BERLIN — Daimler AG said it plans to take all the required measures in order to emerge strengthened from the current economic crisis. "We intend to remain a strong company also in times of weak markets," said Dr. Dieter Zetsche, chairman of the board of management of Daimler AG and head of Mercedes-Benz Cars, at the automaker’s Annual Meeting in Berlin. Approximately 6,600 shareholders are in attendance at the Annual Meeting taking place today.
Daimler said it intends to manage the current financial crisis through rigid cost management, reduced labor costs and reduced working capital, as well as by maintaining financial flexibility and executing further efficiency programs in all divisions.
In the first quarter of 2009, Daimler drastically intensified the actions to reduce the costs of business travel, consultancy fees and general overheads. Wage increases have been limited to the portion specified by the collective bargaining agreement, while executives have had to accept substantial salary reductions of nearly 30 percent. The company announced additional savings measures last week. Negotiations with the employee representatives are to be concluded by the end of April.
According to Zetsche, automobile markets will not pass through the worst of the recession until the second half of 2009 at the earliest.
Despite the crisis, Daimler continues to make targeted investments in key technologies for the future of the automotive industry. "Although the crisis is forcing us to cut costs wherever we can, we will not jeopardize our future by reducing essential investment," said Zetsche.
By 2012, Daimler intends to reduce the average CO2 emissions of its new car fleet in Europe to less than 140 grams per kilometer, thus fulfilling the EU targets. Twenty-four Mercedes-Benz Cars models already emit less than 140 grams of CO2 per kilometer, and nearly every third car is meanwhile in the so-called "five-liter category." Thanks to this progress, at least 50 percent of all cars sold in Germany in 2009 will profit from the country’s new system of vehicle taxation.
Daimler said it is preparing for a distinct decline in business volumes this year. Revenue is likely to be significantly lower than in the prior year in all automotive divisions and further substantial burdens on Group earnings are anticipated.
In its 2008 Annual Report 2008, published on Feb. 17, the company reported Group revenue for the year of $126 billion. Operating profit on continuing operations amounted to $8.2 billion. Including all special factors, in particular the charges on earnings of $4.2 billion from the remaining 19.9 percent equity interest in Chrysler, operating profit amounted to just $3.6 billion. Net profit for the year 2008 was $1.9 billion.
From an accounting perspective, Daimler already significantly reduced its Chrysler-related risk exposure in 2008. Furthermore, the 22 Chrysler sales companies outside the NAFTA region that continued to be temporarily managed by Daimler were successfully transferred to Chrysler Holding LLC effective March 31. This transfer was part of the agreement concluded with Cerberus in 2007.
