Earnings up fivefold at automaker Daimler

Chrysler division makes profit in second quarter, the company reports

July 30, 2004|By BLOOMBERG NEWS

STUTTGART, Germany - DaimlerChrysler AG said yesterday that its second-quarter earnings rose fivefold as its Chrysler division returned to profit, helped by new models including the 300C sedan and job cuts.

Net income rose to 554 million euros ($668 million), or 55 cents a share, from 109 million euros, or 11 cents, a year earlier, chief executive Juergen Schrempp said on a conference call with analysts. Sales gained 9 percent to 37.1 billion euros.

DaimlerChrysler expects its full-year operating profit to grow "strongly" as increases at Chrysler and the truck business make up for declines at Mercedes Car Group, Schrempp said.

"Operating profit at Chrysler and the truck divisions were extremely good," said Markus Brueck, a fund manager at Metzler Investment in Frankfurt.

The world's No. 5 automaker expects worldwide economic expansion in the second half. At the same time, "a continuation of high oil prices" might "have a distinctly negative effect on prospects for global growth," DaimlerChrysler said on its Web site.

Rising steel prices may have a "major" effect on Chrysler's costs, division Chief Executive Dieter Zetsche told analysts on the call.

Shares of DaimlerChrysler fell 1 euro cent, or less than 0.1 percent, to 37.10 euros in Frankfurt. The stock is up 0.3 percent this year. The U.S. shares fell as much as 2.9 percent and closed down 1.3 percent at $44.91 in New York.

Net income missed the 864 million-euro median analyst estimate. Operating profit, or earnings before interest, taxes, pension costs and gains or losses from affiliates, more than tripled to 2.09 billion euros.

Losses at Tokyo-based affiliate Mitsubishi Motors Corp. reduced net income in the quarter by 485 million euros, DaimlerChrysler said. Mitsubishi's operations will no longer have an effect on its earnings because its stake has dropped to 25 percent from 37 percent and will be accounted for as an investment, DaimlerChrysler said.

Chrysler posted an 8 percent increase in second-quarter vehicle sales to 781,443 units, and sales in the commercial vehicles division surged 47 percent to 184,937 trucks and buses. The Mercedes Car Group sold 319,400 cars in the quarter, unchanged from a year earlier.

Mercedes-brand worldwide vehicle sales fell 1.8 percent in June from a year earlier, losing ground to BMW, whose June sales jumped 20 percent. Mercedes' vehicle sales in Germany fell 1 percent from the year-earlier quarter to 104,299 units, the company said.

Earnings before interest and tax at Chrysler was 516 million euros compared with a year-earlier operating loss of 948 million euros. Profit exceeded the analysts' 350 million-euro median estimate for the division. Chrysler profits should rise the rest of the year, Zetsche said.

Earnings before interest and tax at the commercial-vehicles division more than doubled to 468 million euros from 222 million euros. DaimlerChrysler makes more than a half-million trucks annually and is the world's largest truck maker.

Services division operating profit jumped 41 percent to 472 million euros from 334 million euros.

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