Fund managers and individual shareholders confronted Daimler-Chrysler chief executive officer Juergen Schrempp yesterday at the company's annual meeting, venting frustration over the automaker's sagging earnings and troubles at its Mercedes division.
"Is it really useful to shoot yourself in the foot to prove you're a capable doctor?" asked Klaus Kaldemorgen of Deutsche Bank's fund management unit DWS, to rounds of applause from the packed auditorium at the Berlin Messe convention center.
Schrempp said the company was working to overcome the difficulties that saw earnings in the Mercedes division nearly evaporate in the fourth quarter and led to a euro1.2 billion (US$1.56 billion) restructuring of the Smart compact car business, part of the Mercedes division.
"We have made clear progress," Schrempp told the thousands of investors in the vast hall, noting that the company reached its operating earnings target for the full year despite a drop in fourth-quarter earnings.
"We reached our profit target. But we're not satisfied with that," he said.
Investors complain that the company's stock price remains well below the level at the time of the 1998 merger between Daimler-Benz and Chrysler Corp. that created the current company.
DaimlerChrysler AG shares were down 0.2 percent at euro34.60 in Frankfurt trading yesterday. They have lost about a third of their value over the past five years.
"This is becoming a nightmare, this wonderful dream," offered another shareholder, Hans Richard Schmitz.
Some fund managers have said they will oppose or abstain from a largely symbolic vote on approving the management team's performance. Germany's third-largest asset manager, Union Investment, indicated this week it would abstain and others, including DWS and SEB, signaled they may follow suit.
The company's fourth-quarter net profit fell 63 percent to euro526 million from euro1.4 billion in 2003 as Mercedes, once its star division, struggled with quality problems and the dollar's weakness against the euro, which hurt its results in the key US market. Earnings at Mercedes nearly evaporated to just euro20 million from euro784 million.
Those problems followed a costly, multiyear turnaround at Chrysler, the company's US arm.
"The current surge in the Chrysler brand notwithstanding, Daimler still faces fundamental challenges -- its costs are too high and the durability of its products inadequate," said Peter Morici, a University of Maryland economist who follows the auto industry.
"Reliability has been average to well below average," he said.
Last week brought more setbacks as Mercedes-Benz recalled some 1.3 million cars worldwide to examine alternators and batteries.
And DaimlerChrysler said it would restructure its money-losing Smart car maker, spending up to euro1.2 billion this year, cutting 700 jobs and scrapping some models. Smart has been losing money, but the company has not said how much.