Stuttgart, June 28, 1995
The direct impact of the D-Mark's strength against the US Dollar and other key European currencies on the Daimler-Benz Group, despite the positive operating performance of Mercedes-Benz, can only be partially compensated for by further operational improvements and cost reductions. This statement from the Management Board of Daimler-Benz AG confirms concerns previously expressed about the influence of the dramatically changing exchange rates on business.The appreciation of the D-Mark against other currencies will have a considerable impact on the Group's income statement - particularly with regard to the aerospace division, Daimler-Benz Aerospace.
The Daimler-Benz Management Board has reacted with a decision to rapidly introduce measures securing greater independence from shifting exchange rates in the future, primarily for its industrial activities. The action, which includes a reduction of value added in Germany through the transfer of production and increased purchasing activity abroad, will necessitate comprehensive structural expenditure covered by provisions to be made in the 1995 Group financial statements. These additional charges could amount to well over D-Mark 1 billion, depending on corresponding decisions yet to be made.
A further reaction to the impact of the exchange rates on the company's international competitive position and increased related risks is a critical review of the Group portfolio and continued streamlining. These aspects will also be taken into account in this year's financial statements.
The direct and, even more so, the indirect impact of the D-Mark appreciation - which in the opinion of the Daimler-Benz Board can no longer be considered a temporary situation - will lead to a severe loss in the 1995 Group financial statements. The Board does however believe, that the far-reaching measures agreed upon and the provisions to be made this year, should enable a clear return to profit in the 1996 Group results.
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