STUTTGART - Jurgen Schrempp says he will spend as much as 25 percent of his time in 2001 meeting with analysts and investors in an effort to revive DaimlerChrysler's share price.
In an interview with Automotive News Europe, Schrempp said DaimlerChrysler might also buy back shares to boost their value.
The company's stock price has fallen by more than half since the 1998 merger. But Schrempp - a self-professed champion of shareholder value - said he doesn't feel pressured by big D/C investors like Deutsche Bank, the Kuwaiti government and American businessman Kirk Kerkorian.
'They are convinced that what we are doing is perfect, what we are doing is excellent and I have no doubt that our stock will appreciate considerably over time,' Schrempp said. 'We have tremendous support from our board. These are business people and they are not buying easily into a story.'
Schrempp said D/C's problem in the financial markets is one of 'not getting the full message across.'
He said he already talks to equity analysts more than other European CEOs, but plans to do more. He will not, however, consider radical measures to boost the share price, like spinning off Chrysler.
'That would be the ultimate in stupidity,' said Schrempp. 'Either we want to be the No. 1 automotive company or we don't. The most successful company in the automotive industry will have to cover all potential markets. Why should I undo something because of a short-term problem?'
Last month, DaimlerChrysler reported a 92 percent decline in third-quarter operating profits. The part of D/C that used to be Chrysler Corp. lost E618 million. But Schrempp said the markets are not simply reacting to D/C's lower profits in 2000.
'In 1999, our results in net income and in operating profit were the best in the world. But our stock in 1999 dropped by 30 percent. So it is not only immediate financial results, it is perspective - and we have a tremendous story to tell.'
Still, Schrempp said there are some measures DaimlerChrysler could take to increase the stock price.
'What comes to mind is a share buyback,' he said. 'We got permission under German law at the last shareholder meeting. We can do it and we might - at the right time.'
But communicating better with analysts is the key, Schrempp said. Last summer, D/C hired London-based Elizabeth Wade as the company's senior vice president for investor relations. Her job is to create enthusiasm about DaimlerChrysler's prospects among analysts.
'I have so many prizes in my office for investor relations work,' Schrempp said. 'We get prizes for being open, for providing numbers, for fast response. But I have not received the prize for excitement, for fire, for marketing. So I told [Wade] that we have to go out - I have to go out - particularly in 2001.
'I will spend at least 25 percent of my time in the investor community with analysts to convey and document our story,' he said.
That's a lot more than Schrempp has done in 2000.
'My American colleagues do it, but nobody in Europe does it that way,' he said. 'I've talked to a number of my peers at American companies and I asked them, 1/8What are you doing in Wall Street? How much time do you spend? How do you approach that?' Those guys, two or three times a year, go on shows for a week or for two weeks. At least I want to try it.'
Some analysts question whether that is the right strategy.
'I probably would prefer that he spent his time running the business,' said Andrew Blair-Smith, automotive industry analyst at Commerzbank in London. 'I don't know that it is necessary for a CEO to spend so much time talking to analysts.'
Schrempp said he is frustrated by DaimlerChrysler's depressed share price, but 'not despondent.'
He said the merger of the former Daimler-Benz and Chrysler Corp. would generate 'tremendous' synergies.
'I do believe the story we have to tell. We are telling them what is happening in 2001, what is happening in the next three years, what is happening in a five-year span. And you can put it in a way that is believable, that it is plausible, that they will buy.'
But Blair-Smith said he's not convinced the share price problems reflect the way which DaimlerChrysler is telling its story.
'The USA looks to be a difficult market next year and DaimlerChrysler has a high degree of exposure,' said the analyst. 'It's gone from being an insulated company with superior margins to a highly exposed company.'
Schrempp said the Chrysler unit is in the midst of a new-product lull and has been hurt by the cost of buyer incentives in the competitive US market. But he said incentives are being reduced as new models come on stream and cost-cutting measures are implemented.
DaimlerChrysler is pushing its US suppliers to lower component prices. Some parts makers have complained, but Schrempp said he isn't worried about spoiling Chrysler's history of close ties to its supply chain.
'Chrysler is doing that - it is the Americans,' he said. 'Nobody is coming from here with a whip and saying you must do it differently. It's (Chrysler Group CEO) Jim Holden's team and (Chrysler purchasing chief Tom) Sidlik and these guys. All they are doing is going to suppliers and saying, 1/8OK fine, this is the market, this is the incentives, and now everyone of us has to chip in - and you have to chip in as well.'
Schrempp said he backs Holden completely.
'He's a great guy as a chief executive and he's a great guy as a partner and colleague and friend around the board. I'm not happy about the results, but I'm happy about the way he builds his team.'
For example, Schrempp said Holden was able to retain Tom Gale long after the legendary Chrysler design and product development chief wanted to leave.
'I'm very happy that we were able to keep Tom Gale on board for another two years when he wanted to go with his yacht somewhere,' he said. 'And we have selected two [executives to replace Gale] like we have it here in Germany, where engineering and design are separate. Tom Gale had both responsibilities. Now we have [Chrysler product development boss Richard] Schaum and [chief designer] Trevor Creed reporting to Holden.'