Chrysler Group Doing Better, Mercedes Group is the weak sibling
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02-21-2006, 09:59 AM
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Chrysler Group Doing Better, Mercedes Group is the weak sibling
SINDELFINGEN, Germany - DaimlerChrysler AG reported an annual net profit of 2.8 billion euros ($3.33 billion) on Thursday and a fourth-quarter profit that nearly doubled on improved results from its commercial vehicles unit and strong earnings at its Chrysler unit.
For the quarter ended Dec. 31, the German-U.S. automaker earned 966 million euros ($1.15 billion) compared with 526 million euros a year earlier. Revenue rose 10 percent to 41.5 billion euros ($49.9 billion) from 37.7 billion euros.
Fourth-quarter operating profit rose to 1.05 billion euros ($1.25 billion) from 785 million euros.
DaimlerChrysler said its annual profit increased from 2.5 billion euros in 2004 and beat the 2.6 billion euros ($3.1 billion) forecast by analysts polled by Dow Jones Newswires. Revenue rose 5 percent to 149.8 billion euros ($178.32 billion), meeting its own forecast.
Annual operating profit, however, came to 5.19 billion euros ($6.18 billion), down 9.9 percent. Analysts had expected 5.16 billion euros ($6.14 billion).
Shares of DaimlerChrysler fell 3.2 percent to 48.48 euros ($57.71) in Frankfurt trading.
Chief Financial Officer Bodo Uebber said profits were hampered by high costs for raw material like steel and oil, along with intensifying competition in Europe and "tough competitive conditions" in the U.S.
"Of course, 2006 will not be an easy year. Ongoing tough competition in car markets will be a major challenge, especially in the United States," he said. "We also anticipate a further increase in interest rates, and the prices of raw materials and oil in particular are unlikely to fall."
He said the company expects operating profit to rise this year with sales to remain steady, but didn't provide exact figures.
Last year was a volatile time for the automaker, including the surprise announcement by CEO Juergen Schrempp that he was stepping down and the recall of 1.3 million Mercedes-Benz cars.
DaimlerChrysler said in January that it will cut 20 percent of its worldwide administrative staff over the next three years, eliminating 6,000 jobs in a move to save about $1.2 billion a year. Most of the job cuts will be in Germany.
The company said the downsizing will cost it about $2.4 billion between 2006 and 2008. The company also is reorganizing the management of its commercial vehicles division.
DaimlerChrysler announced in early January that it sold more than 4 million vehicles in 2005, an increase of nearly 4 percent over 2004.
The Mercedes Car Group, long the company's flagship unit, posted an operating loss of 505 million euros ($601.15 million), compared to a profit of euro1.7 billion the year before. That was expected given the company's decision last year to realign the unit and cut 8,500 jobs in Germany, as well as the 1.2 billion euro program last year to trim 600 jobs and expenses at its micro car unit, Smart GmbH, leaving it with 750 workers.
The Chrysler Group, which is facing severe competition in the U.S. from Japanese rivals as well as Ford and GM, saw improvement with its operating profit reaching 1.5 billion euros ($1.79 billion) for the year, up from 1.4 billion euros in 2004.
The company said the increase was helped in part by a 240 million euro ($285.7 million) gain on the sale of its Arizona Proving Grounds test facility, but was also hampered by charges of 99 million euro ($117.85 million) related to financial support to a supplier.
"Energy and fuel prices continue to rise triggering fuel consumption concerns in the United States," Chief Executive Dieter Zetsche said at a news conference.
Revenue for the year rose 1.2 percent to 50.1 billion euros ($59.6 billion) from 49.4 billion euros as consumers responded to new offerings, including the rear-wheel drive Chrysler 300 and its line of Jeep-branded vehicles, such as the Commander.
Chrysler plans to launch 10 new models this year, including the Aspen, Jeep Compass and Dodge Nitro, and is looking beyond the U.S. to expand its sales.
"The Chrysler Group has to be more present on international markets," Zetsche said, adding the unit is targeting Europe and China for future growth. "Our goal is to keep Chrysler on a path of profitable growth."
For the quarter ended Dec. 31, the German-U.S. automaker earned 966 million euros ($1.15 billion) compared with 526 million euros a year earlier. Revenue rose 10 percent to 41.5 billion euros ($49.9 billion) from 37.7 billion euros.
Fourth-quarter operating profit rose to 1.05 billion euros ($1.25 billion) from 785 million euros.
DaimlerChrysler said its annual profit increased from 2.5 billion euros in 2004 and beat the 2.6 billion euros ($3.1 billion) forecast by analysts polled by Dow Jones Newswires. Revenue rose 5 percent to 149.8 billion euros ($178.32 billion), meeting its own forecast.
Annual operating profit, however, came to 5.19 billion euros ($6.18 billion), down 9.9 percent. Analysts had expected 5.16 billion euros ($6.14 billion).
Shares of DaimlerChrysler fell 3.2 percent to 48.48 euros ($57.71) in Frankfurt trading.
Chief Financial Officer Bodo Uebber said profits were hampered by high costs for raw material like steel and oil, along with intensifying competition in Europe and "tough competitive conditions" in the U.S.
"Of course, 2006 will not be an easy year. Ongoing tough competition in car markets will be a major challenge, especially in the United States," he said. "We also anticipate a further increase in interest rates, and the prices of raw materials and oil in particular are unlikely to fall."
He said the company expects operating profit to rise this year with sales to remain steady, but didn't provide exact figures.
Last year was a volatile time for the automaker, including the surprise announcement by CEO Juergen Schrempp that he was stepping down and the recall of 1.3 million Mercedes-Benz cars.
DaimlerChrysler said in January that it will cut 20 percent of its worldwide administrative staff over the next three years, eliminating 6,000 jobs in a move to save about $1.2 billion a year. Most of the job cuts will be in Germany.
The company said the downsizing will cost it about $2.4 billion between 2006 and 2008. The company also is reorganizing the management of its commercial vehicles division.
DaimlerChrysler announced in early January that it sold more than 4 million vehicles in 2005, an increase of nearly 4 percent over 2004.
The Mercedes Car Group, long the company's flagship unit, posted an operating loss of 505 million euros ($601.15 million), compared to a profit of euro1.7 billion the year before. That was expected given the company's decision last year to realign the unit and cut 8,500 jobs in Germany, as well as the 1.2 billion euro program last year to trim 600 jobs and expenses at its micro car unit, Smart GmbH, leaving it with 750 workers.
The Chrysler Group, which is facing severe competition in the U.S. from Japanese rivals as well as Ford and GM, saw improvement with its operating profit reaching 1.5 billion euros ($1.79 billion) for the year, up from 1.4 billion euros in 2004.
The company said the increase was helped in part by a 240 million euro ($285.7 million) gain on the sale of its Arizona Proving Grounds test facility, but was also hampered by charges of 99 million euro ($117.85 million) related to financial support to a supplier.
"Energy and fuel prices continue to rise triggering fuel consumption concerns in the United States," Chief Executive Dieter Zetsche said at a news conference.
Revenue for the year rose 1.2 percent to 50.1 billion euros ($59.6 billion) from 49.4 billion euros as consumers responded to new offerings, including the rear-wheel drive Chrysler 300 and its line of Jeep-branded vehicles, such as the Commander.
Chrysler plans to launch 10 new models this year, including the Aspen, Jeep Compass and Dodge Nitro, and is looking beyond the U.S. to expand its sales.
"The Chrysler Group has to be more present on international markets," Zetsche said, adding the unit is targeting Europe and China for future growth. "Our goal is to keep Chrysler on a path of profitable growth."
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