This marks the first time in 14 years that Daimler AG scrapped its dividend. The move was deemed to be necessary after the company posted a worse-than-expected 2009 net loss, bringing shares down to their lowest level in five months. CEO Dieter Zetsche regards this move to be an "exception."
He said that Daimler would distribute a payout for 2010, when it forecasts more than 2.3 billion euros ($3.12 billion) in operating profit due mainly to an a 2 billion euro rebound in earnings it expects from its Mercedes-Benz Cars division.
"Brave but appropriate" is how Morgan Stanley describes the payout omission but it cautioned that the market would cut its estimates for 2010 after expecting a higher operating profit estimate.
A Reuters poll stated that the average forecast is for almost 3 billion in 2010 earnings before interest and taxes (EBIT).
In a note to clients, the bank's analysts said that even when most auto stocks refused to give a 2010 profit outlook, Daimler had the boldness to provide an outlook that is not as high as consensus expects.
This resulted to the consensus falling more for Daimler than for other companies.