said in January.
Fourth-quarter deliveries at the Mercedes-Benz Cars division, which also includes the Smart city-car brand, increased 7 percent to 303,552 cars and sport-utility vehicles. Including trucks, buses and vans, Daimler's vehicle sales fell 8 percent to 441,038 units. That held back the full-year drop to 25 percent for a total 1.55 million vehicles.
"As unsatisfactory as our figures for the year as a whole are, we definitely picked up momentum in the course of 2009," Chief Executive Officer Dieter Zetsche said at the news conference. "We're emerging from the crisis generating a lot of torque."
Renault partnership
Daimler is investing more than 1.4 billion euros to expand its lineup of small cars. The carmaker is in talks with Renault SA, Frances second-biggest automaker, on a potential partnership to expand the Smart unit and produce components such as engines for a planned series of four compact models. Daimler intends to conclude discussions in the first half of this year.
The full-year net loss was 2.64 billion euros, compared with profit of 1.41 billion euros a year earlier, Daimler said today in a statement. Analysts had forecast a loss of 1.86 billion euros, according to the average of seven predictions in a Bloomberg survey.
Daimler has extended Zetsche's contract until the end of 2013. Weber won a similar extension and Wolfgang Bernhard was confirmed as head of production and purchasing at Mercedes-Benz.
Bernhard, who returned left Daimler in 2005 and returned last year to run the van division, has shown an ability to manage costs and understand auto markets and will contribute to an ideally positioned management team at Mercedes-Benz, Zetsche said today. Detroit News