Daimler cuts dividend to free up cash for costly EV shift

STUTTGART -- Daimler on Tuesday slashed its dividend as the company tries to cut costs and conserve cash to pay for an expensive shift to electric cars.

The maker of Mercedes-Benz cars will propose a dividend of 0.90 euros ($0.98) a share at its annual meeting on April 1, the company said in an earnings release on Tuesday. The dividend payout will amount to 1.0 billion euros compared with 3.5 billion in 2018 when the company paid out 3.25 euros a share.

Daimler's 2019 earnings more than halved, weighed down by restructuring and legal charges.

Net profit fell to 2.7 billion euros, down from 7.6 billion euros in the year earlier, despite record deliveries of 2.39 million Mercedes cars that saw the brand retain its title as the world's top-selling premium automaker.

Earnings before interest and taxes (EBIT) dropped to 4.3 billion euros from 11.1 billion in 2018.

The dividend cut underscores Daimler's push to keep costs in check after ballooning regulatory expenses to fix diesel vehicles, production hiccups and poor efficiency squeezed overall returns in 2019.

Daimler said it had booked charges of 4.2 billion euros related to diesel probes and legal proceedings, as well as 828 million euros in restructuring expenses in its vans division, after Mercedes scrapped its X-class pickup.

Mercedes-Benz Vans’ unit posted a 3.09 million euros loss last year compared with a 312 million profit in 2018. The division’s EBIT was hit by a reassessment of expenses for ongoing governmental and legal proceedings and measures relating to diesel vehicles as well as expenses for a recall of Takata airbags, Daimler said.

A further 405 million in charges hit earnings after Daimler restructured its mobility services unit.

Daimler said it would seek to cut administrative and personnel costs by more than 1.4 billion euros by the end of 2022 to help offset expenses from legal proceedings and investments in new technologies.

The company did not detail the number of job cuts. The German business paper Handelsblatt reported on Sunday that Daimler plans to cut up to 15,000 jobs.

Daimler will introduce the seventh generation of its flagship S-class sedan this year. The convertible and coupe versions of the S class will be dropped because of slow sales, Handelsblatt said.

The automaker will also launch the EQA, an entry-level, full-electric crossover, in the autumn. Mercedes-Benz Vans is expanding its product portfolio to include the full-electric EQV van.

More Mercedes cars and SUVs will get plug-in hybrid drivetrain options and 48-volt technology to improve fuel efficiency and help reduce CO2 emissions, Daimler said.

Earnings before interest and taxes this year are forecast to grow "significantly" compared to 2019, Daimler said Tuesday. "Our goal is to ensure solid net liquidity to protect the necessary investments, and at the same time to pay attractive dividends," Chief Financial Officer Harald Wilhelm said.

Daimler's profit warning last month -- its third in less than a year -- fueled concerns among investors that the automaker will not be able to turn the corner anytime soon. Daimler is also grappling with a softening global economy, the unresolved U.S.-China trade spat and Brexit.

Mercedes-Benz Cars, which predicts a return on sales of 4 percent to 5 percent this year, risks steep fines if it fails to meet stricter car-emissions limits that take effect in Europe this year.

Reuters and Bloomberg contributed to this report