Daimler: Reports Increased Second Consecutive Quarterly Loss (of nearly $2 Billion)
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Daimler: Reports Increased Second Consecutive Quarterly Loss (of nearly $2 Billion)
April 28 (Bloomberg) -- Daimler AG, the world’s second- largest maker of luxury cars, posted its first back-to-back quarterly losses in at least 10 years as the recession led to a drop in sales of Mercedes-Benz cars and trucks.
The first-quarter net loss was 1.3 billion euros ($1.7 billion), or 1.40 euros a share, Stuttgart, Germany-based Daimler said today in a statement. The loss was wider than the 790 million-euro median estimate of a Bloomberg survey of 13 analysts. Daimler shares fell 3.7 percent.
Economic institutes in Germany, Daimler’s largest market, predict gross domestic product will shrink 6 percent this year, the most since World War II. Daimler, which lost 1.5 billion euros in the fourth quarter of 2008, predicted a “significant” loss in the second quarter, yet lower than the first-quarter deficit. The company expanded a cost-savings target for this year by 33 percent to 4 billion euros and agreed on wage reductions with workers today.
“It’s a horrible set of numbers,” said Mike Tyndall, an autos analyst with Nomura Securities in London. “Mercedes was weaker than expected, but you could make an argument that it was their worst quarter.”
Daimler fell 1.01 euros to 26.38 euros in Frankfurt trading. The stock has slipped 1.2 percent this year, valuing the automaker at about 28 billion euros.
Eliminating Chrysler Stake
The carmaker agreed yesterday to cede its remaining 19.9 percent stake in former U.S. division Chrysler LLC to Cerberus Capital Management LP. The transaction will result in costs of as much as $700 million in the second quarter, Daimler said.
Cerberus, an investment firm with headquarters in New York, bought 80.1 percent of Auburn Hills, Michigan-based Chrysler in 2007, ending a decade-old merger between the carmakers. Chrysler is racing to restructure to meet a U.S.-government April 30 deadline for aid. Daimler will contribute $600 million to its former U.S. division’s pension plans over the next three years.
“That chapter is closed and over,” and no further costs beyond those already announced are expected, Chief Financial Officer Bodo Uebber said on a conference call with analysts.
Daimler sold shares last month to Abu Dhabi, making the emirate its biggest investor, to raise 1.95 billion euros in cash. First-quarter cash flow was a negative 1.1 billion euros. Sales in the period fell 22 percent to 18.7 billion euros. Year- earlier net income was 1.3 billion euros, or 1.29 euros a share.
Holding Back Forecast
Car-market “volatility” is keeping Daimler from making a full-year earnings forecast, Uebber said, adding that he “can’t exclude” Daimler reporting an operating loss for 2009.
The Mercedes-Benz Cars division, which also makes the Smart minicar, reported a first-quarter loss of 1.12 billion euros compared with year-earlier profit of 1.15 billion euros. Sales fell 27 percent to 9.1 billion euros.
Mercedes-Benz Cars will be profitable again in the second half of 2009, boosted by sales of the new E-Class sedan, which went on sale late in the first quarter, Daimler said.
The truck division, the world’s biggest maker of heavy vehicles, had a loss of 142 million euros, compared with profit of 403 million euros. Cargo haulers halted purchases because of the economic slowdown, leading to a 22 percent drop in sales to 4.9 billion euros, and the unit is spending on a reorganization.
North American Reorganization
Daimler Trucks, which builds Mercedes-Benz commercial vehicles in Europe and Freightliner models in the U.S., is cutting 3,500 jobs, closing two North American plants and dropping the Sterling brand under a plan to save $900 million a year by 2011. Savings from the North American reorganization, as well as pay cuts and reduced marketing spending, will trim expenses by at least 1 billion euros this year.
Further reorganizations may be in store for Daimler’s truckmaking operations in Asia, Andreas Renschler, head of the unit, said on the conference call.
Daimler agreed with worker representatives today on a package of measures aimed at cutting personnel costs in Germany by 2 billion euros. Administrative, research and sales employees will work 8.8 percent fewer hours, and take a corresponding cut in pay, and wages will also be reduced for manufacturing workers who are also on shortened weeks. Management will take a salary cut as of May.
Employee representatives also agreed to postpone a 2.1 percent pay raise until October from May, Daimler said. In exchange for the wage concessions, Daimler promised to preserve jobs until at least June 30, 2010.
