Daimler seeks EUR1B in savings at Mercedes-Benz by cutting jobs
Daimler presented a new sustainable business strategy at its Capital Market Day. "We are positioning the company for the transformation with a clear strategy for the future. The expenditure needed to achieve the CO2 targets require comprehensive measures to increase efficiency in all areas of our company. This also includes streamlining our processes and structures," said Ola Kallenius, Chairman of the Board of Management of Daimler AG and Mercedes-Benz AG. "This will have a negative impact on our earnings in 2020 and 2021. To remain successful in the future, we must therefore act now and significantly increase our financial strength." Mercedes-Benz Cars has initiated systematic countermeasures to sustainably improve its cost structure and offset the expected margin erosion. Primarily, material cost reductions should support this compensation. By the end of 2022, Mercedes-Benz Cars plans to save more than EURO$1 billion in personnel costs. To this end, jobs are to be reduced in both management and the indirect areas. The company is in close dialog with the employee representatives in order to make the measures as acceptable as possible. To strengthen the free cash flow, investment in property, plant and equipment and in research and development will be capped at the 2019 level and be reduced in the medium term. In order to increase Mercedes-Benz Vans' competitiveness, material costs are to be reduced as well as personnel costs by EURO$100 million. On this basis, the division Mercedes-Benz Cars & Vans expects to achieve a return on sales from operating activities of at least 4% in the year 2020 and at least 6% in 2022.