Publish date:

Daimler Profit Doubles

Earnings soar even as Chrysler swings to a steep loss.
Author:

DaimlerChrysler (DCX) said earnings more than doubled from year-earlier levels in the first quarter.

The Stuttgart, Germany-based company made $2.64 billion, or $2.53 a share, for the quarter ended March 31, up from the year-ago $1.05 billion, or $1.03 a share. Revenue fell to $47.3 billion from $50.3 billion a year earlier.

The news comes just a day after the company agreed to deal its struggling U.S. Chrysler unit to private equity shop Cerberus Capital in a deal that will result in a net cash outflow from Daimler of $650 million, plus various transaction and liability-related costs. The deal comes nine years after Daimler agreed to buy Chrysler for $38 billion.

The company said it expects earnings before interest and taxes to rise nearly 30% for 2007 to $9.4 billion, excluding the so-called realignment involving the Chrysler sale.

TheStreet Recommends

First-quarter vehicle sales fell 5% from a year ago to 1.1 million units. Revenue dropped 6% on a reported basis but was flat excluding currency effects.

Mercedes swung to a first-quarter EBIT profit of $1.06 billion from the year-ago loss of $983 million. Year-earlier figures were hit by cost reductions and a move to end production of a smart model.

At Chrysler, revenue fell 18% from a year ago on an 8% drop in shipments. EBIT for the unit swung to a loss of $2 billion from the year-earlier $857 million profit.

"The decline in the first quarter of 2007 result also reflects a decrease in factory unit sales in the United States and an unfavorable product and market mix," Daimler said. "However, as a result, the Chrysler Group further reduced its dealer inventories to approximately 500,500 vehicles at the end of the quarter. Additional charges resulted from negative net pricing developments and financial support provided to suppliers. These negative factors were partially offset by an increase in unit sales outside the United States."