DaimlerChrysler boosted operating profit in 2004 to $US7.8 billion, up from $6.9 billion the previous year, while net income rose to $3.3 billion from $0.6 billion.

Earnings per share were up to $3.29 from $0.60 and revenues rose 4% to $192.3 billion

The company is expecting operating profit in 2005 to be "slightly higher" than in 2004.

The operating profit for full year 2003 excluded restructuring expenditures at Chrysler and the capital gain realised on the sale of MTU Aero Engines.

The 2004 increase was primarily due to the improved earnings of the Chrysler Group and in the Commercial Vehicles divisions while the profit contribution from the services (finance) division was at the high level of the previous year, despite a charge from Toll Collect.

Howver, Mercedes Car Group's contribution to operating profit decreased sharply and the group result was negatively impacted by considerable charges from Mitsubishi Fuso Truck and Bus Corporation (MFTBC) and Toll Collect.

Chairman Jurgen Schrempp said: "One of DaimlerChrysler's key strengths is its ability not only to compensate at the group level for differing cycles in the divisions and varying regional developments, but also to achieve growth in earnings. The year 2004 shows that our strategy works well - even in such a challenging competitive environment."

For some 144,000 employees of DaimlerChrysler AG in Germany, the bonus for 2004 has been set at $1,489. It will be paid out together with wages and salaries in April 2005. This year's profit-related bonus for 68,000 employees of Chrysler in the United States will average $1,500 and will be paid out in March 2005.

DaimlerChrysler sold 4.7 million vehicles in 2004, surpassing the level of the prior year by 8%.

Last year, DaimlerChrysler invested a total of $8.6 billion in property, plant and equipment (2003: $9.0 billion).

The focus of the investment of $3.2 billion by the Mercedes Car Group was on expanding the plants in Rastatt and Tuscaloosa/USA for the production of the new A-Class and M-Class vehicle families, production preparations for the next S-Class model, and the expansion of production facilities for new diesel and petrol engines.

Chrysler Group's investments of $3.6 billion were primarily applied to prepare for the production of the nine new models launched in 2004, including the very successful Chrysler 300C and the Dodge Magnum, and at least five additional models to come in the year 2005.

Important projects in the Commercial Vehicles division, which invested a total of $1.6 billion, included the new Euro-4 truck engines and preparations for the successor to the Sprinter.

Research and development expenditure totaled $7.7 billion in 2004 (2003: $7.5 billion). Of this total, $3.6 billion was accounted for by the Mercedes Car Group. This division's most important projects were the B-Class and R-Class sports tourers and the successors to the M-Class and S-Class models as well as completely new engine families.

In the planning period of 2005 through 2007, DaimlerChrysler expects to invest a total of $28.4 billion in property, plant and equipment. It plans to invest "substantial funds in the context of the group's involvement in China". For research and development activities, DaimlerChrysler will spend a total of $23 billion in the period of 2005 through 2007, thus maintaining the high level of recent years.

Mercedes Car Group

The Mercedes Car Group sold 1,226,800 vehicles in 2004 (2003: 1,216,900). For model life-cycle reasons, unit sales of the Mercedes-Benz brand were 2% lower than in the prior year, however. smart's unit sales increased by 22% due to the launch of the smart forfour.

The division's revenues decreased slightly to $67.2 billion (2003: $69.6 billion) due to exchange-rate effects and the changed model mix, primarily caused by lifecycle-related factors.

At $2.3 billion, operating profit was significantly lower than the $4.2 billion posted in 2003. This was due partially to the changed model mix and exchange-rate effects, but also due to the high launch costs for new products and the costs of the quality offensive at Mercedes-Benz. In addition, the contribution from the smart brand was significantly negative as a result of higher marketing expenses and launch costs for the smart forfour.

The Mercedes Car Group has started a comprehensive programme designed to improve efficiency and increase earnings. With the CORE program, the group aims to improve its performance by more than $4.1 billion and the division should once again achieve a return on sales of 7% in 2007. It also expanded its quality offensive in 2004. For the smart brand, a business model is now being prepared with the goals of increasing unit sales as a result of measures taken in the sales network, improving cost structures and boosting productivity.

More than 500 exclusive Maybach sedans were delivered to customers worldwide in the year 2004.

