The NYT reported that Daimler, the maker of Mercedes cars and Freightliner trucks posted an unexpected Q4 loss and canceled its dividend for the first time in more than a decade.
Daimler reported a net loss of EUR 352 million compared with a loss of EUR 1.53 billion in the same quarter a year earlier. The average forecast of analysts surveyed by Reuters was for a profit of EUR 264 million. Excluding one time items, operating profit was EUR 599 million compared with a loss of EUR 1.95 billion a year earlier after the global financial crisis significantly reduced the demand for luxury cars.
Daimler attributed the huge gap between its operating profit and its net loss to steeper financing costs, as well as to a reassessment of its future global tax bill, which led to a write-down. Over all, Daimler’s profit continued to show the effects of the global slump in vehicle sales and costs of scaling back production.
The company said that there is very little hard evidence that a self sustaining, lasting upswing has actually started. Although there are some signs of global economic recovery, there is no reason to assume that the crisis is over.
Mr Aleksej Wunrau an analyst at BHF Bank in Frankfurt said that “That was a surprise for the market. Daimler’s failure to more fully explain why it was not paying a dividend suggested the company might be girding for another tough year. Otherwise, everything was very solid.
Mr Dieter Zetsche CEO of Daimler said that all its divisions would report an operating profit for 2010 of at least EUR 2.3 billion. After playing a calculated defensive game in 2009, we will once again go on the offensive in 2010. The company would also resume paying a dividend for 2010.
Mr Zetsche said that the company was well positioned with new products like its E-Class sedan, introduced last year and fuel efficient luxury cars like the hybrid S-Class. In addition, Daimler should be able to hold down costs even as sales increase. Daimler should benefit from a wage agreement Thursday between the IG Metall union, which represents workers at the company, and employers in the state of North Rhine Westphalia. The agreement, which will serve as a benchmark for other regions, will give workers an effective pay raise of 1.5% per year through mid 2012, the lowest increase in 30 years according to calculations by economists at Royal Bank of Scotland in London.
He said that the pay deal was certainly in the interests of companies and workers and makes a substantial contribution to job security.
Meanwhile, Mr Zetsche said that Daimler struggled more than the other German carmakers during the downturn because, unlike BMW, it has a large truck division which is highly vulnerable to economic cycles. “In commercial truck markets, demand practically evaporated during some months of last year.
(Sourced from www.nytimes.com)
