Struggling DAF talks to potential suitors

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DAF, the loss-making Anglo-Dutch trucks company, is seeking a strategic alliance that could include a partner taking an equity stake, writes Mary Fagan.

DAF, 16 per cent-owned by British Aerospace, said that talks were taking place with potential suitors. Daimler-Benz, rumoured as a candidate along with Saab- Scania of Sweden, declined to comment yesterday.

DAF made a loss of 97.4m guilders (pounds 31.7m) in the first half of the year, compared with a 179m guilders loss a year earlier. It said recession in the UK meant it was unlikely to do more than break even in the second half.

The company has a 7.7 per cent market share in Western Europe, which analysts have long believed is not large enough for it to survive as an independent entity.

'They're too small, they don't have the economies of scale of the bigger companies,' said Philip Ayton, of Barclays de Zoete Wedd.

DAF has been cutting costs and increasing efficiency, partly through stock control. About 540 jobs were lost in the first half as part of previously announced plans to reduce non-production staff by 1,600 over two years. Around half the job losses in the next 18 months will be in the UK.