Daimler Slumps to Loss, Says Sales Will Slide Further
Originally posted on Bloomberg
Daimler AG, the world’s second- biggest maker of luxury cars, reported its first quarterly loss since 2007 on declining sales and costs from Chrysler LLC and said the recession will burden earnings further this year.
The fourth-quarter loss was 1.53 billion euros ($1.93 billion) compared with year-earlier net income of 1.7 billion euros, Stuttgart, Germany-based Daimler said in a statement today. Expenses from Chrysler, in which the company retains a 20 percent stake, wiped 2.01 billion euros from earnings.
Daimler suffered as the European economy contracted the most in 13 years in the quarter, helping to push revenue down 12 percent to 23.2 billion euros. Car sales in Europe plunged 27 percent to the lowest in two decades last month and contracted 37 percent to a 28-year low in the U.S., a key market for the company’s Mercedes-Benz luxury division.
Chief Executive Officer Dieter Zetsche said he aims to save “several-billion euros” this year by deepening production cuts to clear a glut of unsold cars, curbing spending on real estate, computers and administration and using more common parts across Daimler’s product range. He will also suspend an employee-share program, freeze pay for top managers and lower wage increases for 140,000 workers to save about 1.4 million euros a month.
Daimler fell as much as 7.4 percent to 21.82 euros in Frankfurt and was down 3.4 percent at 22.75 euros as of 3:11 p.m. local time. The stock has fallen 15 percent this year, valuing the carmaker 21.9 billion euros.