Daimler CEO faces disgruntled investor grilling over 'lost year'

Daimler AG’s Chief Executive Officer Ola Kallenius is poised to face critical questions at his first annual general meeting since taking over the German carmaker, with the coronavirus pandemic having disrupted plans to restructure and revive returns.

A string of profit warnings -- several of which predated Covid-19 -- exposed misguided investments and the vulnerability of Daimler’s business, Deka Investment GmbH said ahead of the gathering on Wednesday.

“We look back at a lost year for Daimler," Ingo Speich, Deka’s head of sustainability and corporate governance, said in prepared remarks. While Speich supports Kallenius’s cost-cutting and focus on cash generation, he said the CEO carries some responsibility for Daimler’s woes because he served as development chief under his predecessor Dieter Zetsche.

Kallenius, who took over Daimler’s top job in May 2019, has warned the maker of Mercedes-Benz cars and its peers will be forced to make deeper cutbacks to overcome the economic fallout from the pandemic. While Daimler, Volkswagen AG and BMW AG brace for second-quarter losses after the virus shuttered factories and showrooms, electric-car leader Tesla Inc. shrugged off the slump to become the world’s most valuable automaker this month.

‘Boring’ EQC

Daimler shares have declined 24% this year, giving the Stuttgart-based manufacturer a market capitalization of about 40 billion euros ($45 billion), less than a fifth of Tesla’s valuation.

Tesla sells about ten times as many electric cars as Daimler, and the German company’s Mercedes-Benz EQC model, released last year, is “too late, too expensive and too boring," Speich said.

A worker wears a protective face mask and shield on the assembly line inside the Mercedes-Benz AG automobile plant, operated by Daimler AG, in Kecskemet, Hungary. (Bloomberg)

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A worker wears a protective face mask and shield on the assembly line inside the Mercedes-Benz AG automobile plant, operated by Daimler AG, in Kecskemet, Hungary. (Bloomberg)

Deka holds about 5.4 million Daimler shares, a roughly 0.5% stake, according to Bloomberg data. Daimler’s largest investor is Chinese billionaire Li Shufu with a 9.7% holding, followed by the emirate of Kuwait with 6.8% and the automaker’s joint-venture partner in China, BAIC Motor Group, at 5%.

CEO’s Overhaul

Daimler completed a corporate overhaul last year to give its cars, trucks and mobility-services operations more independence, but management has yet to explain how they intend to earn back the related expenses. Investors have been urging Daimler for years to consider a separate listing of the trucks division, but those calls haven’t resonated within the executive ranks yet.

Daimler’s latest restructuring plan, which Kallenius unveiled in November, foresees cutting the company’s workforce by more than 10,000 to save 1.4 billion euros in 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 last year, called the report speculation.