Daimler headquarters in Stuttgart
Of all things in the corona crisis, the chief financial officer unsettled his team with an organizational reorganization, according to the company.
(Photo: AFP)
Munich For Daimler– Chief Financial Officer Harald Wilhelm April 1, 2020 is a special date. Finally the former celebrated airbus-Manager at the beginning of the month not only his one-year anniversary as a board member at the Stuttgart carmaker, but since then has been responsible not only for the Group’s overall finances in personal union but also for those of the dominant Mercedes car division. The previous Mercedes CFO Frank Lindenberg had to leave the company after a power struggle.
In his new role, Wilhelm emailed the workforce last week. First of all he thanked Lindenberg for his services. Then he announced that the financial organization of the holding company (FC) with its 1200 employees would merge with the car division (FM), in which around 5000 financiers work.
“We will merge FC and FM for reasons of efficiency, speed and in order to be an even more effective business partner,” explained Wilhelm in the letter that is available to the Handelsblatt.
However, the manager left open details of the planned restructuring, which he wants because of the corona crisis only submit later in the month. For the moment, Wilhelm is asking his troops to continue working in the existing structure and to secure liquidity with all their might. “Let’s put all hands on deck and on cash,” appeals to the top guardian of the numbers Daimler in his final remark to thousands of controllers.
Internally, many reacted to Wilhelm’s announcements in a highly irritated manner, it is said in corporate circles. In a phase in which Mercedes’ factories across Europe are standing still and the group’s financiers are under as much pressure as they did recently after the Lehman bankruptcy in 2008, the manager additionally unsettled his team with an organizational reorganization. And that, although this is likely to cost jobs and the concrete design of which has not yet been determined.
“You can’t communicate like this in a crisis,” complains a seasoned finance manager. “The timing is fatal. That lacks tact, ”says another manager.
Double structures are to be eliminated
The challenges for Daimler are currently huge: The corona virus crisis has also caused a massive decline in sales. In the first quarter, the group sold around 477,400 cars of the core brand Mercedes-Benz, which was almost 15 percent less than in the same period last year, as Daimler announced on Wednesday. Vans sales declined to the same extent.
Sales of the small car brand Smart even dropped by more than 78 percent, which Daimler also attributed to the switch to exclusively battery-powered vehicles and the expiry of the previous models.
However, even Wilhelm’s critics consider the chief financial officer’s plan to be correct in principle, since the group has a lot of double structures. In particular, the financial management of the parent company Daimler AG is considered oversized. Wilhelm is therefore considering reducing his staff in the holding company from 1200 to just over 200 employees, reports from corporate circles. The remaining employees could be cut in a socially responsible manner or transferred to one of the three divisions – car, truck, mobility services.
Harald Wilhelm
Many in the Daimler financial organization still struggle with the 53-year-old.
(Photo: Bloomberg)
Daimler said: “We are constantly working on improving our efficiency and leveraging synergy effects. Last but not least, we confirmed this at the Daimler AG Capital Markets Day in November. This is the permanent task of management. In addition, there is currently nothing to announce ”.
One thing is clear: Wilhelm plans to shift power to Mercedes Benz AG, which already stands for well over half of the total group’s turnover of 173 billion euros. This development should not remain limited to the finance department, it is said in corporate circles. In the future, areas such as IT, human resources or law and compliance between the holding company and Mercedes could also move closer together.
The goal: On the one hand, the parent company with its 6,000 employees is to be trimmed to a certain extent; a good 20 percent of the positions are considered to be obsolete by insiders in the medium term. On the other hand, the management could create a better basis for a possible IPO of Daimler Truck AG, since the unit will increasingly be separated by the move of the holding company and Mercedes. Investors would be delighted to have been demanding for a long time to split off the truck and bus business.
Officially, the people of Stuttgart do not want to know about such mind games. The family should stay together, is the line. Unofficially, Daimler CEO Ola Källenius has long been considering bringing the division onto the floor, at least in part, reportedly from corporate circles.
For tax law reasons, an IPO by Daimler Truck is at the earliest at the end of 2021. In addition, the unit has yet to be brushed up for investors. With a return on sales of 6.1 percent recently, the world’s largest manufacturer of commercial vehicles is lagging behind competitors like Scania (11.5 percent) or Volvo Trucks (11.1) far behind. This gap has to narrow.
Internally, Wilhelm teases, externally he receives praise
Either way, CFO Wilhelm urgently needs success. Behind the manager, who came to Stuttgart with an excellent reputation as a cleaner and capital market whisperer, is a horror year. The Munich-born artist had to cash in the forecast three times in 2019. Profits slumped by almost two-thirds last year. Wilhelm couldn’t help the bad numbers. 6.7 billion euros of negative special effects – above all contaminated sites in the diesel scandal – spilled the manager’s balance sheet.
In 2020 Wilhelm’s losing streak was to end, the manager calculated the turn in earnings. But then came the outbreak of the coronavirus pandemic and large-scale production stops. All plans are now waste. The downsizing is stagnating, discussions scheduled for April on termination agreements had to be postponed to the summer. The first rating agencies are keeping their fingers crossed, the refinancing of liabilities threatens to become more expensive.
In this difficult situation, Wilhelm would need a highly motivated team that pulls together. But many in the financial organization still struggle with the 53-year-old. “Nobody works against him, but hardly anyone works for him,” says an insider.
Top-class companies like M&A boss Frank-Markus Weber are looking for happiness outside the company. Weber joins as CFO Knorr brake. Others are looking internally for new tasks, such as Mercedes top controller Karl Deppen, who will be responsible for the truck business in Brazil in the future.
After all, Wilhelm’s team was recently able to sign another line of credit worth EUR 12 billion. Not a matter of course during the corona crisis. Many investors therefore trust Wilhelm to rigorously manage the exceptional situation and sustainably reduce costs in Stuttgart. “He is certainly not a lively entertainer, but a calm worker. This is an advantage right now, ”believes one major shareholder.
In critical moments, Wilhelm can also rely on the backing of the highest authority. Chairman of the supervisory board Manfred Bischoff had already led the manager back in the 1990s to the Daimler aircraft subsidiary Dasa at the time. Even if the ways of the men separated later – the contact and the mutual appreciation never ended.
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