DaimlerChrysler expects an improvement in profitability in fiscal year 2006, with continuing increases in operating profit during the following years, chairman Dieter Zetsche, was to tell the annual meeting in Berlin on Wednesday.
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“We’ve set ourselves challenging but realistic goals that we intend to achieve within the foreseeable future,” he said in speech notes released ahead of the AGM.
A new management model announced in January will make DaimlerChrysler faster, more flexible and more efficient – and therefore more successful, Zetsche claimed.
“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.”
That will lead to the axing of some 6,000 administrative positions worldwide with executives in Germany offered severance agreements and early retirement.
Zetsche is confident that thanks to current measures to boost productivity and efficiency, the Mercedes Car Group will achieve the planned 7% 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.
This year, Chrysler will launch 10 new products – the most in a single calendar year.
Reviewing the results of fiscal year 2005 – the operating profit was EUR5.2bn including EUR1.1bn Smart restructuring charges – Zetsche said: “we are not satisfied with last year’s results level.” 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%.
“Our mission is to put DaimlerChrysler back on top,” Zetsche said.
