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Daimler Expects Dividend in 2010 as Sales Increase

Wednesday, 14 Apr 2010 09:23 AM

Daimler AG said Wednesday that it expects to resume paying a dividend this year as its sales increase, and chief executive Dieter Zetsche sought to assure shareholders that the German automaker is positioned for a strong post-crisis rebound.

The maker of Mercedes-Benz cars is paying no dividend for 2009 after posting a net loss of 2.6 billion euros ($3.54 billion) and an operating loss of 1.5 billion euros — hit by the economic crisis and charges related to Chrysler LLC, with which Daimler was once merged.

However, "we continued to do our strategic homework and laid important foundations for our post-crisis success," Zetsche told its annual meeting, a week after he announced a platform-sharing partnership with Renault and Nissan.

"We are sharpening our brand profiles, spearheading technological transformation, growing in key markets, satisfying changed customer requirements and boosting our efficiency," Zetsche said.

Daimler reaffirmed that it expects increases in sales and revenue this year — though it said that "they will still be significantly lower than the good levels of 2008."

Zetsche told its annual meeting that the company plans to grow sales at about double the rate of the global passenger car market in 2010.

Daimler forecast earnings before interest and tax from ongoing business operations of more than 2.3 billion euros ($3.1 billion).

Zetsche stressed that the company's decision not to pay a dividend for 2009 was an exception and insisted that "it is also in the long-term interest of our shareholders, because it raises the dividend payment potential from our retained income in the years to come."

"We plan to, and will, step on the gas this year," Zetsche said in a 50-minute speech that was greeted by some applause.

Zetsche said the partnership with Renault and Nissan is an important step forward, acknowledging that "we cannot compensate for our unit volume deficits in some segments on our own."

The car makers aim to strip out billions of euros (dollars) in costs over the next five years by sharing parts and development costs, mainly in energy efficient compact cars such as the Renault Twingo and the Mercedes Smart car. Zetsche stressed that that wouldn't mean watering down the Mercedes brand.

"Mercedes will not ... tolerate any compromises to our claim 'the best or nothing,'" he said. He said that his company will "Mercedize" engines used in its own cars — "we will optimize them to ensure that they meet our customers' premium requirements."

Zetsche also stressed that "we have zero tolerance for compliance violations" after Daimler and its subsidiaries earlier this year agreed to $185 million in civil and criminal payments to U.S. authorities over bribes paid to win sales in various countries.

He pointed to efforts to tighten compliance in recent years and to the fact that Daimler agreed to have former FBI Director Louis Freeh monitor its compliance with anti-bribery steps for the next three years.

"We got the message and act accordingly — not only for legal but also for ethical reasons," Zetsche said.

The chief executive also said that Daimler has reassessed its business relations with Iran in light of political tensions and will give up its 30 percent stake in the Iranian Diesel Engine Manufacturing Company, a subsidiary of Iranian Khodro Diesel.

Daimler has withdrawn applications in Germany to export three-axle commercial vehicles to Iran for civilian use, he said, adding that in general Daimler's business activities in Iran "will now be limited to meeting our existing contractual obligations."

German law allows shareholders to pose questions to managers and directors during the annual general meeting.

On Wednesday, concerns they raised included whether Daimler is making enough progress on cutting emissions and developing electric cars, and whether it would manage its partnership with Renault and Nissan better than its failed merger with Chrysler.

"The approaches are not comparable" in the two cases, Zetsche said, adding that details of the partnership are "clearly defined." Renault, Nissan and Daimler are taking only small stakes in each other.

Questioned about Zetsche's dual role as both Daimler CEO and head of the core Mercedes-Benz Cars unit, supervisory board chairman Manfred Bischoff said it is the "best solution" for the company.

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Daimler AG said Wednesday that it expects to resume paying a dividend this year as its sales increase, and chief executive Dieter Zetsche sought to assure shareholders that the German automaker is positioned for a strong post-crisis rebound.The maker of Mercedes-Benz cars...
EU,Germany,Daimler
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2010-23-14
Wednesday, 14 Apr 2010 09:23 AM
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