Daimler Benz slides to loss of pounds 2.5bn

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The Independent Online
Currency losses and problems with its Dasa aerospace arm helped force Daimler Benz to a net loss of DM5.7bn (pounds 2.5bn) in 1995.

However Manfred Gentz, chief financial officer, said key businesses within the group were well hedged against currency fluctuations into the near future.

The group paid no dividend for the year and said it was too early to comment on any payout for 1996.

Jurgen Schrempp, chairman, said that Dasa, one of the four partners in the European Airbus consortium, should break even in 1997 after losses of more than DM4bn last year.

He said that restructuring measures to achieve the turnaround have been provided for in the 1995 accounts.

Mercedes-Benz, the group's automotive unit, provided an upbeat tone at the annual meeting with projections of a 5 per cent increase in sales this year, with profits at least equal to those in 1995.

Last year Mercedes made a net DM2.275bn compared with DM1.849bn a year earlier while sales rose to DM72bn from DM70.7bn in 1994.

Currency market fluctuations reduced group net income by DM2.4bn. Daimler said currencies hurt net income by reducing the operating results by DM1.6bn while a further DM800m was shaved off to cover provisions for risks on its order books.

The mark climbed much of last year against the dollar and other European currencies.

A strong mark hurts German companies by reducing the amount of money they make on overseas business and by raising the price of their goods when they are denominated in other currencies.

Mr Gentz said Daimler's car business in the US was hedged at exchange rates above recent levels well into this year and in Europe into the autumn.

He added that Dasa was hedged into 1997 and even 1998 with futures contracts "clearly above" the current dollar/mark rate.

Daimler said group sales should grow this year by 5 to 10 per cent on last year's DM103.55bn.