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Daimler posts dramatic loss for 2009

German auto giant Daimler suffered a sharp loss last year that surprised markets Thursday and pushed its share price lower as the group reported results from one of the auto sector's most challenging years.

Daimler posts dramatic loss for 2009
Photo: DPA

Daimler posted a 2009 net loss of €2.64 billion ($3.6 billion), compared with a profit of €1.4 billion a year earlier.

“Last year brought many great challenges also for Daimler,” a statement quoted chairman Dieter Zetsche as saying.

The group nonetheless “laid the foundations not only to overcome the upheaval affecting our industry, but to lead from a strong position. We are emerging from the crisis with plenty of torque,” he stressed.

The group forecast 2010 pre-tax profit would be more than €2.3 billion but said it would not pay a dividend for 2009.

After pulling out of the red in the third quarter of 2009, Daimler plunged back into loss in the fourth quarter, with a net loss of €352 million.

The group suffered in particular from a collapse in sales of heavy trucks, a sector in which it is the global leader.

In the fourth quarter of 2008, Daimler had posted a net loss of €1.5 billion owing mainly to exceptional items stemming from its sale of the US car maker Chrysler.

Costs related to Chrysler trimmed another €294 million from Daimler’s full-year pre-tax profit in 2009. Overall sales last year fell to €78.9 billion from €98.5 billion in 2008.

The latest results caught analysts by surprise, as they expected Daimler to announce a dividend of around €0.43 and a fourth quarter net profit of €277 million, according to a survey by Dow Jones Newswires.

Daimler said last month that unit sales had fallen by 10.1 percent last year to just under 1.13 million Mercedes-Benz, Smart city cars and other autos, as the global auto sector was slammed by an economic downturn.

In the fourth quarter however, those sales had gained 13 percent from the same period a year earlier.

Luxury car makers did not benefit as much as rivals from state subsidised car scrapping premiums, but saw sales improve towards the end of the year.

Asian markets were largely responsible for a second-half increase as demand grew for larger Class E and Class S autos and Daimler said the “ongoing solid growth of emerging markets such as China and India is exerting a positive influence.”

Shares in the group plunged however by 7.88 percent to 30.44 euros in morning trades on the Frankfurt stock exchange, while the DAX index of German blue-chips was essentially unchanged overall.

In addition to the weaker than expected earnings, “the cancellation of the dividend is weighing on sentiment,” one trader told Dow Jones.

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From lizards to water, eco-bumps snag Tesla’s giant Berlin car factory

In the green forest outside Berlin, a David and Goliath-style battle is playing out between electric carmaker Tesla and environmental campaigners who want to stop its planned "gigafactory".

From lizards to water, eco-bumps snag Tesla's giant Berlin car factory
Tesla's gigafactory outside the doors of Berlin. dpa-Zentralbild | Patrick Pleul

“When I saw on TV that the Tesla factory was going to be built here, I couldn’t believe it,” said Steffen Schorch, driving his trusty German-made car.

The 60-year-old from Erkner village in the Berlin commuter belt has become one of the faces of the fight against the US auto giant’s first European factory, due to open in the Brandenburg region near Berlin in July.

“Tesla needs far too much water, and the region does not have this water,” said the environmental activist, a local representative of the Nabu ecologist campaign group.

Announced in November 2019, Tesla’s gigafactory project was warmly welcomed as an endorsement of the “Made in Germany” quality mark – but was immediately met with opposition from local residents.

Demonstrations, legal action, open letters – residents have done everything in their power to delay the project, supported by powerful
environmental campaign groups Nabu and Gruene Liga.

Tesla was forced to temporarily suspend forest clearing last year after campaigners won an injunction over threats to the habitats of resident lizards and snakes during their winter slumber.

READ MORE: Is Germany’s Volkswagen becoming ‘the new Tesla’ as it ramps up e-vehicle production?

And now they have focused their attention on water consumption – which could reach up to 3.6 million cubic metres a year, or around 30 percent of the region’s available supply, according to the ZDF public broadcaster.

The extra demand could place a huge burden on a region already affected by water shortages and hit by summer droughts for the past three years.

Local residents and environmentalists are also concerned about the impact on the wetlands, an important source of biodiversity in the region.

Tesla Street

“The water situation is bad, and will get worse,” Heiko Baschin, a spokesman for the neighbourhood association IG Freienbrink, told AFP.

Brandenburg’s environment minister Axel Vogel sought to play down the issue, saying in March that “capacity has not been exceeded for now”.

But the authorities admit that “the impact of droughts is significant” and have set up a working group to examine the issue in the long term.

The gigafactory is set to sprawl over 300 hectares – equivalent to approximately 560 football fields – southwest of the German capital.

Tesla is aiming to produce 500,000 electric vehicles a year at the plant, which will also be home to “the largest battery factory in the world”,
according to group boss Elon Musk.

In a little over a year and a half, swathes of coniferous forest have already been cleared to make way for vast concrete rectangles on a red earth base, accessed via the already iconic Tesla Strasse (Tesla Street).

German bureaucracy

The new site still has only provisional construction permits, but Tesla has been authorised by local officials to begin work at its own risk.

Final approval depends on an assessment of the project’s environmental impact – including the issue of water.

In theory, if approval is not granted, Tesla will have to dismantle the entire complex at its own expense.

But “pressure is being exerted (on the regulatory authorities), linked to Tesla’s significant investment”, Gruene Liga’s Michael Greschow told AFP.

In early April, Tesla said it was “irritated” by the slow pace of German bureaucracy, calling for exceptions to the rules for projects that help the environment.

Economy Minister Peter Altmaier agreed in April that his government “had not done enough” to reduce bureaucracy, lauding the gigafactory as a “very important project”.

Despite Germany’s reputation for efficiency, major infrastructure projects are often held up by bureaucracy criticised as excessive by the business community.

Among the most embarrassing examples are Berlin’s new airport which opened last October after an eight-year delay and Stuttgart’s new train station, which has been under construction since 2010.

Brandenburg’s economy minister, Joerg Steinbach, raised the possibility in February that the Tesla factory could be delayed beyond its July planned opening for the same reason.

SEE ALSO: Tesla advertises over 300 jobs for new Gigafactory near Berlin

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