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Shareholders hit Daimler
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April 11, 2001: 12:24 p.m. ET
Complaints voiced on U.S., Japanese losses; Schrempp defends units
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NEW YORK (CNN) - German shareholders attacked DaimlerChrysler executives for losses at the company's U.S. and Japanese units at the company's shareholder meeting Wednesday.
But Juergen Schrempp reiterated his support both for keeping the Chrysler unit and investing in Japanese automaker Mitsubishi, saying both were "integral" to the world's third-largest automaker, as measured by revenue. He said turnaround plans are on track, despite operating losses in the recently completed quarter that could reach  1 billion, or $890 million.
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Prices reflect trading of DaimlerChrysler's American depository receipts. | | |
The shareholder meeting, which drew 9,400 to Berlin's convention center, was the first public airing of shareholder complaints since financial troubles at DaimlerChrysler (DCX: down $0.27 to $48.35, Research, Estimates) became known last summer. Some of the shareholders who spoke said the losses should not have come as such a surprise at that time.
"It can't be the point of a 'World Inc.' to collect companies in need of repair," complained Lars Labryga of the German Society for the Protection of Small Shareholders. "It's regrettable this is happening with shareholders' money."
Another shareholder said the lack of information about losses at the Chrysler unit before last summer was especially disturbing.
"With such a piecemeal tactic, one loses the confidence of shareholders and the markets," said Klaus Kessler, representing a German small shareholder group.
Company says loss will match earlier guidance
But Schrempp defended the automaker's executives, saying they now have the company on the road to returned profitability.
"The restructuring of the Chrysler Group is moving along well," said Schrempp. "Work force reduction is proceeding according to plan, and agreements on cuts in the cost of materials in 2001 have already been reached."
The company announced plans in late February to take $3.9 billion in charges as part of a three-year recovery plan aimed at restoring Chrysler to profitability. It said at the time the overall company would lose between 800 million and 1 billion in the first quarter, excluding special charges, a guidance Schrempp repeated at Wednesday's meeting.
A key to that plan is the elimination of about 26,000 jobs at Chrysler and another 9,600 jobs Mitsubishi, in which it holds a controlling minority stake. It is also seeking a 15 percent reduction in costs from suppliers over three years.
Chrysler's sales targets for the first three months have all been met, Schrempp said, and the company now has a lower inventory of cars than any of its competitors.
Still, the company's previous statement in February said it would see a loss for this year, a narrow profit in 2002 and a return to healthy profit levels only in 2003.
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Some shareholders charged the company's premier Mercedes brand will be hurt by plans to share more parts and engineering with the U.S. and Japanese units. But Schrempp said both companies are important to the Stuttgart, Germany-based company.
"Both the Chrysler Group and our alliance with Mitsubishi are integral and essential elements of our corporate strategy," he said. "They are not expendable."
-- from staff and wire reports 
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