At a lively, at times hostile annual meeting of more than 7,000 shareholders in Berlin today, the chief executive of Daimler warned there would be further cost-cutting and a reduced dividend payout this year. The gloomy prospects, revealed just a week after Aabar Investments, the Abu Dhabi investment firm, paid ?1.95 billion (Dh9.51bn) for a 9.1 per cent stake in the company, are expected to continue "until the second half of the year". The announcement of cost cuts cheered investors, sending Daimler shares up nearly 5 per cent to ?23.57 in Frankfurt trading.
"The automotive industry didn't cause this crisis but is feeling the full brunt of its impact, and suppliers and dealers are suffering just as much as manufacturers," Dieter Zetsche, the chief executive, told the meeting. Mr Zetsche said the Stuttgart-based company, whose brands include Mercedes-Benz, Smart, Maybach and AMG, was ready to take "all the required measures" to remain strong. Daimler said it would stick with rigid cost management and reduced labour costs, including management pay cuts, but did not provide a figure on what savings the plan would create.
Daimler also reiterated that it expected a first-quarter loss because of the economic downturn, but did not provide any figures. In February, the company posted a fourth-quarter loss of ?1.53bn - its first in two years. Daimler's full-year revenue last year slid 12 per cent to ?23.2bn compared with ?26.5bn in 2007. The company plans to reduce its dividend by 70 per cent to ?0.60 a share, compared with ?2 last year.
It said it expected a gradual improvement in earnings this year. Many shareholders interrupted Mr Zetsche's speech with protests. Others yelled for people in the crowd to "shut up!" This month, Daimler said it hoped to save ?2bn in personnel costs by cutting work time for 73,000 workers - largely administrative staff - in Germany by as much as five hours a week, but did not plan to eliminate jobs.
Those plans are unrelated to the previously announced decision to put 50,000 car-production workers on shorter hours. Daimler has said it also planned to put another 18,000 commercial vehicle workers on shorter hours. But its chief executive in China was more upbeat, saying he aims to increase sales of Mercedes-Benz cars by more than 10 per cent this year. Daimler sold more than 11,000 in China in the first quarter, 30 per cent more than in the same period last year, with more than 5,000 sold last month, a 50 per cent gain.
"The auto market in China is picking up again," said Klaus Maier, the president and chief executive of Mercedes-Benz China. "We are quite confident for the remaining nine months." * with agencies
