Dieter Zetsche Addresses DaimlerChrysler Annual Meeting: Profitability Expected to Improve
12 Avril 2006 - 9:40AM
PR Newswire (US)
- Shareholders to decide on unchanged dividend of euro 1.50 per
share BERLIN, April 12 /PRNewswire/ -- DaimlerChrysler (NYSE:DCX)
expects an improvement in profitability in fiscal year 2006, with
continuing increases in operating profit during the following
years, says Dr. Dieter Zetsche, Chairman of the Board of
Management, according to the written version of his speech, at the
Annual Meeting in Berlin on Wednesday. Says Zetsche, "We've set
ourselves challenging but realistic goals that we intend to achieve
within the foreseeable future." A more detailed earnings forecast
for the full year will be presented to coincide with the
publication of the company's financial results for the first
quarter on April 27, 2006. (Logo:
http://www.newscom.com/cgi-bin/prnh/20020212/DCXLOGO ) New
Management Model To further improve earnings, the Board of
Management initiated the New Management Model at the end of
January, says Zetsche. "The New Management Model will make
DaimlerChrysler faster, more flexible and more efficient -- and
therefore more successful." One key goal here is to make the
company's administrative functions leaner and eliminate
redundancies between the Group and divisional levels. This in turn
will make the reporting and decision- making processes faster and
leaner. According to Zetsche, these measures will "enable our
operating units to focus on their core business of developing,
building and selling fascinating vehicles." In addition, processes
and methods are to be harmonized and standardized not just within
the business units but also between them. This networking will be
much more extensive in the future, ranging from the exchange of
know-how and the adoption of best practices to the exchange of
technologies and the joint development of components. According to
Zetsche, the identity of the brands will not be affected. As a
result of the implementation of the New Management Model, some
6,000 administrative positions will be cut worldwide. Executives in
Germany will be offered severance agreements and early retirement.
All of the steps taken regarding employees covered by collective
bargaining agreements will be based on the "Safeguarding the Future
2012" agreement that was signed in July 2004. Zetsche makes a point
of emphasizing that the company's most important capital is its
employees. "And we also realize that behind the numbers we are
talking about are the lives of real people," he says. "We therefore
regard it as our duty to make the necessary personnel cuts fairly."
In the long term, these measures will also help to safeguard
Germany as a business location. "We are convinced that the New
Management Model will help us to become better and faster at
transforming DaimlerChrysler's potential into compelling products,"
says Zetsche. Zetsche is confident that thanks to current measures
to boost productivity and efficiency, the Mercedes Car Group will
achieve the planned 7 percent return on sales (RoS) in 2007. In
terms of results, the division achieved the turnaround in the
second quarter of 2005. Altogether, the Mercedes Car Group plans to
cut 8,500 jobs by the end of September. This program is being
implemented according to plan. Up to now, around 7,800 employees
have taken advantage of voluntary severance agreements and early
retirement packages. The Chrysler Group aims to stand "shoulder to
shoulder with its leading global competitors in terms of quality,
productivity and customer satisfaction in 2007," says Zetsche. "Of
course, it will continue to thrill customers with outstanding
products," he adds. This year ten new products will be introduced
-- more than ever before in a single calendar year. Last year, the
Chrysler Group not only further increased its efficiency and
productivity but also improved its flexibility. In fiscal year
2005, the Commercial Vehicles division launched the "Global
Excellence" program in order to translate its size and market
position into economies of scale and to substantially increase its
profitability. In January 2006, a new distribution of business
operations was confirmed as part of the New Management Model. The
division now known as the Truck Group will focus on the truck
business. The Vans unit will report to the head of the Mercedes Car
Group, and the Bus unit will report to the head of the Truck Group.
These measures will help the division come much closer to its goal
of posting profits that better reflect its position as Number 1 in
terms of sales. The Financial Services division is concentrating on
achieving profitable growth in its core business this year and
beyond. Since last November, Financial Services has been the first
financial services company to offer financing and insurance for
passenger cars and commercial vehicles in China, supporting the
automotive divisions' penetration of this major market. At the
Group level, DaimlerChrysler also continued to focus on its
automotive core business. As already announced in early April, the
company has decided to reduce its 30 percent share in EADS, the
European Aeronautic Defence and Space Company, to 22.5 percent.
Dieter Zetsche: "In 2005, EADS substantially exceeded its financial
targets for the sixth year in a row. Its order volume has more than
doubled - partially due to the large demand for the Super Airbus A
380. And that's an excellent basis for achieving further profitable
growth in the years ahead. We aim to support this growth and to
remain a major shareholder with a stake of at least 15 percent.
Should we eventually decide to reduce our share to 15 percent, we
will strive to maintain the balance between German and French
shareholders." The sale of MTU Friedrichshafen to the Swedish
financial investor EQT in 2005 is a further step toward a focus on
the company's core business, Zetsche says. In front of 8,000
shareholders, the Chairman takes a detailed look at the results of
fiscal year 2005. The operating profit was euro 5.2 billion.
Excluding the euro 1.1 billion charges due to restructuring of the
business model at smart, the operating profit would have been
greater than the previous year's figure of euro 5.8 billion.
Consolidated revenues increased by 5 percent to approximately euro
150 billion. And the Group's net income also topped the previous
year's figure, increasing from euro 2.5 to euro 2.8 billion.
However, "we are not satisfied with last year's results level,"
declares Zetsche. The return on net assets failed to cover the
company's capital costs. And DaimlerChrysler is still far from its
target of achieving a return on net assets (RoNA) of 10 percent.
"Our mission is to put DaimlerChrysler back on top," says Zetsche.
Unchanged dividend to be paid The Board of Management and the
Supervisory Board propose to the Annual Meeting that
DaimlerChrysler pay a dividend of euro 1.50 per share for fiscal
year 2005 (2004: euro 1.50). This corresponds to a dividend sum of
euro 1.5 billion (2004: euro 1.5 billion). This proposal takes into
consideration the operating profit and cash flow development in
2005, as well as the perspectives for subsequent years. This
document contains forward-looking statements that reflect
management's current views with respect to future events. The words
"anticipate," "assume," "believe," "estimate," "expect," "intend,"
"may," "plan," "project" and "should" and similar expressions
identify forward- looking statements. Such statements are subject
to risks and uncertainties, including, but not limited to: an
economic downturn in Europe or North America; changes in currency
exchange rates, interest rates and in raw material prices;
introduction of competing products; increased sales incentives; the
effective implementation of our New Management Model, and the CORE
program, including the new business model for smart, at the
Mercedes Car Group; renewed pressure to reduce costs in light of
restructuring plans announced by our major competitors in NAFTA;
supply interruptions of production materials, resulting from
shortages, labor strikes or supplier insolvencies; the resolution
of pending governmental investigations; and decline in resale
prices of used vehicles. If any of these or other risks and
uncertainties occur (some of which are described under the heading
"Risk Report" in DaimlerChrysler's most recent Annual Report and
under the heading "Risk Factors" in DaimlerChrysler's most recent
Annual Report on Form 20-F filed with the Securities and Exchange
Commission), or if the assumptions underlying any of these
statements prove incorrect, then actual results may be materially
different from those expressed or implied by such statements. We do
not intend or assume any obligation to update any forward-looking
statement, which speaks only as of the date on which it is made.
http://www.newscom.com/cgi-bin/prnh/20020212/DCXLOGO
http://photoarchive.ap.org/ DATASOURCE: DaimlerChrysler CONTACT:
Han Tjan, +1-212-909-9063, or Thomas Froehlich, +49
(0)711-17-9-33-11 Web site: http://www.daimlerchrysler.com/
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