GERMANY: DaimlerChrysler to take record €400 million Q3 charge on Fuso
The Asian Wall Street Journal reports that DaimlerChrysler AG has announced that it will book a charge of 400 million euros against earnings in the third quarter to cover the cost of recalls and past quality problems at Japanese truck maker Mitsubishi Fuso Truck & Bus Corp (65% owned by DaimlerChrysler).
Despite the charge, the carmaker said it remains on track to post a "significant improvement" in its 2004 operating profit.
The charge is based on a "preliminary evaluation" of the cost of Mitsubishi Fuso's recalls and cleanup efforts, DaimlerChrysler said in a statement.
The truck maker, 65% owned by DaimlerChrysler, has announced the recall of more than 500,000 vehicles this year after acknowledging that it had hidden defects in its vehicles' wheels and clutch systems for years.
The 400 million euro third-quarter charge follows a 70 million euro second-quarter charge related to the problems at Mitsubishi Fuso.
Last month, Mercedes said it expects to report lower operating profit this year as a result of rising costs to fix persistent glitches in its luxury cars.
The Mitsubishi Fuso and Mercedes troubles are being offset by a rebound at Chrysler and DaimlerChrysler's own heavy-truck division.
While describing the 400 million euro charge as "extraordinary," DaimlerChrysler said it "can be more than compensated for by the very positive trend" in performance by other units within DaimlerChrysler's Commercial Vehicles Division.
DaimlerChrysler has said it expects a "significant improvement" in operating profit in 2004.