DaimlerChrysler steers round Smart car losses to lift earnings

[FISH]

http://www.todayonline.com/articles/101438.asp

Time is GMT + 8 hours
Posted: 16-Feb-2006 17:35 hrs


Dieter Zetsche, DaimlerChrysler Chairman and Head of the Mercedes Car Group, addresses the media at the North American International Auto Show at Cobo Hall in Detroit, in January 2006. German-US auto giant DaimlerChrysler said that it had managed to boost its bottom-line last year despite the costs of restructuring its loss-making Smart car unit

German-US auto giant DaimlerChrysler said that it had managed to boost its bottom-line last year despite the costs of restructuring its loss-making Smart car unit.
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DaimlerChrysler said in a statement that net profit rose by 15 percent to 2.846 billion euros (3.4 billion dollars) in 2005.
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At the same time, operating profit declined by 10 percent to 5.185 billion euros, but largely as a result of a 1.1-billion-euro charge related to the troubled ultra-compact Smart car division.
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Excluding that charge, operating profit would have increased last year, the car maker said.
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"We thus fulfilled our earnings forecast for the full year," it said on Thursday.
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Sales rose by 5.4 percent to 149.8 billion euros and unit sales were up 2.7 percent at 4.829 million cars worldwide.
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"DaimlerChrysler made significant progress in 2005. But our earnings are still not where we want them to be," said chairman Dieter Zetsche.
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The car maker therefore planned to pay an unchanged dividend of 1.50 euros per share for 2005, it said.
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All divisions except the Mercedes Car Group, which includes DaimlerChrysler's prestigious Mercedes brand, the ultra-compact Smart and the luxury Maybach, reported a rise in earnings last year.
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Mercedes reported an operating loss of 505 million euros from a year-earlier profit of 1.666 billion euros "due to the realignment of the Smart business model and the expenses for the personnel measures," the company explained.
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The US arm Chrysler turned in operating profit of 1.534 billion euros, up 7.5 percent on the year and the commercial vehicles division drove profits 57 percent higher to a record 2.093 billion euros.
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The financial services division was also able to lift operating profit by 17 percent to 1.468 billion euros.
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In the fourth quarter alone, group-wide net profit soared by 84 percent to 966 million euros compared with the same period of 2004 and operating profit jumped by 33 percent to 1.048 billion euros on a 10-percent rise in sales to 41.5 billion euros.
.
Looking ahead to the current year, DaimlerChrysler said it expected unit sales to "be in the range of 2005. Revenues will most likely increase slightly on a currency-adjusted basis."
.
Given the anticipated restructuring expenses and investments required over the coming year, DaimlerChrysler declined to make a concrete profit forecast for 2006.
.
But it insisted that profitability would improve this year and operating profit would rise "continuously" in the following years.
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Investors did not appear to be convinced and DaimlerChrysler shares were among the few losers on the blue-chip DAX 30 index in early trading in Frankfurt, shedding 0.31 euros or 0.62 percent to 49.78 euros. — AFP
German-US auto giant DaimlerChrysler said that it had managed to boost its bottom-line last year despite the costs of restructuring its loss-making Smart car unit.
.
DaimlerChrysler said in a statement that net profit rose by 15 percent to 2.846 billion euros (3.4 billion dollars) in 2005.
.
At the same time, operating profit declined by 10 percent to 5.185 billion euros, but largely as a result of a 1.1-billion-euro charge related to the troubled ultra-compact Smart car division.
.
Excluding that charge, operating profit would have increased last year, the car maker said.
.
"We thus fulfilled our earnings forecast for the full year," it said on Thursday.
.
Sales rose by 5.4 percent to 149.8 billion euros and unit sales were up 2.7 percent at 4.829 million cars worldwide.
.
"DaimlerChrysler made significant progress in 2005. But our earnings are still not where we want them to be," said chairman Dieter Zetsche.
.
The car maker therefore planned to pay an unchanged dividend of 1.50 euros per share for 2005, it said.
.
All divisions except the Mercedes Car Group, which includes DaimlerChrysler's prestigious Mercedes brand, the ultra-compact Smart and the luxury Maybach, reported a rise in earnings last year.
.
Mercedes reported an operating loss of 505 million euros from a year-earlier profit of 1.666 billion euros "due to the realignment of the Smart business model and the expenses for the personnel measures," the company explained.
.
The US arm Chrysler turned in operating profit of 1.534 billion euros, up 7.5 percent on the year and the commercial vehicles division drove profits 57 percent higher to a record 2.093 billion euros.
.
The financial services division was also able to lift operating profit by 17 percent to 1.468 billion euros.
.
In the fourth quarter alone, group-wide net profit soared by 84 percent to 966 million euros compared with the same period of 2004 and operating profit jumped by 33 percent to 1.048 billion euros on a 10-percent rise in sales to 41.5 billion euros.
.
Looking ahead to the current year, DaimlerChrysler said it expected unit sales to "be in the range of 2005. Revenues will most likely increase slightly on a currency-adjusted basis."
.
Given the anticipated restructuring expenses and investments required over the coming year, DaimlerChrysler declined to make a concrete profit forecast for 2006.
.
But it insisted that profitability would improve this year and operating profit would rise "continuously" in the following years.

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[Motownr]

I'd be surprised if DCX can deliver anything other than surprises to the downside this year.

The Chrysler Group is sitting on 600,000+ unsold vehicles, many of them full size SUVs that are clogging 60 storage lots. Think of the costs for working capital...for storage...for car hauling fees....subvented lease deals, incentives, etc.

The other shoe that is to drop is the cost to rehab each of these vehicles when they finally find a home at the dealer/rental fleet. Many if not most will need several hundred dollars of work to replace rusted rotors, replace scratched/dented panels. DCX is on the hook for this...and it'll add up.

Will all the new products help? Absolutely. However, they won't contribute until late in the year, and the contributions will be relatively small compared to the potential magnitude of the write-offs for the excess inventory.

[johnny smallblock]

It will come down to their new mid-sizers. When do they get the dual-mode hybrid tranny?

[Motownr]

Originally Posted by johnny smallblock

It will come down to their new mid-sizers. When do they get the dual-mode hybrid tranny?

Not sure about the hybrid plans....however, kinda scary to think that their fortunes ride on success in the midsize market....they haven't exactly set the world on fire in the past, and the competition isn't too shabby.

I think the popularity of the Caliber and Patriot will have a lot to do with their sales. Great prices, particularly now that the Koreans have greatly increased their prices. CG could score a few wins here.

We'll see.

[asim]

Haha...Smart was the stupidest thing they did...

[chevydlrmn]

if it is so smart, how did it get stuck on the wall in Detroit?