German carmaker Daimler scrapped its dividend for the first time in 14 years after it swung to a worse-than-expected 2009 net loss, sending shares down to their lowest level in five months.

Chief Executive Dieter Zetsche called the move an exception and said Daimler would distribute a payout for 2010, when it forecasts over 2.3 billion euros ($3.12 billion) in operating profit thanks mainly to an expected 2 billion euro rebound in earnings at its Mercedes-Benz Cars division.

Morgan Stanley called the payout omission brave but appropriate but warned that the market would slash its estimates for this year after expecting a higher operating profit estimate.

The average forecast in a Reuters poll is for nearly 3 billion in 2010 earnings before interest and taxes (EBIT).

While most auto stocks refused to give a 2010 profit outlook, Daimler was bold enough to give an outlook that is not as high as consensus expects. The result is that consensus will fall more for Daimler than for other auto names, the bank's analysts wrote in a note to clients.

Despite slashing costs vigorously by 5.3 billion euros in 2009, Daimler still could not avoid swinging to an operating loss of 1.5 billion euros, which matched analysts' expectations.

We have increased the pace of our efficiency programmes once again, which will permanently improve our cost position, finance chief Bodo Uebber said.

Uebber is also chairman of aerospace group EADS , in which Daimler has a major stake. He warned that a dispute over budget overruns in the Airbus A400M military transport project could hit Daimler's results.

Possible charges have not yet been taken into consideration from ongoing negotiations between EADS and the ordering countries concerning the financing of the A400M military transport airplane, Uebber said.

Daimler shares sank more than 8 percent to their lowest point since September 2009 before paring losses slightly, not helped by scrapping its dividend when analysts' median forecast had banked on 0.50 euro a share. At 1209 GMT, the shares were down 4.9 percent at 31.435 euros.

The group expects to boost vehicle sales this year amid a 3 to 4 percent overall gain in global car demand and moderate growth in truck markets.

Following a significant (20 percent) decrease in 2009, the Daimler Group assumes that its revenue will rise again this year, but will still be significantly lower than in 2008, when turnover reached 98.5 billion euros, the company said.

CEO Zetsche, whose contract was extended on Wednesday, may have retained the confidence of his board but he still has to put out a number of fires before he can focus on developing a coherent strategy for the longer term.

Together with the new head of production at premium car arm Mercedes, Wolfgang Bernhard, the Daimler duo will look to slash billions more in costs as they aim to lift the division's operating margin to 10 percent.

Its passenger car business posted a sequential improvement in its quarterly operating results, returning to the black in the second half as planned, but the division's EBIT will only total some 1.5 billion euros this year.

Mercedes is losing out both to larger rival BMW and its fleet of more fuel-efficient cars, as well as to premium carmaker Audi, whose high profitability it thanks in part to sharing costs with parent Volkswagen .

Daimler's problems with its commercial vehicles business also continue.

It can maximize economies of scale better than rivals thanks to its industry-leading volumes but has repeatedly taken restructuring charges at its North American or Asian operations.

Smaller rival Paccar
delivered just 61,000 commercial vehicles such as the DAF XF105 but managed to post its 71st straight year of net profits, while Swedish truckmaker Scania also remained in the black last year.

(Reporting by Christiaan Hetzner; editing by Karen Foster)

($1=.7377 Euro)