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  HOME | Business & Economy (Click here for more)

Daimler Proposes Higher Dividend as Net Profit Soars, Still Cautious on 2018

BERLIN – Daimler AG’s net profit jumped 49 percent in the three months to the end of December, in line with analysts’ forecasts, and proposed on Thursday raising its dividend on 2017 earnings, but issued a cautious outlook for 2018 as rising costs for electric vehicles and self-driving cars dent profits at its flagship Mercedes-Benz car division, according to a report from Dow Jones.

Overall, net earnings from Daimler’s cars, trucks, buses, vans and growing financial-services businesses rose to 3.2 billion euros ($3.98 billion) in the fourth quarter from 2.21 billion euros the year before, as revenue increased 6 percent to 43.6 billion euros.

Net profit for the full year rose 24 percent to 10.9 billion euros, prompting Daimler to propose paying a dividend of 3.65 euros, up from 3.25 euros the year before.

Analysts expected Daimler to report fourth-quarter net earnings of 3.23 billion euros.

Higher spending on new technology – due to regulators tightening rules on auto emissions and car makers fighting for dominance in the electric-vehicles market – is taking a toll on profits at the company’s biggest earner, the Mercedes-Benz car division, which accounted for 58 percent of the company’s revenue last year.

Mercedes defended its title as the top premium-car brand, selling 2.4 million sedans, sport-utility vehicles, and luxury compact cars in 2017, an increase of 8 percent.

But the costs of developing new technology and investment in new models – Mercedes will launch more than a dozen new and upgraded models this year – caused the unit’s pre-tax profit to fall 5 percent to 2.4 billion euros.

Daimler said 2018 earnings would be in the “magnitude of the previous year” and there would be only slight growth in vehicle sales and revenue.

The company is planning to invest 10 billion euros to develop a new generation of electric vehicles, with plans to launch 10 new electric cars by 2022, according to Dow Jones.

Costs will continue to weigh on profits for several years, Daimler said.

As the Mercedes-Benz car division stumbled in the fourth quarter, a pickup in demand in the United States and Latin America boosted sales and earnings at Daimler Trucks, which reported a 60 percent increase in pre-tax earnings to 555 million euros.

The company’s vans and bus divisions also posted higher earnings.

 

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