Addressing DaimlerChrysler shareholders at the annual shareholders’ meeting in Berlin, DC’s CEO, Juergen Schrempp, admitted that deteriorating economic conditions were pushing back DC’s profitability goals after 2002. The share price has come under pressure as a result of the remarks.
Schrempp said that he stands by the expectation that an operating profit of “significantly more than double last year’s figure can be achieved this year.” However, turning to subsequent years’ (unspecified) targets, he added that, “due to projected economic trends, we will only be able to achieve these targets at a somewhat later date”. In a prepared statement he also declared himself “far from being satisfied” with the accomplishments to date.
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DC has already revised its profit targets for 2002 earlier this year. Last year DC set an operating profit target of 5.5-6.5 billion euros for full-year 2002, but that was revised in February to ‘clearly more than 2.6 billion euros’ reflecting weaker market conditions.
However, DC expects overall earnings in the first quarter to reach around last year’s level.
Schrempp also gave some information on the performances of DC’s various operating units in the first quarter. The company said that the Mercedes-Benz Passenger Cars and smart Division had a good first quarter. Despite the ‘difficult market environment and the model change-over of the E-Class sedan, sales were better than planned and continue the excellent numbers recorded last year’.
The company also said that the Commercial Vehicle Division is still being hit by adverse market conditions and significant production cuts. However, a ‘positive trend is beginning to emerge, with respect to incoming orders vis-a-vis planning.’ The company added that ‘this also holds true for Freightliner’.
A positive spin was also put on Chrysler’s performance which, ‘after six consecutive negative quarters the Chrysler Group will report slightly positive operating results for the first quarter of 2002’. That would compare to a 4 billion euro ($1.2 billion) loss in the first quarter of 2001.
DaimlerChrysler will release a detailed interim report on the first quarter at the end of April.
