UPDATE 2-Daimler to reduce Iran ties over nuclear policy

* To sell 30 pct stake in Iranian engine maker – CEO

* To freeze planned exports of cars, trucks to Iran

* Will still supply spare parts, provide maintenance service

* Follows U.S. calls for action against Iran

* Co of confident of Mercedes profit target for 2010

* Stock up 1.2 pct, outperforming slight gains in German DAX

(Rewrites throughout adding CEO on Iran, Mercedes)

By Christiaan Hetzner

BERLIN, April 14 (BestGrowthStock) – Luxury carmaker Daimler
(DAIGn.DE: ) became the latest German firm to reduce business ties
with Iran in protest at its nuclear policy, a day after the U.S.
called for swift sanctions to pressure Tehran.

Daimler’s announcement of plans to sell its 30 percent stake
in an Iranian engine maker and freeze the planned export to Iran
of cars and trucks follows U.S. President Barack Obama’s move to
isolate Iran during a recent nuclear security summit in
Washington. [ID:nN11158113] [ID:nN13250646]

That goal was supported by German Chancellor Angela Merkel
and Daimler’s decision to reduce ties with Iran follows similar
action by German peers Siemens (SIEGn.DE: ), Munich Re (MUVGn.DE: )
and Allianz (ALVGn.DE: ). [ID:nLDE60P1LJ] [ID:nLDE61H1Z2]

“The policies of the current Iranian leadership have
compelled us to put our business relationship with that country
on a new footing,” Chief Executive Dieter Zetsche told
shareholders at Wednesday’s annual general meeting.

“In general, our business activities with Iran will now be
limited to meeting our existing contractual obligations and
continuing our cooperation with established customers.”

Daimler said its business with Iran constituted less than a
tenth of a percent of its 79 billion euros ($107.9 billion) in
total global revenues last year.

Wednesday’s move follows Daimler’s decision last year to
stop supplying parts to Iran Khodro, the Middle East’s largest
carmaker, which had been assembling a few hundred old Mercedes
E-Class models locally.


In addition to the Iran plans, Zetsche also sounded a
bullish note about full-year profit at Mercedes, after seeing a
strong uptick in sales since the start of the year.
A near 27 percent increase in Mercedes-Benz brand retail
volumes along with a rich model mix leaning heavily towards
higher-margin sales of Mercedes E-Class and S-Class vehicles
gave Daimler more confidence its car business would earn more
than 1.5 billion euros ($2.05 billion) in operating profit this

“Following our very good performance over the first three
months, the emphasis is here clearly on the words ‘more than’,”
Zetsche said, adding he expects all divisions to return to the

Zetsche earned a hefty rebuke from shareholders for his
decision to omit a 2009 dividend for the first time in 14 years,
although he has pledged to pay out about 40 percent of the
group’s 2010 net profit. [ID:nLDE61G0LL]

Last week, Daimler agreed to a cross-shareholding with
French peer Renault (RENA.PA: ) and Japan’s Nissan (7201.T: ),
cementing a strategic partnership that will stretch from small
cars through light commercial vehicles to sharing technology for
electric powertrains. [ID:nLDE6361D5]

Some investors are sceptical that Zetsche can achieve his
plans to save some 2 billion euros through a partnership with
loss-making Renault, in particular because an activist French
government controls 15 percent of the carmaker’s shares.

Daimler also has a poor record for tie-ups, especially in
its ill-fated 1998 marriage to Chrysler from which Daimler was
able to extricate itself just days before the U.S. carmaker
filed for bankruptcy last April. [ID:nL6376163]

Zetsche has argued that Daimler has already defined more
specific joint projects with Renault at present than after nine
years with Chrysler, where he said Daimler mistakenly entered a
deal before even identifying the amount of possible savings.

For FACTBOX on Iran sanctions click on [ID:nLDE63B1CF]

For FACTBOX on companies severing ties with Iran see

Investing Basics

($1=.7322 Euro)
(Reporting by Christiaan Hetzner; editing by Simon Jessop)

UPDATE 2-Daimler to reduce Iran ties over nuclear policy