Daimler slashes 2019 profit forecast after second-quarter loss

Shareholders crowd around a Vision Urbanetic self-driving van by Mercedes-Benz on display during Daimler’s annual general meeting on May 22, 2019 in Berlin. (AFP)
Updated 12 July 2019

Daimler slashes 2019 profit forecast after second-quarter loss

  • Daimler already downgraded its outlook on June 23, penciling in flat earnings instead of a slight increase

FRANKFURT AM MAIN: German auto giant Daimler, maker of Mercedes-Benz, on Friday slashed its 2019 profit forecast for the second time in a few weeks, after booking a $1.8 billion (€1.6 billion) operating loss in the second quarter.
By comparison, between April and June last year, the Stuttgart-based group chalked up operating profit of €2.6 billion.
But unforeseen events, including a mass recall over faulty airbags and government probes and legal cases related to the “Dieselgate” emissions cheating scandal, prompted the company to set aside more cash in provisions and increase estimated costs for the year, Daimler said in a statement.
That meant the carmaker now expects to book an annual operating profit “significantly below” the €11.1 billion recorded in 2018, it said.
Daimler already downgraded its outlook on June 23, penciling in flat earnings instead of a slight increase as it tackled the fallout from the “Dieselgate” scandal that had forced it to set aside hundreds of millions of euros in provisions.
The previous day, Germany’s KBA road transport authority ordered the company to recall 60,000 vehicles it suspected were fitted with software to reduce harmful emissions under lab testing conditions.
Last year, the office had already ordered the recall of 700,000 Daimler-made vehicles worldwide over illegal software.
As well as the one-off events, Daimler said it was making slower progress bringing new models to market, while demand worldwide is less robust than expected.
And changes to the product line-up in its Vans division — one of those affected by recalls — will generate additional costs of €500 million, the company said.


OPEC+ faces challenge from rivals’ rising output, says IEA

Updated 15 November 2019

OPEC+ faces challenge from rivals’ rising output, says IEA

  • Sluggish refinery activity in the first three quarters has caused crude oil demand to fall for first time in a decade

LONDON: OPEC and its allies face stiffening competition in 2020, the International Energy Agency said on Friday, adding urgency to the oil producer group’s policy meeting next month.

“The OPEC+ countries face a major challenge in 2020 as demand for their crude is expected to fall sharply,” the Paris-based agency said in a monthly report.

The IEA estimated non-OPEC supply growth would surge to
2.3 million barrels per day (bpd) next year compared with 1.8 million bpd in 2019, citing production from the US, Brazil, Norway and Guyana.

“The hefty supply cushion that is likely to build up during the first half of next year will offer cold comfort to OPEC+ ministers gathering in Vienna at the start of next month,” it added.

While US supply rose by 145,000 bpd in October, the IEA said, a slowdown in activity that started earlier this year looks set to continue as companies prioritize capital discipline.

Demand for crude oil from OPEC in 2020 will be 28.9 million bpd, the IEA forecast, 1 million bpd below the exporter club’s current production.

The recovery by Saudi Arabia from attacks on the country’s oil infrastructure contributed 1.4 million bpd to the global oil supply increase in October of 1.5 million bpd.

Saudi state oil company Aramco, the world’s most profitable firm, starts a share sale on Nov. 17 in an initial public offering that may raise between $20 billion and
$40 billion.

It was the IEA’s last monthly report before the Dec. 5-6 talks among OPEC states and partners led by Russia on whether to maintain supply curbs aimed at buoying prices and balancing the market.

The agency kept its assessments for growth in global oil demand in 2019 and 2020 at 1 million bpd and 1.2 million bpd respectively, but said its outlook might slightly underestimate the impact of tariffs from the US-China trade war.

The IEA said that if some or all tariffs were lifted in coming months, “world economic growth and oil demand growth would both rise significantly,” though the rebound may not be immediate.

Sluggish refinery activity in the first three quarters has caused crude oil demand to fall in 2019 for the first time since 2009, the IEA said, but refining is set to rebound sharply in the fourth quarter and in 2020.