By Max Bernhard 
 

Daimler AG (DAI.XE) plans to cut jobs and save more than one billion euros ($1.10 billion) in personnel costs over the next three years but the luxury car maker's profitability outlook disappointed analysts, nevertheless.

Daimler shares traded lower after the news, down about 3.0% at EUR51.95 at 1005 GMT.

The German company said Thursday it plans to save more than EUR1 billion in personnel costs at its core Mercedes Benz Cars & Vans divisions. It will also cap investments in property, plant and equipment and in research and development at the 2019 level. It is targeting a reduction of those expenses in the medium term at the businesses, it said.

Mercedes-Benz Cars & Vans now expects an operating return on sales of at least 4% in 2020 and at least 6% in 2022, excluding possible import tariffs. Citi analysts had expected a margin of 6% next year.

"Expectations have come down in recent weeks; however, this still appears to be below the low end," the bank's analysts said.

Frank Schwope, an analyst at NordLB, said Daimler's outlook for next year appears weak.

"Against the backdrop of recurring crises and weaknesses in the industry, the group is likely to abandon its average target margin of above 8% in the passenger car sector," he said.

Chief Executive Ola Kallenius said efforts to cut vehicle emissions would hit the car maker's earnings in 2020 and 2021.

"To remain successful in the future, we must therefore act now and significantly increase our financial strength," he said.

Traditional manufacturers have been struggling with a slump in demand, coinciding with high upfront costs to make their vehicles compliant with emissions regulation and large investments into future technologies.

At the same time, the companies are trying to fend off competition from newcomers, such as Tesla Inc (TSLA). The U.S. electric car maker said this week it would build a factory in Daimler's home turf, Germany.

Write to Max Bernhard at max.bernhard@dowjones.com; @mxbernhard

(END) Dow Jones Newswires

November 14, 2019 05:39 ET (10:39 GMT)