Daimler Profit Falls 33% Despite Gains at U.S. Unit
DaimlerChrysler said Thursday that its first-quarter profit dropped by a third on a charge tied to delays in implementing a German truck toll system and losses at affiliate Mitsubishi Motors Corp.
Net income fell to $483 million, or 39 cents a share, down 33% from a year ago, Chief Financial Officer Manfred Gentz said during a conference call. Operating profit rose 10% to $1.89 billion in the quarter and will increase for the full year as well, he said.
The $342.9-million toll-system charge overshadowed a rebound in earnings at the German firm’s Chrysler and commercial vehicles divisions.
“The operating profit is a bit better than expected and the guidance is too, especially on Chrysler,†the firm’s U.S. unit, said Stephan Thomas of Frankfurt Trust Investment, which holds 4 million shares of DaimlerChrysler.
The shares fell 91 cents to $45 on the New York Stock Exchange.
Meanwhile, Chief Executive Juergen Schrempp won renewed backing from DaimlerChrysler’s board after troubles at Japanese partner Mitsubishi set back his vision of a global auto powerhouse.
The board, responsible for appointing top managers, reaffirmed “complete support†for Schrempp and dismissed speculation on his future after the company decided last week against pumping more money into Mitsubishi.
“Operating profit was strong and they have upgraded their outlook following the good figures from Ford and General Motors,†said Jeremie Papin, an analyst at Lehman Brothers in London with an “equal weight†rating on the shares. “We don’t know yet whether this is a once-and-for-all write-off on [the German toll system] or if there is more to come.â€
DaimlerChrysler is more “optimistic†than it was two months ago, Gentz said. He expects average incentives on Chrysler vehicles to fall over the course of the year.
Ford Motor Co. last week said first-quarter profit more than doubled to $1.95 billion, the highest in four years, bolstered by record earnings from car loans. General Motors Corp. reported quarterly net income of $1.28 billion.
