GERMANY: Chrysler unit boosts DaimlerChrysler Q2 profit
A turnaround at DaimlerChrysler's US-based Chrysler unit helped the company to substantially increase its second quarter operating profit from $0.8 billion last year to $2.5 billion.
Worldwide retail sales for the Chrysler Group increased by 3% to 759,800 vehicles in the second quarter of 2004 and the unit's revenues increased by 12% to euro 13.2 billion. Chrysler sales growth was put down to the success of new products such as the Chrysler 300 and 300C, the Dodge Magnum, the Dodge Durango and the new minivans.
DaimlerChrysler said that The Chrysler Group, Commercial Vehicles and Services divisions significantly improved their earnings, though the operating profits of the Mercedes Car Group and the Other Activities segment were lower than in the same period of last year.
Net income for the second quarter amounted to $675 million (Q2 2003: $133 million). However the company said that the generally positive development of the Group's operative business was partially offset by a negative impact of Mitsubishi Motors Corporation's net loss in its 2003/04 financial year.
Earnings per share rose from $0.13 to $0.67.
DaimlerChrysler achieved second quarter unit sales of 1.3 million vehicles, 10% more than Q2 2003. The DaimlerChrysler Group's total revenues increased in the second quarter by 9% to $45.2 billion, primarily as a result of the higher unit sales by the Chrysler Group and Commercial Vehicles. However, there was an opposing effect from the appreciation of the euro against the US dollar. Adjusted for currency-translation effects, revenues increased by 13%.
The Mercedes Car Group sold 319,400 vehicles in the second quarter, slightly more than in the same period of last year. Its revenues amounted to $15.8 billion (Q2 2003: $16.1 billion). The division's operating profit of $856 million was lower than in Q2 2003. This, the company said, is mainly the result of the lifecycle-related decrease in unit sales by Mercedes-Benz, high launch costs and start-up costs for new products, as well as the 'continuation of the quality offensive'.
In the second quarter of 2004, Mercedes-Benz passenger cars sold 274,200 vehicles worldwide in a difficult market environment (Q2 2003: 281,600). Unit sales of 180,400 vehicles in Western Europe did not quite equal the figure for the same quarter in the previous year (-2%). Deliveries to dealers in the United States fell by 4% to 53,000 vehicles. US retail sales of 54,100 were at the same level as in Q2 2003. While unit sales in Japan also decreased, Mercedes-Benz achieved a significant increase in vehicles sold in China.
Worldwide retail sales for the Chrysler Group increased by 3% to 759,800 vehicles in the second quarter of 2004. The growth was primarily due to the success of new products such as the Chrysler 300 and 300C, the Dodge Magnum, the Dodge Durango and the new minivans. Factory shipments in the second quarter rose by 8% to 781,400 vehicles. Dealers' inventories in the US at June 30 totalled 605,600 vehicles (June 30, 2003: 518,600), equivalent to 72 days' supply (June 30, 2003: 63). Dealers increased their inventories primarily as a result of the introduction of numerous new models introduced in the first half of 2004.
As a consequence of the higher shipments and a higher-value model mix, the Chrysler Group's revenues increased by 12% to euro 13.2 billion. Measured in US dollars, revenues increased by 18%.
With an operating profit of $628 million, the Chrysler Group posted a positive operating result for the fourth consecutive quarter. This strong improvement is mainly due to the market success of the new products, higher unit sales and further cost reductions, the company said.
In terms of outlook, DaimlerChrysler said that it anticipates only moderate growth for the major automobile markets of the triad for the remainder of this year. There are signs of a continuing recovery of the North American truck market, and the European market for trucks and vans is expected to expand slightly compared with the prior year, while the bus market is likely to stabilize at last year's level. DaimlerChrysler assumes that the strong competitive pressure will continue unchanged in all segments.
For full-year 2004, the Mercedes Car Group expects the models launched in the first half of the year (new generation C-Class, SLK roadster and smart forfour) and the models to come in the second half of the year (A-Class and CLS coupe) to more than offset the slight decrease in unit sales of the first half-year.
Earnings for the full year are anticipated to be lower than in 2003 due to a changed model mix, exchange-rate effects, and increased start-up costs for new products and expenses for the quality offensive.
The Chrysler Group expects a continuation of high price incentives in its markets. Based on customers' positive response to the products introduced so far this year, as well as the ongoing cost-cutting program, the Chrysler Group is also confident of achieving considerable positive earnings in full-year 2004.