STUTTGART (Reuters) – Daimler AG scrapped its annual dividend last week for the first time in 14 years after it swung to a worse-than-expected 2009 net loss.
CEO Dieter Zetsche called the move an "exception" and said Daimler would make a payout for 2010, when it forecasts a rebound at premium car arm Mercedes will help it post over 2.3 billion euros ($3.12 billion) in operating profit -- far below the nearly 3 billion expected in a Reuters poll.
"While most auto stocks refused to give a 2010 profit outlook, Daimler was bold enough to give an outlook that is not as high as consensus expects," Morgan Stanley wrote in a note to clients, warning that the market would now likely slash its estimates for Daimler more than for other carmakers.
Some analysts said they thought the dividend move was Zetsche's olive branch to unions, who helped to extend his contract at a Daimler supervisory board meeting on Wednesday.
Zetsche told Reuters Insider that he expected EADS, in which Daimler holds 22.5 percent of the votes, and customers to strike a deal within two weeks to cover budget overruns in the Airbus A400M military transport plane.
Management hope any writedowns on the project could come before March, letting Daimler still squeeze a provision for the near-certain book loss into its final 2009 results.
While this would trigger a net loss even wider than the 2.6 billion euros Daimler posted on Thursday, it would effectively kitchen-sink all bad news into 2009.
"The balance sheet is then clean and solid," finance chief Bodo Uebber told Reuters after a news conference where he announced an impairment on deferred tax assets in the fourth quarter that analysts had not factored into their models.
Uebber oversaw vigorous cost cuts that shaved 5.3 billion euros from the budget in 2009. Daimler aims to retain some 5 billion of these improvements this year.
"We have increased the pace of our efficiency programs once again, which will permanently improve our cost position," the CFO said.
The group expects to boost vehicle sales this year amid a 3 to 4 percent overall gain in global car demand and moderate growth in truck markets.
"Following a significant (20 percent) decrease in 2009, the Daimler Group assumes that its revenue will rise again this year, but will still be significantly lower than in 2008," when turnover reached 98.5 billion euros, the company said.
Zetsche may have retained the confidence of his board but he still has to put out a number of fires before he can focus on developing a coherent strategy for the longer term.
Together with Mercedes' new head of production, Wolfgang Bernhard, the Daimler duo aim to eventually lift the division's operating margin to 10 percent from a loss in 2009.
Daimler's passenger car business posted a sequential improvement in its quarterly operating results, returning to the black in the second half as planned, but the division's EBIT will only total some 1.5 billion euros this year.
Mercedes is losing out both to larger rival BMW AG and its fleet of more fuel-efficient cars, as well as to premium carmaker Audi, whose high profitability is due in part to sharing costs with parent Volkswagen AG.