DaimlerChrysler’s chief executive again defended his global car-making strategy before angry investors on Wednesday as it emerged that the firm may seek to line up a $US6.7 billion capital injection for affiliate Mitsubishi Motors.
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A source close to Mitsubishi Motors’ revival talks told Reuters that the 700 billion yen ($6.7 billion) was needed as part of a restructuring and headcount reduction plan submitted at a recent meeting led by a DaimlerChrysler team preparing a plan to revive the carmaker.
The source reportedly said that DaimlerChrysler, which owns 37% of Mitsubishi Motors, is set to bankroll a significant portion of the proposed capital increase by purchasing newly issued preferred shares.
But DaimlerChrysler is trying to get the funding mainly from other major stakeholders in the Mitsubishi group, which includes Mitsubishi Heavy Industries, Mitsubishi Corp. and Bank of Tokyo-Mitsubishi, the report noted.
Reuters said that DaimlerChrysler CEO Juergen Schrempp, speaking before 8,000 shareholders at the company’s annual general meeting in Berlin, said any reported figures were “only speculation” and reiterated that the Mitsubishi revival plan was not yet finished.
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By GlobalDataHe reportedly said all options were being kept open regarding Mitsubishi Motors, but DaimlerChrysler’s global strategy built around the Mercedes, Chrysler, Dodge, Jeep and Mitsubishi brands remained intact.
“When there’s a problem with the operating business, then we don’t change the strategy, we fix it,” Schrempp said, according to Reuters.
Schrempp reportedly said that DaimlerChrysler was playing an advisory role in mapping out Mitsubishi Motors’ future and added: “We don’t have the operating control over Mitsubishi.”
According to the news agency, Schrempp tried to placate the assembled investors, but his comments, such as “We’re our own hardest critics,” failed to impress in view of the stock’s clear underperformance since the beginning of the merger in 1998.
Retail investment funds like Deka Investment and Deutsche Bank unit DWS Investments attacked DaimlerChrysler’s management for the continued failure to recognise and solve the problems before they assumed their current dimensions, Reuters said.
“We will vote against ratifying the management board – in particular Schrempp – against ratifying the supervisory board and against the re-election of Hilmar Kopper as supervisory board chairman,” Michael Schneider, representing Deka, told Reuters.
Reuters said DaimlerChrysler reaffirmed on Wednesday it aims for a slight increase in operating profits this year, helped by a further improvement at Chrysler, although group earnings in the first quarter will remain flat.
DaimlerChrysler reportedly said its US operations, which posted a full-year loss due mainly to a very weak second-quarter, has further boosted its profits in the first three months of 2004.
Daimler reiterated that operating earnings would improve considerably in 2005 and 2006 once it launches some 50 new models, Reuters added.
