Daimler-Benz Takes Necessary Action on AEG and Fokker; Financial Support for Fokker to cease; AEG to be merged with Daimler-Benz AG; Schrempp: "streamlined portfolio will enhance profitability"; Operating results improved in 1995, but high one-off charges.

STUTTGART, Germany--(BUSINESS WIRE)--January 22, 1996--The Board of Management of Daimler-Benz has taken further decisive action to streamline problem areas of the group and restore satisfactory profitability as quickly as possible.

Following an extensive restructuring, focusing on the divestment of loss-making sectors, AEG AG will be merged with Daimler-Benz AG. At an extraordinary meeting today, the Supervisory Board of Daimler-Benz AG endorsed the recommendation of the Board of Management to cease the financial support for Fokker, with immediate effect. The negotiations with the Dutch government have failed, Daimler-Benz and the Dutch state are the shareholders of Fokker Holding, which holds 51% of Fokker, the regional aircraft manufacturer.

After implementing these decisions, Daimler-Benz will acquire a markedly leaner profile, based on core activities in the transport sector which have bright prospects for the future. "Profitability must take precedence over revenues," says Daimler-Benz Chairman Juergen E. Schrempp. "With over 80% of our businesses running satisfactorily we owe it to our shareholders not to allow the other 20% to impede our overall performance."

The extraordinary expenditures arising from the action now being taken to eliminate the accumulated burdens will be accounted for in the 1995 financial statements. The restructuring of AEG Dailmer-Benz industrie will result in an extraordinary expenditure of DM 1.5 billion. The decision to cease financial support for Fokker may depress the consolidated group results for 1995 by a further one-off charge of approximately DM 2.3 billion. The actual further liquidity outflow resulting from the decision on Fokker will be less than DM 1 billion, the equity of the group will be reduced by DM 0.7 billion.

Compared to the first six months of 1995, the operating loss in the second half of the year fell substantially, as already announced. In view of the substantial one-off expenditures for AEG and Fokker in the amount of DM 3.8 billion, Daimler-Benz currently expects the group's operating loss for the year as a whole to be in the region of DM 6 billion.

With the restructuring of these problem areas, the Daimler-Benz Board of Management has stepped up the drive it announced in the summer of 1995 to streamline the business portfolio of the group; the extraordinary expenses in connection with these measures will be absorbed in the 1995 financial statements. Daimler-Benz currently expects the consolidated results for 1996 to move back into the black. "Profitability in all fields of business is the first priority of the group," said Schrempp, "any strategies which do not unequivocally support that priority are unacceptable."

The year 1995 at Daimler-Benz has been marked by an all-out endeavour to shed loss-making areas which originated from the acquisitions of the past years. At the same time, exchange-related risks will be reduced substantially and the competitiveness of the profitable core businesses of the group will be further enhanced. Schrempp: "The product offensive at Mercedes-Benz, the Daimler-Benz Aerospace (Dasa) competitiveness-improving initiative, the restructuring of debis's involvement in Cap Gemini and the restructuring of those parts of AEG which will remain in Daimler-Benz are further milestones in making the Daimler-Benz group substantially more efficient and more profitable." Dasa-Chairman Dr. Manfred Bischoff commented: "Dasa's future activities in the field of civilian aircraft manufacturing will center on the further development and expansion of the European Airbus system."

The decision on Fokker means that Dasa, with immediate effect, will only fulfill those obligations of Fokker that are either guaranteed by Dasa or have been entered into by Fokker since the beginning of the year with the authorization of Dasa. Dasa will explore all possibilities for ensuring that operators continue to receive technical support for Fokker aircraft.

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Note to Editors:

After the Supervisory Board Meeting, the Board of Management of Daimler-Benz AG will meet the press to answer questions at 3 pm CET at the group headquarters in Stuttgart-Mohringen. (Please bring your press passes with you).

CONTACT: Daimler-Benz AG, Stuttgart, Germany

Corporate Communications (KOM)

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