GERMANY/US: Mercedes drags down DaimlerChrysler results
DaimlerChrysler Group has reported operating profit of $6.1 billion for full year 2005, compared with $6.8 billion in 2004.
Revenue rose from $168 billion to $177 billion and net income was up to $3.37 billion from $2.92 billion.
Last quarter operating profit was $1.24 billion (up from $931 million and net income rose to $1.14 billion from $623 million.
Mercedes Car Group was the problem child in the books, reporting a $598 million operating loss for the full year (from a $1.97 billion profit a year earlier). Chrysler, on the other hand, made a $1.82 billion operating profit ($1.69 billion), commercial vehicles posted a $2.47 billion profit ($1.58 billion) and financial services wrote its $1.738 billion result ($1.48 billion) in black ink, too.
DaimlerChrysler's official word was: "Excluding charges relating to the realignment of the smart business model ($1.3 billion), there was an increase in the group's operating profit. The group thus fulfilled its earnings forecast for the full year."
LBBW auto analyst Stephan Droxner told Reuters: "Overall the group results were very strong at first glance but a closer look revealed that the 400 million more in reported operating profit versus our expectations was mainly attributable to one-offs, which were much more benign than we had thought.
"The €570 million restructuring charge at Mercedes Car Group was far lower than our estimate of €800 million.
"Adjusted for the €240 million gain from the sale of its test track in Arizona, Chrysler's operating profit [$507 million vs $457 million] pretty much fell by half in the fourth quarter, and I think this is the most important thing that these results show."
According to Reuters, he added: "The fourth quarter left unmistakable skid marks at Chrysler and this is a hint that we think points towards a weak 2006. I estimate Chrysler's operating profit could decline by 40-50% this year.
"Commercial vehicles [$423 million vs $517 million] also fell about 200 million short of my expectations for Q4 operating profit although this was compensated by a strong financial services performance. With commercial vehicles possibly at the top of its cycle, it appears as if the drop-off in profitability is occurring faster than anticipated.
"Overall, group operating profit came in 400 million over our estimates but 300 million of this was due to one-offs, so the underlying earnings were pretty much in line with what we expected."
In a statement, DC chairman Dieter Zetsche said: "DaimlerChrysler made significant progress in the year 2005. But our earnings are still not where we want them to be."
DaimlerChrysler sold around 4.8 million vehicles in 2005, up 3% year on year.
The giant German-US automaker offered only a vague outlook for 2006, saying group unit sales should be much the same as for 2005 with revenues likely to increase slightly.
Promising a more detailed forecast later, after the cost of a major restructuring has been fully calculated, DC added it anticipates an improvement in profitability in 2006, with continuous increases in operating profit during coming years, led by the launch of 50 new vehicles in the period 2005 to 2008.