Daimler CEO Sees ‘Drastic’ Pay Cuts, Deeper Restructuring
(Bloomberg) -- Daimler AG Chief Executive Officer Ola Kallenius said the maker of Mercedes-Benz cars and the industry as a whole face painful cutbacks to overcome the economic fallout of the Covid-19 pandemic.
The virus outbreak will force manufacturers to do more significant restructuring than they had planned before the crisis erupted, Kallenius said Wednesday during a webcast hosted by Germany's largest labor union, IG Metall.
The “significantly harsher reality” for the industry following Covid-19 will necessitate “drastic” salary cuts, with Daimler executives facing bigger reductions than rank-and-file workers, he said. The adjustments are necessary to protect Daimler's financial condition and safeguard investments in future technologies, according to the CEO.
The virus outbreak shuttered factories and showrooms across the globe, exacerbating Daimler's struggle to execute a deep restructuring announced last year. Kallenius indicated in April that the planned measures might not be enough in light of the dramatic market contraction. The company and its German peers Volkswagen AG and BMW AG are bracing for second-quarter losses.
While the German auto industry's prospects are slowly starting to improve, with demand recovering in markets including China and France, companies still rate the current situation as “very pessimistic,” Munich-based Ifo Institut said Thursday in a statement. The group's employment indicator fell four points to minus 54.4 points in June -- worse than during the 2009 financial crisis.
Daimler's restructuring plan, issued in November, called for cutting its workforce by more than 10,000 to slash 1.4 billion euros ($1.6 billion) off personnel spending by 2022. Another 10,000 jobs could be axed through 2025, trade magazine Automobilwoche reported last month, citing unidentified company sources. Daimler, which had about 299,000 employees at the end of 2019, called the report “speculation.”
Daimler shares rose as much as 2.3% in early trading in Frankfurt on Thursday.
Kallenius must brace for critical questions from investors at Daimler's annual general meeting next week, his first one as CEO after succeeding veteran leader Dieter Zetsche last year. The stock is down 26% this year, giving Daimler a market value of about 39 billion euros -- less than a quarter of Tesla Inc.
©2020 Bloomberg L.P.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
-
Joining The Dots | Dark Skies, Steady Diya: Why Hope Holds This Diwali
With war, a weak rupee and foreign outflows weighing on sentiment, policymakers at the NDTV World Summit and market veterans at NDTV Profit Ignite: Diwali Edition offered the same advice: stay invested and filter out the noise.
-
The Curious Case of Equitas Small Finance Bank And A CEO Who Quit For Stock
PN Vasudevan believes persistent investor concerns over a perceived conflict of interest had become a governance overhang on Equitas Small Finance Bank's stock, even as the lender improved profitability and asset quality.
-
Talking Points This Week: AI Cash Burn, A Tiger Comeback And An India That Still Finds Its Own Path
India is not immune to higher oil or tighter global liquidity, yet its earnings base is broader, its domestic policy levers are still available.
-
Foreign Investors Own Half Of HDFC Bank and ICICI Bank. An LTCG Cut Could Matter Most Here
Foreign portfolio investors have US$115 billion parked in HDFC Bank, ICICI Bank. If the government cuts long-term capital gains tax, Jefferies says returning foreign money could land here first.
