The chief executive of DaimlerChrysler, Jürgen Schrempp, reportedly has faced a hail of abuse from angry shareholders over costly management blunders and an alarming slide in quality at Mercedes.
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The Daily Telegraph said the uproar at the annual meeting, in Berlin, followed last week’s disastrous recall of 1.3 million Mercedes cars with faulty alternators and software – Mercedes sales fell 9.2% in the first quarter compared with a year earlier.
The newspaper noted that Schremmp still commands enough support from major shareholders to hang on to his job.
But Germany’s largest equity fund, DWS, reportedly said the group had “exhausted shareholder patience” with a string of errors and ventures overseas with Mitsubishi Motors and Chrysler.
According to the Daily Telegraph, the fund’s chief, Klaus Kaldemorgen, accused Schrempp of “shooting himself in the foot” and said the crisis was now so serious the task was to “save” the company.
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By GlobalDataDaimlerChrysler shares, which fell slightly to €34.26 in Frankfurt on Wednesday, have lost two thirds of their value over seven years, the newspaper noted.
Schrempp reportedly admitted that quality at Mercedes had “not been under control” and promised to restore his group’s reputation as a matter of “absolute priority” – predicting rosy profits next year, he said tough restructuring would slash €3billion a year from overall costs by 2007 and added: “We have made clear progress, even if we’re not yet fully satisfied.”
The Daily Telegraph said his optimistic talk failed to assuage angry shareholders, however, who lined up to berate him in language rarely heard at Germany’s stuffy corporate venues.
Union Investment’s Thomas Meier reportedly slammed Schrempp for issuing misleading forecasts year after year, and said the seven-year merger with Chrysler had bled the company dry.
The paper said he asked why anybody would still want to buy a Mercedes. “If you pay a premium price, you expect premium quality. One has the impression that at least one cylinder isn’t turning properly at this firm.”
Thomas Körfgen, head of equity funds at SEB, reportedly said: “Herr Schrempp, we’ve had five years of mismanagement. Every year, there’s another division with a catastrophic development.”
The Daily Telegraph said DaimlerChrysler earned robust profits of €5.8 billion in 2004 on the strength of booming sales by the aerospace conglomerate EADS, in which it holds a 32% stake, but overall profits are expected to drop sharply in 2005 as the strong euro bites deeper into American and Asian sales.
Mercedes’ profits collapsed to €20 million in the last quarter of 2004, from €784 million a year earlier, the paper added.
