Annual profit: slumped by a third. The dividend: from 3.25 euros per share to 90 cents. Employee bonuses: plummeted to around EUR 1,000 after around EUR 5,000 the previous year. Daimler’s head of office Ola Källenius, who has been in office since May 2019, has had a catastrophic start – you can’t say it otherwise.
During the annual press conference So the Swede tries it with a step that is rather unusual for a CEO: he gives a free speech, without speech manuscript or teleprompter, supported by transparencies. In a blue suit and white shirt, Källenius explains in Stuttgart’s Carl Benz Arena where he wants to lead the automaker in the future – and what were the biggest problems last year.
“The financial results of 2019 are not results that we want to see in the future,” Källenius clarifies right from the start. No wonder, after a total of four profit warnings since taking office. “That is not enough, it is not something that I will accept in the future,” said the Daimler CEO.
However, much of this was due to special effects, explains Källenius, the poor figures. The largest part of the lower EBIT, namely additional costs in the amount of 5.4 billion euros, had had provisions for diesel lawsuits and recall of airbags from the supplier Takata, said Källenius. But the decision to discontinue the X-Class was also rather expensive at 800 million euros. And the merger of the car sharing activities with the competitor BMW and the withdrawal from US cities would have cost an unspecified amount.
But now – and Källenius repeats this message several times – you are on the right track again. The cost-cutting measures had already taken effect in the second half of 2019. The Daimler boss confirmed the recently lowered forecast several times. Daimler plans to “significantly increase group EBIT and free cash flow this year,” said Källenius.
“We don’t cut staff with the lawnmower”
“I’m a realist: The next three years will be a sack of work,” says Källenius at one point. There is still a lot of work to be done on the cost structures. In the personnel area, Daimler wants Show stock market chart save € 1.4 billion annually from 2022. But Källenius expresses a clear answer as to whether 10,000 or, as recently speculated in the media, 15,000 jobs should be cut.
“We do not cut personnel by using a lawnmower, but intelligently,” promises Källenius. There is an agreement with the employee side, a large part of the job cuts and thus a large part of the costs will be incurred in the next two years.
However, Daimler will continue to invest properly in the important future areas, especially in electric mobility. Regarding the painfully reduced dividend, Källenius only declares that Daimler remains true to its policy of distributing 40 percent of its net profit to shareholders.
Källenius remains vague with crisis plans
What he specifically wants to change in order to lead Daimler successfully into the future – that still remains somewhat unclear. Källenius certainly throws ambitious goals into the room. For example, he wants to more than quadruple the sales of pure electric models and plug-in hybrids, which accounted for 2 percent of Daimler sales last year. This year, the share of these vehicles in the total sales should be 9 percent. He also plans to double the sales of more economical mild hybrid engines that were sold in 200,000 Daimler vehicles last year.
Also read:
The Zetsche team is too weak for KälleniusDaimler’s works council calls the board’s assessment “almost naive”
All of this should help to get into “CO2 compliance” in the coming years, as Källenius puts it – that is, to achieve the CO2 emission targets in the major markets. For 2020, however, Källenius cannot promise Europe to get by without fines. Because the industrial production of batteries is “the biggest challenge”.
Due to lack of batteries At times, Daimler does not meet the demand for the EQC electric model. Daimler’s works council chief Michael Brecht stated statements by the board of directors that the cells would be of the desired quality and quantity in an interview with manager magazin recently as “almost naive”.
Daimler is currently on the right path, the CEO repeatedly repeats. Statements on concrete measures for savings – Källenius is also stingy at this press conference. You test all series and models for their earnings potential, he explains very convoluted. Whether Mercedes is now painting the S-Class coupé or convertible, Källenius says nothing about that at first.
Carlos Tavares, head of PSA, demonstrated that there is a different and more concrete way in the car world. A few years ago, he declared that half of all PSA models at that time would be canceled and he kept his word.
“The best or nothing” – advertising slogan is history
Källenius cannot bring himself to make such clear announcements in public. You can tell from his speech that it was well thought out and well rehearsed. He makes it clear that a lot of work and savings are needed at Daimler. But he reveals little about what he would have to be measured later.
But one thing seems to be history at Daimler: the slogan “the best or nothing” The new Daimler boss never mentions that. Källenius says at one point that his company’s high standards are to be “architects for mobility”. That is ambitious – but one or two levels below the uncompromising claim from the era of his predecessor Dieter Zetsche.