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Daimler posts dire loss and cuts wages

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Daimler posts dire loss and cuts wages
Photo: DPA
17:27 CEST+02:00
German luxury car and truck maker Daimler posted a stiff first-quarter loss Tuesday and warned sales would "decrease significantly" this year. Some 60,000 workers will also see their wages cut by nearly 9 percent.

Daimler said it had suffered a net loss of €1.28 billion ($1.66 billion), against a profit of €1.3 billion in the same period a year earlier.

Sales fell 25 percent in the first three months of 2009 to €18.7 billion, while the group's operations showed a loss of €1.42 billion, a statement said.

"The Daimler Group's total revenue is likely to decrease significantly in the full-year 2009" from the previous year's level of €95.9 billion, it added. And "earnings in the second quarter are expected to be significantly negative once again," Daimler said.

Shares in the automotive group plunged by 5.40 percent to €25.90 in midday trades on the Frankfurt stock exchange, while the DAX index of German blue-chips was off by 2.57 percent overall.

Like other auto groups, the maker of Mercedes Benz cars and trucks has been slammed by the global collapse of automobile markets.

Daimler said it had "initiated measures designed to adjust costs and avoid expenditure across all divisions" and at its headquarters in Stuttgart, southern Germany.

The plan should provide cost savings of €4 billion a year, said Daimler, which employed 263,819 people at the end of March.

Daimler boss Dieter Zetsche recently refused to rule out job cuts at the company, which suffered from "sharp drops in unit sales at Mercedes-Benz Cars, Daimler Trucks and Mercedes-Benz Vans in the first quarter of 2009."

But 60,000 workers already putting in shorter hours would no longer be compensated for the 8.75 percent reduction in time on the clock.

The automotive division nonetheless expected to post positive earnings in the second half of the year, the statement said. Daimler said it had earned €449 million from the sale of property at Berlin's Postdamer Platz, and €102 million from the transfer of shares in the European aeronautic group EADS.

But the group also booked charges of €491 million in connection with its holding in the distressed US car maker Chrysler, a former Daimler division. Another $700 million in charges was expected before Chrysler was finally separated from Daimler's books.

On Monday, Daimler said it would give up its 19.9 percent stake in Chrysler and forgive outstanding loans from the struggling firm, which must draw up a viable plan this week to continue receiving US government support.

Looking ahead, Daimler said it would launch its "smart" city car in China and Brazil this year, but that in general, "lower volumes are anticipated above all in the markets of the United States, Western Europe and Japan."

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