Ola Källenius, chairman of the Board of Management, Daimler AG and CEO of Mercedes-Benz Cars, is implementing a series of changes.

Daimler AG continues to deny cheating on emission tests despite the fact that the costs associated with its defense grows as the company’s operating income weakens.

Daimler said Wednesday that it will set aside between 1.1 billion euros ($1.2 billion) and 1.5 billion euros to cover legal and government costs related to the issue. Those mounting costs as well as problems with production and sales at the company’s key units resulted the company’s operating profit for 2019 cut in half.

The results were below expectations, even though the company issued three profit warnings during the past nine months.

(Daimler hit with new lawsuit about the cost of diesel emissions)

The company has had to recall at least 774,000 diesel cars in Germany, after insisting for years its engines comply with emission rules. The costs squeezed returns at the main Mercedes-Benz car unit and drove the smaller vans division to a significant loss.

Daimler AG, Mercedes-Benz parent, was accused of selling more than 1 million diesel-powered cars equipped with a cheating device.

Daimler also issued its third profit warning in less than 9 months, offering a fresh reminder that the company are largely rooted in homegrown problems, rather than broader industry headwinds. While trade tensions, tariffs and a general automotive slowdown have hurt results, the legal costs are rising.

“What’s truly remarkable is the fact that Chief Executive Officer Ola Källenius hasn’t taken more action with respect to his divisional leadership teams,” Evercore ISI analyst Arndt Ellinghorst said in a note. “Broadly speaking, the same people are in charge.”

Daimler shares were down 1.5% in early afternoon trading in Frankfurt.

(Daimler plans major job losses to offset coming expenses)

Group earnings before interest and taxes fell to 5.6 billion euros for the year, the German manufacturer said in a statement. Profit at Mercedes-Benz cars was roughly halved to 3.7 billion euros, as the operating return on sales eroded to 4% from 7.8% in the previous year.

The Stuttgart-based manufacturer retained its luxury-car sales lead over BMW AG, but margins slumped below the level of French mass-market manufacturer PSA Group.

Mercedes-Benz retained its global sales crown over German rival BMW once again in 2019.

The van unit swung to a 2.4 billion-euro loss from 300 million euros in profit the prior year. The division has been hard hit by the diesel-engine recalls. Daimler will likely cut its dividend by more than half to 1.60 euros per share this year.

Källenius has embarked on a major restructuring since taking over as CEO last May. The company plans to shed more than 10,000 jobs worldwide to save about 1.4 billion euros in personnel costs alone.

(Cost of Dieselgate Continues to Rise for Daimler AG)

It hasn’t specified the overall cost-savings targeted, but it has stated a labor deal remains in place that rules out forced layoffs among its domestic German workforce.

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