"Earnings in the second quarter are expected to be significantly negative once again," Uebber said.
Daimler AG lost more than $1.7 billion during the first quarter as its revenue dropped 22% from weak sales of luxury cars, trucks and vans.
The Daimler Group’s total revenue is likely to decrease significantly in full-year 2009, Bodo Uebber, Daimler’s chief financial officer, acknowledged during a conference call with analysts today. He said that it would be difficult for the German automaker to get back to profitability, though he continued to hold out hope in the second half of the year.
“Earnings in the second quarter are expected to be significantly negative once again,” he said. In addition, Daimler will also be asked to absorb a $700 million write down, according to the terms of new deal that terminates its ties with Chrysler LLC.
Daimler also expects its unit sales to drop dramatically this year.
“The Daimler Group’s total revenue is likely to decease significantly in full-year 2009,” Uebber said. As a result of the dire outlook, Daimler is mounting a quest for $5.2 billion in savings that will reach across the company. The cuts could include delaying or trimming some research and development and capital spending projects that were once untouchable. “We will do whatever it takes,” Uebber said.
Only last week, Ernst Lieb had said in an interview with TheDetroitBureau.com that, “while we’ve made cutbacks, you’ll not hear (Daimler AG CEO) Dieter Zetsche cutting our R&D.”
However, the Great Recession has shaken Daimler to its core, Uebber acknowledged.
“In order to alleviate the impact of the significant decline in unit sales and revenue caused by the global financial and economic crisis, at short notice Daimler has initiated measures designed to adjust costs and avoid expenditure across all divisions and at the Group’s headquarters. As well as actions to reduce labor costs, this includes the reduction of fixed costs and administrative expenses and further streamlining of the Group’s organizational structures.”
In addition, projects are being postponed, if they are not directly relevant to competitiveness,” the company’s financial statement noted.
Uebber said the company is hoping the launch of the new E-Class in the U.S. this coming summer will help bolster flagging sales.
“Mercedes-Benz Cars assumes it will at least maintain its market shares and that the bottom of the EBIT curve was reached in the first quarter. Due in particular to the cost-reducing measures and the launch of the new E-Class in Europe and the US launch planned for June 2009, there should be a gradual improvement in profitability over the next three quarters and positive earnings in the second half of the year,” the company said.
During the first quarter, sales of Mercedes-Benz cars dropped 27% due to weak sales in Europe and North America. Daimler swung from posting an operating profit of $1.5 billion to a loss of $1.5 billion, the kind of dramatic multi-billion swing that is invariably a harbinger of serious problems for any carmaker.
Revenue from Daimler Trucks dropped 22%, revenue from Daimler Vans fell 45% and revenue from Daimler Busses dropped 2%.
Uebber also confirmed he had recently been in China seeking to round up some potential investors to cover Daimler’s present and future debt. However, he also pointed out he would be traveling to Frankfurt, London and Boston, in the company’s continuing bid to raise additional capital to help weather the recession.