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DaimlerChrysler says its 2nd-quarter profit fell 14 percent

DaimlerChrysler says its 2nd-quarter profit fell 14 percent

DaimlerChrysler AG said Wednesday that its second-quarter profit fell 14 percent and it planned to spend euro7.5 billion (US$10.22 billion) buying back nearly 10 percent of its outstanding shares as it moves forward without its Chrysler division.
The automaker said it earned euro1.44 billion (US$1.91 billion) excluding the operations it sold, compared to euro1.8 billion a year earlier. It now expects a charge of euro2.5 billion for the year from the sale of Chrysler group and its financing arm, less than it had previously thought.
DaimlerChrysler also said it expects vehicle sales to be in line with the 2.1 million it sold in 2006, with revenue on par with the euro99 billion it reported last year.
The company sold the Chrysler group and North American financial services units to Cerberus Capital Management LLC earlier this month in a deal that saw the private equity group take an 80.1 percent stake in Chrysler for US$7.4 billion (euro5.42 billion).
Including those operations, DaimlerChrysler posted a second-quarter net profit of euro1.85 billion (US$2.52 billion), down from euro2.15 billion a year earlier. Sales fell to euro23.84 billion (US$32.52 billion) from euro24.6 billion last year.
The Chrysler Group and the related financial services business in North America saw their profit rise by 18 percent to euro406 million (US$554.8 million) in the April-June period compared with euro342 million a year earlier.
DaimlerChrysler also said it "anticipates a charge against earnings" of euro2.5 billion (US$3.42 billion) for the year, below its initial estimates of euro3 billion to euro4 billion (US$4.1 billion to US$5.47 billion).
The company also said it would buy back shares, a move authorized by shareholders at its April 4 general meeting, in part to help "optimize the company's capital structure and make it more efficient."
DaimlerChrysler shares rose 2 percent to euro63.95 (US$87.22) in Frankfurt.
Wednesday marked the last time that Chrysler's full earnings will be released to the public, because the company as controlled by a private equity firm will not be required to publish results.
DaimlerChrysler retains a 19.9 percent share in Chrysler, so it will continue to report some Chrysler earnings starting with its third-quarter results in October.
But the German automaker plans to list Chrysler's results in a miscellaneous category and will not separate them from other holdings, such as its 22.5-percent share in the European Aeronautic Defense and Space Co.
Casting an eye toward markets volatile in the wake of the subprime mortgage crisis in the U.S., the company said that it and Cerberus had "agreed to support the financing of the majority takeover of Chrysler by Cerberus."
Both companies subscribed US$2 billion (euro1.46 billion) of a second lien loan for Chrysler's automotive business, to be drawn within 12 months. DaimlerChrysler's portion will be US$1.5 billion (euro1.1 billion). The debt will be priced at market conditions with the maturity in seven years. Within a year, DaimlerChrysler has the right to sell the loan in the credit market.
By division, the Mercedes Car Group posted a pretax profit of euro1.2 billion (US$1.64 billion) in the quarter compared with euro690 million a year earlier, but was still dragged lower by the rising euro and other foreign exchange issues.
The truck group saw its second-quarter pretax profit rise to euro601 million (US$821.21 million) from euro585 million a year, lifted in part by improved sales in Europe and Latin America, but hurt by lower sales in North America and Japan.
The company's shareholders will meet in Berlin on Oct. 4 to approve a name change to Daimler AG. The proposal is expected to pass, despite concerns that by not restoring the name to Daimler-Benz, the company is ignoring the work of Karl Benz, who designed and patented an internal combustion flat engine before linking his company, Benz & Cie, with Daimler in 1926.
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On the Net:
http://www.daimlerchrysler.com


Updated : 2021-02-27 09:08 GMT+08:00