It must have been my critical posts on the Smart Car that pushed the board over the edge. Such power! ;-)
DaimlerChrysler CEO Schrempp to leave
Thu Jul 28, 2005 6:17 AM ET
today.reuters.com
By Michael Shields, European Auto Correspondent
FRANKFURT (Reuters) - DaimlerChrysler's embattled Chief Executive Juergen Schrempp will leave at the end of the year, the carmaker said in a shock announcement on Thursday that eclipsed surprisingly good quarterly results.
Daimler said Schrempp, whom disgruntled investors blasted at their annual meeting for poor performance and shoddy leadership, had volunteered to go and hand over the reins of the world's fifth-biggest automaker to Chrysler chief Dieter Zetsche.
The news boosted DaimlerChrysler's stock -- the laggard so far this year among European peers -- more than 10 percent. They traded at 39.40 euros at 0930 GMT, up 8.5 percent. Schrempp's leaving added some 3.7 billion euros to the firm's market value.
"The supervisory board and Prof. Schrempp are in full agreement that the end of the year 2005 is the optimal time for a change in the leadership of the company," Chairman Hilmar Kopper said in a statement.
"The decisions of the supervisory board have been made unanimously after a thorough process," he said.
"He has left voluntarily after a dialogue with the supervisory board," a spokesman added, saying that Schrempp, 60, had proposed Zetsche as his successor.
Although Schrempp's contract runs until 2008, he will only draw his salary until the end of this year, the spokesman said.
Zetsche, 52, helped turn around the number-three U.S. automaker at a time of ferocious competition in North America. The German manager gets a five-year stint as group CEO. He is succeeded by Chrysler chief operating officer Thomas LaSorda.
"Schrempp's stepping down should absolutely be seen as positive for DaimlerChrysler," said Metzler Bank analyst Juergen Pieper. "Schrempp has made too many poor strategic decisions in the past. Zetsche should bring a breath of fresh air."
Schrempp's decision to build a carmaker with global reach led to Daimler-Benz's 1998 merger with Chrysler and its investment until last year in Japan's struggling Mitsubishi Motors Corp.
Both deals hurt profits and created management headaches while diverting attention from flagship luxury division Mercedes Car Group.
MERCEDES SPRINGS SURPRISE
The group's second-quarter operating profit fell 20 percent to 1.67 billion euros ($2.02 billion), beating expectations thanks to a surprise operating profit at Mercedes.
It reiterated its forecast for slightly higher 2005 operating profit excluding restructuring costs for its loss-making Smart minicar brand.
Mercedes posted a 12 million operating profit despite an extra 311 million euros in charges to restructure Smart.
U.S. arm Chrysler, sucked into a North American price war with rivals General Motors and Ford, saw operating profit gain 4 percent to 544 million euros, also above analyst estimates of 412 million.
Traditional cash cow Mercedes has been grappling with the strong euro, model changeovers, spending to fix quality problems and hefty losses at Smart. Its first-quarter operating loss of 954 million euros marked its first red ink since 1993.
The profit collapse prompted a new efficiency drive that aims to boost earnings at the division by more than 3 billion euros and restore an operating margin of 7 percent by 2007.
The company said on Thursday it aims to improve Mercedes earnings by "up to 3.5 billion euros."
DaimlerChrysler's market-leading commercial vehicles business turned in another strong quarter amid a truck boom, especially in North America. (Additional reporting by Ralf Banser and Christiaan Hetzner) ($1=.8287 Euro)
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