Daimler Posts a Loss, Eliminates Dividend

The past three years have been a brutal time for the world automakers, as declining consumer spending and tight credit conditions have made purchasing an automobile even more challenging. In the case of Daimler Mercedes, they had the issues of divesting themselves of Chrysler and the challenging market conditions. Together, these two elements caused sales at the German automaker to decline by 20% in 2009. Yet, looking a little deeper within the earnings it is clear that the company is facing a number of different variables, which could make earnings more uncertain. Where, the company reported that their passenger car division saw sales actually turn positive towards the end of the year. In the commercial truck vehicle division and because of confusion surrounding their delivery of parts for the A400M; has led the company to give very conservative guidance as well as cut its dividend for the first time in 14 years. Looking forward, Daimler said that they expected sales to improve over levels from 2009, but not as much as they were in 2008.

What this shows; is that Daimler is facing similar kinds of challenges as their American competitors. However, given the fact that positive comments have been seen from the Ford, means that you more than likely will see a boost in auto sales. As the recovery will more than likely be more gradual; because of the severe economic conditions that existed throughout much of 2009. This means, that earnings could be subject to volatility as the company is using cost cutting, to resume profit growth once again.