SOURCE: Automotive NewsDaimlerChrysler earnings rise despite Chrysler loss
May 15, 2007 - 8:00 am
UPDATED: 5/15/07 10:07 A.M.
FRANKFURT (Reuters) -- DaimlerChrysler today posted a 73 percent rise in first-quarter profit as one-off gains and a profit rebound at Mercedes helped overcome ballooning losses at the Chrysler group, the U.S. arm it is selling.
First-quarter earnings before interest and tax (EBIT) advanced to $2.76 billion (2.04 billion euros), the company said, even as Chrysler lost $2.02 billion (1.49 billion euros).
In its first detailed outlook for the year, the German group forecast that 2007 EBIT would rise to $9.48 billion (7 billion euros) excluding the impact from selling Chrysler, a deal announced on Monday that breaks up a failed transatlantic car merger sealed in 1998.
The automaker was reporting under IFRS accounting standards for the first time.
The results drove home just why DaimlerChrysler was in effect paying private equity group Cerberus Capital Management to take Chrysler off its hands after nine years of roller-coaster results.
Mercedes Car Group -- which includes the premium Mercedes-Benz, luxury Maybach and Smart minicar brands -- swung to a better-than-expected EBIT of $1.07 billion (792 million euros).
Mercedes reiterated its forecast of generating an operating margin of at least 7 percent this year, up from just 6.6 percent in the quarter, which Mercedes had signaled would be weak.
The Chrysler group's loss in the quarter was twice as bad as expected, after restructuring costs of $1.24 billion (914 million euros).
Chrysler, which is in the process of cutting 13,000 jobs, expects a 2007 EBIT loss of $2.17 billion (1.6 billion euros) even though its car sales will rise, especially outside North America, it said.
Overall, group net profit advanced 152 percent to $2.67 billion (1.97 billion euros), helped by a gain from selling shares in aerospace group EADS.
Boosted by a global boom in freight transport by road, its market-leading truck group had operating profit of $715.1 million (528 million euros), up by a quarter and ahead of market expectations.
The group, set to be called Daimler AG once the Chrysler sale goes through later this year, said the forecast for $9.48 billion (7 billion euros) in 2007 EBIT included a gain of $2.17 billion (1.6 billion euros) from selling EADS shares.
It will also book charges of $1.36 billion (1.0 billion euros) for reorganizing Chrysler and $812.9 million (600 million euros) for cutting white-collar jobs.