GERMANY: Post-Chrysler Daimler sees full-year profit rise
DaimlerChrysler, soon to be renamed the Daimler Group after the sale of Chrysler to private equity group Cerberus, on Wednesday reported second quarter net profit of EUR1,849m compared with EUR2,146m a year ago.)
Net profit from continuing operations was down to EUR1,443m from EUR1,804m in 2006. Group revenues also fell to EUR23.8bn from EUR24.6bn.
The group is expecting EBIT "in the magnitude of EUR8.5bn" for full-year 2007 compared with EUR5.0bn in 2006.
Today's Q2 interim report also covered results for the group, the financial services division (excluding Chrysler Financial NAFTA) and the discontinued operations of the Chrysler Group and Chrysler Financial (NAFTA).
Second-quarter results for the Mercedes Car Group and the Truck Group as well as for the Van, Bus, Other segment had previous been disclosed.
"The present reporting structure now reflects the new structure of the DaimlerChrysler Group," the automaker said in its results announcement.
DaimlerChrysler said its earnings trend was positively affected primarily by the Mercedes Car Group, which again achieved a strong increase in its operating results, mainly due to quality and efficiency improvements, and a better sales structure. Despite the expected strong decline in unit sales in the NAFTA region, the Truck Group's EBIT was also above the prior-year quarter. The Financial Services EBIT was essentially flat.
DC said the decrease in Group EBIT was due mainly to the lower profit contribution from Van, Bus, Other and noted this segment's earnings in Q2 2006 were positively affected by gains of EUR814m on the valuation of derivative financial instruments related to the transfer of interest in EADS. However, lower expenses for the implementation of the new management model (EUR42m vs EUR137m) were recorded for this quarter.
As a result of better facility use, depreciation of property, plant and equipment was adjusted to the longer useful lives giving a positive Q2 2007 effect on group EBIT of EUR226m.
The vehicle units sold 516,400 vehicles in the second quarter, down from 536,600 a year ago.
Though group Q2 revenues decreased 3% to EUR23.8bn, when adjusted for exchange-rate effects and changes in the consolidated group, revenues were flat year on year, DC said.
Q2 net profit from discontinued operations was EUR406m vs EUR342m, including an extinguishment loss after tax of EUR0.3bn resulting from the early redemption of long-term financing liabilities of the Chrysler Group.
DC also expects a charge of EUR2.5bn in full-year 2007 for transferring its majority interest in Chrysler and the closing of the transaction on 3 August, lower than the estimate of EUR3-4bn announced in May, and due to the positive result of the discontinued operations in Q2 as well as a charge against earnings of about EUR3bn in Q3.
In the financial services business of the Chrysler, Jeep and Dodge brands, Cerberus took over the financing from DaimlerChrysler when the transaction was closed and this led to a cash inflow of EUR25.6bn.
For H1 2007, DaimlerChrysler expects the expansion of global automotive markets - for both passenger cars and commercial vehicles - to slow down compared to H1 2006 due mainly to developments in the 'triad markets' - demand for passenger cars in North America, western Europe and Japan is expectd to fall slightly. However, significant increases in demand are anticipated for both passenger cars and commercial vehicles in the emerging markets. Total global demand for passenger cars and commercial vehicles should increase by approximately 3% in 2007 (2006: 4%).
For full-year 2007, DaimlerChrysler anticipates unit sales of about 2.1m, as in 2006.
Group total revenues are also seen flat at EUR99bn though the restructured group expects to achieve EBIT of about EUR8.5bn in full-year 2007 vs 5bn in 1006. Significant factors seen affecting earnings in 2007 are the gain of EUR1.4bn from the transfer of interest in EADS and charges of EUR0.3bn to implement the new management model.