Daimler shares slump as diesel emission settlement cost wipes out profit


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Daimler shares slump as diesel emission settlement cost wipes out profit

On Monday, the 24th of June 2019, share prices of the German luxury carmaker Daimler AG were plunged as much as five percent after the German Mercedes-Benz maker, headquartered in Stuttgart, had slashed its profit forecast for the third time in a year, adding that it had set aside hundreds of millions of euro to settle a regulatory probe on its diesel-run vehicles.

Latest warning that the German automaker might have failed to post an operating profit this year had raised calls for a fresh approach of the Daimler Chief Executive, Ola Kaellenius and his team, while an Everscore ISI analyst Arndt Ellinghorst wrote in a client note, “Best execution and accountability remain core areas of improvement that need to be addressed by the new management.

The endless array of so-called one-time effects raises questions regarding process, management information systems and ultimately accountability of management”. In point of fact, carmakers over Europe and United States had been vying to deal with emission cheating scandal since 2015, when Daimler’s German rival Volkswagen had acknowledged that it had committed cheating on US pollution tests on its diesel engines.

Never the less, the Stuttgart-based Mercedes-Benz maker had declined to give further details on the probe it had been facing and the amount it had set aside for a possible settlement.