DaimlerChrysler Profit Jumps Fivefold on Chrysler Turnaround
{{#rendered}} {{/rendered}}Automaker DaimlerChrysler AG (DCX) posted a fivefold increase in net profit in the second quarter to 554 million euros ($670 million), thanks to a sharp turnaround at its U.S. division Chrysler, the company said Thursday.
The latest profit improved on the profit of 109 million euros in the April-June quarter a year ago, but fell short of the average forecast among stock analysts surveyed by Dow Jones Newswires of 809 million euros ($979 million.)
Group revenue rose 9 percent to 37.1 billion euros ($44.9 billion) from 33.9 billion euros in the same quarter a year ago.
{{#rendered}} {{/rendered}}Stronger sales of new Chrysler models — the Dodge Durango (search) sport-utility, Dodge Magnum station wagon, 300C sedan and the company's new minivans — boosted the division's sales revenue by 12 percent.
That led to a second-quarter operating profit for the Chrysler division of 516 million euros ($614 million) in contrast to an operating loss of 948 million euros a year earlier due to the price wars with U.S. competitors Ford Motor Co. (F) and General Motors Corp (GM).
Chrysler's improvement combined with continued profits at the company's commercial vehicles unit, another former restructuring case. DaimlerChrysler has had to slash thousands of jobs to put the two divisions back on their feet.
{{#rendered}} {{/rendered}}Even as the two former problem divisions turn in solid results, the company's mainstay through the tough times, luxury brand Mercedes, reported an 18 percent drop in operating profit to 703 million euros ($851 million).
DaimlerChrysler attributed the decrease to slower sales due to an older model line and costs for launching new models such as the A-class subcompact, due out in September.
The company said the earnings dip would be made up in the second half of the year, when new models launched in the first half — its C-class Mercedes, SLK roadster and Smart compact — begin contributing more strongly to sales, along with models coming later this year such as the A-Class compact and CLS coupe.
{{#rendered}} {{/rendered}}DaimlerChrysler's profit was reduced by around 500 million euros ($600 million) from its share of losses in Mitsubishi Motors Corp., in which it owned a 37 percent stake. That stake has been reduced to less than 25 percent as DaimlerChrysler has declined to take part in a capital increase at the troubled company, and Mitsubishi will no longer be reflected in Chrysler profit and loss statements, the company said.
Earlier in the day, DaimlerChrysler's board named Eckhard Cordes as new head of its Mercedes division. Cordes has been chief of the commercial vehicles division and will take over for 65-year-old Juergen Hubbert, who will become head of the company's executive automotive committee ahead of his expected retirement in April 2005.
The 53-year-old Cordes will be replaced at commercial vehicles by Andreas Renschler, 46, head of the company's Smart compact car division.