Daimler AG (OTC: DDAIF) will report better-than-expected second-quarter earnings next Thursday, July 23. But job cuts are a big part of the brighter picture.
“We took proactive decisions on costs and spending and focused intensely on working capital management,” said CEO Ola Kaellenius, Chairman of the Board of Management of Daimler AG and Mercedes-Benz AG.
“But, there is still much to do. Our systematic efforts to lower the break-even of the company by reducing costs and adjusting capacity will need to continue.”
The company is seeking 2 billion euros in annual savings through staff cuts. That is equivalent to more than 20,000 jobs, Germany’s Handelsblatt newspaper reported Friday.
Daimler has said it is seeking to save more than 1.4 billion euros from annual staff costs, according to Reuters.
The parent company of Daimler Trucks & Buses and Mercedes-Benz passenger vehicles said it spent €129 million on buyouts and early retirements in the second quarter.
Daimler will stop building the Mercedes-Benz C-Class sedan in Tuscaloosa, Alabama. But it will continue to produce sport utility vehicles (SUVs). It also will stop making a variant of the compact Mercedes-Benz A-Class in Aguascalientes, Mexico, Reuters reported.
Still at a loss
The German automaker expects a second-quarter operating loss of €1.68 billion euros ($1.91 billion). The company released the projection Thursday. Analysts called for a -€2.3 billion loss. Cash flow and liquidity also are expected to top forecasts.
“Daimler pre-released better-than-consensus second-quarter numbers,” Jefferies analyst Philippe Houchois said.
Daimler Trucks & Buses is expected to report adjusted earnings before interest and taxes of -€747 million. Consensus is -€823 million. Freightliner and Western Star truck brands are sold by Daimler Trucks North America (DTNA) It is the leading manufacturer in North America.