Chrysler Group

Worldwide, the Chrysler Group posted factory unit sales (shipments) of 2.8 million passenger cars, minivans, sport-utility vehicles and light trucks, a 5% increase over 2003. Worldwide retail sales increased by 4% to 2.7 million vehicles.

The Chrysler group's revenues of €49.5 billion were at the same level as in the prior year; calculated in US dollars, the increase was 10%.

After reporting an operating loss of $685 million in the prior year, in 2004 Chrysler achieved an operating profit of $1.9 billion. Lower average price incentives also contributed to the better result.

Commercial Vehicles

In a favourable economic environment in 2004, the Commercial Vehicles division boosted its unit sales by 42% to 712,200 trucks, vans and buses.

This figure includes 118,100 vehicles of the business unit Mitsubishi Fuso Truck and Bus Company, which was consolidated in April 2004. Even without the consolidation of MFTBC, the number of 594,100 units sold significantly exceeds the previous record set in 1999 (554,000). The increase in unit sales excluding MFTBC amounted to 19% in 2004.

Revenues also grew substantially to $47.1 billion (2003: $36.3 billion). Even without MFTBC there would still have been strong growth of 16%.

Operating profit of $1.8 billion was far higher than the prior-year earnings of $1.1 billion. This strong result was achieved although the Commercial Vehicles division was burdened by charges of $643 million relating to the expenditure arising at MFTBC for quality measures and recall campaigns. The main reasons for the earnings improvement were the substantially higher unit sales and the successful implementation of efficiency programmes.

DaimlerChrysler has successfully claimed compensation for the quality problems at MFTBC.

At the beginning of this week, the DaimlerChrysler board and the Mitsubishi Motors Corporation board approved a letter of intent regulating compensation for the expenses that DaimlerChrysler has incurred due to those quality problems.

Thanks to the success of the new products and increased demand in the key markets, as well as the full consolidation of MFTBC, sales by Trucks business segment increased by 57% to 403,300 vehicles. With unit sales of 137,400 vehicles, the Trucks Europe/Latin America (Mercedes-Benz) business unit sold 24% more vehicles than in the prior year, thus setting a new record. The Trucks NAFTA business unit (Freightliner, Sterling, Thomas Built Buses) also achieved a strong increase in truck sales of 22% to 152,400 vehicles. MFTBC recorded unit sales of 118,100 trucks and buses. Its decrease in Japan was offset by strong growth in South East Asia, the Middle East and in Europe. The Mercedes-Benz vans business unit posted sales of 260,700 units in 2004 (2003: 230,900). The DaimlerChrysler Buses business unit achieved a new record with sales of 32,800 units (+16%).

Services

The Services division operating profit of $1.69 billion was at last year's high level (2003: $1.68 billion), despite the charges of $639 million from Toll Collect.

New business increased by 7% to $68.9 billion primarily due to the close co-operation with the vehicle divisions. Contract volume rose to $138.6 billion (2003: $132.9 billion). In total, the portfolio consisted of 6.6 million leased and financed vehicles in 39 countries at the end of 2004.

DaimlerChrysler Bank continued with the expansion of its core areas of leasing and financing in 2004. New business increased by 9% to $11.1 billion, and contract volume was up 10% to $19.6 billion. DaimlerChrysler Bank also expanded its portfolio in 2004 to include new products such as auto insurance.

Following the successful execution of important tests of the satellite- based toll-collection system and a full trial confirming the functionality and compatibility of the various system components, Toll Collect was granted a provisional operating permit at the end of 2004. The toll system then started smoothly on January 1, 2005.

The Other Activities' operating profit decreased from $1.8 billion to $0.6 billion last year. The reason for the reduction is that the operating profit for the prior year included the profit contribution from MTU Aero Engines, as well as the gain of $1.4 billion realized on the disposal of this unit.

At $2.37 billion, DaimlerChrysler Off-Highway's revenues in 2004 were about 2% higher than in the prior year. The business unit's incoming orders totaled $2.49 billion, 7% higher than the figure for 2003.

Outlook

Assuming a moderate increase in the worldwide demand for automobiles, the DaimlerChrysler Group expects total unit sales to increase in 2005 and the following years. And revenues should also continue rising.

After a weaker first and second quarter, for the full-year 2005 DaimlerChrysler expects a slightly higher operating profit than in the previous year.

Significant earnings improvements are to be expected for the year 2006, when the Mercedes product offensive takes full effect and additional new models become available from Chrysler.