Daimler Slashes Outlook on Fresh Diesel Allegations
June 24 2019 - 5:49AM
Dow Jones News
By William Boston
BERLIN -- Shares of Daimler AG fell almost 5% on Monday after
the maker of Mercedes-Benz luxury cars issued a profit warning late
Sunday related to a government recall of vehicles suspected of
manipulating diesel emissions.
Daimler lowered its full-year earnings outlook on cars and vans
because of an expected increase in expenses relating to what it
defined as ongoing governmental proceedings and measures regarding
Mercedes-Benz diesel vehicles.
The German Transport Ministry said Saturday that it ordered
Daimler to recall 60,000 vehicles, a mix of GLK sport-utility
vehicles and Sprinter vans, as part of ongoing government
investigations of auto makers suspected of manipulating toxic
emissions from diesel engines to make them appear less polluting
than they are.
The German car maker sees a "high three-digit million" euro hit
in the second quarter, which will be taken into account in its
earnings before interest and taxes. Daimler now expects 2019
earnings before interest and taxes to be in line with the previous
year from a prior forecast of "slight growth" in earnings.
The diesel-emissions crisis continues to reverberate nearly four
years after Volkswagen AG was exposed by U.S. authorities for
installing illegal software on diesel engines to make them appear
less polluting on emissions tests.
Germany's Bild am Sonntag first reported the recall on
Saturday.
Daimler was forced to recall around 690,000 vehicles last year
on similar allegations, and as a result suffered delays in
certifying vehicles under the European Union's new emissions
testing regime, causing a bottleneck in production. Overall the
company has recalled and fixed around three million vehicles
related to emissions irregularities.
A Daimler spokesman said the company denied using illegal defeat
devices in its vehicles and that it would file a formal objection
with the government.
Analysts at Barclay Capital warned that there could be further
ramifications for Daimler and urged the company's new chief
executive officer, Ola Källenius, to get to the bottom of the
matter.
"Clearly both the near term operational challenges and possible
question around Daimler's corporate culture are issues that must be
addressed with urgency by Daimler's new CEO," they wrote in a note
to clients on Monday.
Auto makers have come under scrutiny since Volkswagen was
exposed in 2015 for installing illegal software on its diesel
engines to game emissions tests even as its vehicles produced toxic
emissions in excess of environmental regulations.
Volkswagen was forced to recall nearly 11 million vehicles
world-wide and has amassed $30 billion in fines, penalties, legal
fees and compensation for consumers.
Write to William Boston at william.boston@wsj.com
(END) Dow Jones Newswires
June 24, 2019 05:34 ET (09:34 GMT)
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