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Daimler warns of 'significant adverse effects' of virus outbreak

FILE PHOTO: Daimler AG sign with raindrops is pictured before the company's 2016 annual news conference in Stuttgart

BERLIN (Reuters) - German luxury carmaker Daimler on Friday warned of risks for the economy and its own business from the outbreak of coronavirus that is spreading in China and around the world.

"Risks for the Daimler Group may not only affect the development of unit sales, but may also lead to significant adverse effects on production, the procurement market and the supply chain," the Stuttgart-based company said in its annual report https://bit.ly/2SJHGOi.

It also noted that the epidemic posed a risk for economic growth in China, other Asian countries and worldwide.

Daimler CEO Ola Kaellenius announced last week that its key Mercedes-Benz brand had re-started production of luxury passenger cars in Beijing, adding it was still too early to gauge the impact of the coronavirus on Daimler's business.

Daimler also said stricter anti-pollution tests have made it harder to comply with new rules and increased provisions for regulatory proceedings, liability and litigation risks to 4.9 billion euros, up from 2.1 billion euros in 2018.

The increase relates to ongoing governmental and legal proceedings and measures taken with regard to Mercedes-Benz diesel vehicles in several regions and markets, as well as an updated risk assessment for an extended recall of Takata airbags, the carmaker said.

Due to the replacement of the NEDC (New European Driving Cycle) with the new measuring method WLTP (Worldwide Harmonized Light Vehicles Test Procedure), the average emissions of carbon dioxide have risen, the car and truck maker said.

"In the light of today's knowledge, this makes it more difficult to achieve the CO2 targets as of 2020," Daimler said.

The current public focus on vehicle emissions as well as possible certifications stops and recalls could result in damage to Daimler's reputation, the company said.

(Reporting by Thomas Seythal and Edward Taylor; Editing by Jan Harvey and David Evans)