Daimler and its works council have yet to agree on the details of an employee stock program, which was supposed to be financed by 2008 profit-sharing funds. Talks on the plan will continue, with the goal of reaching an agreement by the end of 2009, the carmaker said.
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The first-quarter net loss was 1.3 billion euros ($1.7 billion), or 1.40 euros a share, Stuttgart, Germany-based Daimler said today in a statement. The loss was wider than the 790 million-euro median estimate of a Bloomberg survey of 13 analysts. Daimler shares fell 3.7 percent.
Economic institutes in Germany, Daimler’s largest market, predict gross domestic product will shrink 6 percent this year, the most since World War II. Daimler, which lost 1.5 billion euros in the fourth quarter of 2008, predicted a “significant” loss in the second quarter, yet lower than the first-quarter deficit. The company expanded a cost-savings target for this year by 33 percent to 4 billion euros and agreed on wage reductions with workers today.
“It’s a horrible set of numbers,” said Mike Tyndall, an autos analyst with Nomura Securities in London. “Mercedes was weaker than expected, but you could make an argument that it was their worst quarter.”
Daimler fell 1.01 euros to 26.38 euros in Frankfurt trading. The stock has slipped 1.2 percent this year, valuing the automaker at about 28 billion euros.
Eliminating Chrysler Stake
The carmaker agreed yesterday to cede its remaining 19.9 percent stake in former U.S. division Chrysler LLC to Cerberus Capital Management LP. The transaction will result in costs of as much as $700 million in the second quarter, Daimler said.
Cerberus, an investment firm with headquarters in New York, bought 80.1 percent of Auburn Hills, Michigan-based Chrysler in 2007, ending a decade-old merger between the carmakers. Chrysler is racing to restructure to meet a U.S.-government April 30 deadline for aid. Daimler will contribute $600 million to its former U.S. division’s pension plans over the next three years.
“That chapter is closed and over,” and no further costs beyond those already announced are expected, Chief Financial Officer Bodo Uebber said on a conference call with analysts.
Daimler sold shares last month to Abu Dhabi, making the emirate its biggest investor, to raise 1.95 billion euros in cash. First-quarter cash flow was a negative 1.1 billion euros. Sales in the period fell 22 percent to 18.7 billion euros. Year- earlier net income was 1.3 billion euros, or 1.29 euros a share.
Holding Back Forecast
Car-market “volatility” is keeping Daimler from making a full-year earnings forecast, Uebber said, adding that he “can’t exclude” Daimler reporting an operating loss for 2009.
The Mercedes-Benz Cars division, which also makes the Smart minicar, reported a first-quarter loss of 1.12 billion euros compared with year-earlier profit of 1.15 billion euros. Sales fell 27 percent to 9.1 billion euros.
Mercedes-Benz Cars will be profitable again in the second half of 2009, boosted by sales of the new E-Class sedan, which went on sale late in the first quarter, Daimler said.
The truck division, the world’s biggest maker of heavy vehicles, had a loss of 142 million euros, compared with profit of 403 million euros. Cargo haulers halted purchases because of the economic slowdown, leading to a 22 percent drop in sales to 4.9 billion euros, and the unit is spending on a reorganization.
North American Reorganization
Daimler Trucks, which builds Mercedes-Benz commercial vehicles in Europe and Freightliner models in the U.S., is cutting 3,500 jobs, closing two North American plants and dropping the Sterling brand under a plan to save $900 million a year by 2011. Savings from the North American reorganization, as well as pay cuts and reduced marketing spending, will trim expenses by at least 1 billion euros this year.
Further reorganizations may be in store for Daimler’s truckmaking operations in Asia, Andreas Renschler, head of the unit, said on the conference call.
Daimler agreed with worker representatives today on a package of measures aimed at cutting personnel costs in Germany by 2 billion euros. Administrative, research and sales employees will work 8.8 percent fewer hours, and take a corresponding cut in pay, and wages will also be reduced for manufacturing workers who are also on shortened weeks. Management will take a salary cut as of May.
Employee representatives also agreed to postpone a 2.1 percent pay raise until October from May, Daimler said. In exchange for the wage concessions, Daimler promised to preserve jobs until at least June 30, 2010.
Daimler and its works council have yet to agree on the details of an employee stock program, which was supposed to be financed by 2008 profit-sharing funds. Talks on the plan will continue, with the goal of reaching an agreement by the end of 2009, the carmaker said.
http://www.bloomberg.com/apps/...=home
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