Daimler prepares for potential profit warning

The head of German carmaker Daimler said on Wednesday that European demand had been weaker than expected in early 2013, paving the way for a possible lowering of the company's annual targets.

Daimler prepares for potential profit warning
Photo: DPA

“Not much tailwind is anticipated from the markets in the coming months,” a company statement quoted CEO Dieter Zetsche as telling the annual shareholder’s meeting.

“For Europe in particular, there are no signs of a trend reversal,” he was quoted as saying.

“Daimler will therefore reassess whether its previous market-related assumptions for 2013 are still valid,” Zetsche said, adding the company would give more information about full-year earnings expectations when it publishes its first-quarter results.

The group, which produces Mercedes cars and trucks and the Smart city car, is due to publish those results on April 24th.

It had banked on increasing sales this year and in 2014 and posting earnings before interest and tax (EBIT) barring exceptional items of about €8.1 billion ($10.6 billion) for 2013, along the same lines as last year.

The group reiterated on Wednesday that it expects the second half of the year to be better than the first.

Daimler said it had sold more cars, vans and buses in the first three months of this year than in the same period a year earlier despite the fact that “many markets were weaker than expected at the beginning of 2013.”

“That applies in particular to the markets for cars and commercial vehicles in Europe,” it said.

Meanwhile, US auto giant General Motors will invest €4 billion ($5 billion) in its German subsidiary Opel and its British sister brand Vauxhall in 2013-2016, its chief announced Wednesday.

“As a global automotive company, GM needs a strong presence in Europe, in terms of design and development as well as manufacturing and sales,” GM chairman and chief executive Dan Akerson said at Opel headquarters in western Germany.

Opel is “on the right track” and has GM’s “full support” in its restructuring plan as well as its aim to balance its books by mid-decade, Akerson told gathered Opel chiefs, local politicians and workers.

The German carmaker has been making losses for years as it has been slow to react to the crisis in demand for cars in Europe, and GM has ordered Opel’s management to prescribe draconian cost-cutting.


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Germany’s Daimler to cut ‘at least 10,000’ jobs to fund electric shift

German luxury automaker Daimler on Friday said it would slash at least 10,000 jobs worldwide in a major cost-cutting drive to help finance the switch to electric cars.

Germany's Daimler to cut 'at least 10,000' jobs to fund electric shift
Daimler's headquarters in Stuttgart at night. Photo: DPA

 “The total number worldwide will be in the five-digits,” Daimler personnel
chief Wilfried Porth told reporters in a conference call, after the group said
in an earlier statement “thousands” of jobs would be axed.

He added that the company intended to save €1.4 billion in staff costs. The cull includes slashing management jobs worldwide “by 10 percent”.

READ ALSO: Germany boosts support for electric cars with cash bonuses and a million charging points

“The automotive industry is in the middle of the biggest transformation in its history,” Daimler said.

“The development towards CO2-neutral mobility requires large investments,”
it added.

Along with other manufacturers, Daimler is scrambling to get ready for tough new EU emission rules taking effect next year, forcing it to accelerate the costly shift to zero-emissions electric cars and plug-in hybrids.

The group, which employs 304,000 people globally, said the job cuts would be achieved through natural turnover, early retirement schemes and severance packages.

Daimler's announcement comes as the mighty German car industry is buffeted by trade tensions, weaker Chinese demand and a darkening economic outlook.

Other major car companies have in recent months already unveiled plans to cut some 30,000 jobs in the sector over the next years.

Germany's Audi said it wants to axe 9,500 jobs, followed by more than 5,000 each at Volkswagen and car parts supplier Continental, while Bosch aims to cut more than 2,000 roles.

READ ALSO: Audi to slash 9,500 jobs in Germany

US car giant Ford plans to scrap some 5,000 jobs in Germany alone.

Electric engines require fewer parts and are less complicated to assemble than internal combustion engines, needing fewer hands.

But auto bosses have said thousands of new, hi-tech jobs will also be created in the electric era to make cars more autonomous and connected.

German automotive expert Ferdinand Dudenhöffer has said he believes the German car sector — which currently employs 800,000 people — will shed 250,000 jobs over the next decade.

A total of 125,000 new ones will be created, he predicted.

Daimler returned to profit in the third quarter and said it was expecting 2019 revenues to be “slightly above” last year's, while operating profit would be “significantly below” the €11.1 billion in 2018.

The group was this year hit by expensive recalls and a €870 million fine for having sold diesel vehicles that did not conform with legal emissions limits.