DaimlerChrysler boosted second quarter operating profit 11% year on year to EUR1,857m due mainly to a significantly increased operating profit at the Mercedes Car Group.

The Truck Group and Financial Services also improved their operating profits, offsetting a decrease in operating profit recorded by the Chrysler Group.

Chrysler's EUR51m Q2 operating profit was less than 10% of the EUR544m a year ago and was due to a decrease in worldwide sales, a higher mix of discounted fleet vehicles and negative net pricing, the automaker said.

DaimlerChrysler's net income rose to EUR1,810m  from EUR737m helped by a EUR800m after-tax gain from the mark-to-market valuation of derivatives to hedge the price risks of shares of the European Aeronautic Defence and Space Company (EADS).

Earnings per share were EUR1.77, compared with EUR0.73. EUR0.78 of this amount resulted from EADS share gains.

DaimlerChrysler sold 1.3m vehicles in the second quarter, which was 3% lower than in Q2 2005.

Group total revenues of EUR38.6bn were on par with a year ago.

Mercedes Car Group sold 325,500 vehicles in the second quarter, up 6%. Mercedes-Benz brand sales also rose 6% to 291,000 vehicles. Smart sales of 34,500 vehicles were static. Revenues 7% to EUR13.4bn.

Mercedes Car Group reported an operating profit of EUR807m, a substantial improvement compared with the Q2 2005's EUR12m. Higher unit sales (+17,400 vehicles) and an improved model mix, due to the full availability of the new S-Class and M-/R-Class combined with cost savings helped.

Staff reductions planned at Mercedes-Benz Passenger Cars led to additional expenses of EUR20m. Charges arising from the discontinuation of the Smart Forfour model reduced operating profit by EUR13m; a year ago, expenses of EUR311m arose in connection with the realignment of the Smart business model.

Chrysler's worldwide retail and fleet sales in Q2 2006 fell 9% to 713,600 units and factory shipments fell to 761,700 vehicles from 812,200 a year ago. Second-quarter revenues fell to EUR12.5bn from EUR13.0bn); measured in US dollars, a decrease of 4%.

Unit sales by the Truck Group of 138,600 units were slightly lower than a year ago but revenues climbed from EUR8.1bn to EUR8.5bn. Second-quarter operating profit rose 34% to EUR551m due to an improved model mix and efficiency-improving measures.

At 36,600 units, Mercedes-Benz brand truck sales in Europe/Latin America were off and an increase in unit sales in western Europe, particularly in Germany, was offset by lower sales in the Middle East and Brazil. Unit sales by Trucks NAFTA under the Freightliner, Sterling, Western Star and Thomas Built Buses brands were off 2% to 53,000. Mitsubishi Fuso's unit sales increased 4% to 49,800 vehicles.

The Financial Services division boosted operating profit to EUR422m from EUR385m aided by increased business and a positive earnings trend at Toll Collect offsetting higher interest rates.

New business of EUR14.1bn was 9% higher than in Q2 2005. Contract volume increased slightly by 1% to EUR115.3bn; the increase amounted to 4% after adjusting for the effects of currency translation.

The Van, Bus, Other segment posted a reduced second-quarter operating profit of EUR159m compared with EUR277m in Q2 2005.. Second-quarter operating profit included expenses of EUR145m incurred for staff reductions in administrative functions in connection with the new management model.

Mercedes-Benz Vans' unit sales of 65,600 were 9% lower due mainly to the startup of the new Sprinter and the related production changes in the Düsseldorf and Ludwigsfelde plants in Germany.

Worldwide sales of buses and chassis by the brands Mercedes-Benz, Setra and Orion increased 9% to 10,300 units in the second quarter.

The contribution to earnings from the European Aeronautic Defence and Space Company (EADS) also increased, mainly due to higher Airbus deliveries, to EUR231m from EUR154m in the prior-year quarter.

For full-year 2006, DaimlerChrysler expects similar growth to that in 2005 and worldwide sales of 4.8m units, the same as last year.

Automobile sales in the United States are seen decreasing slightly while demand should increase slightly in Western Europe and Japan.

Car sales are expected to increase in nearly all of the larger emerging markets this year, with significant growth rates in some countries. Worldwide demand for commercial vehicles is likely to remain at a high level in the second half of 2006 but risks will arise if oil and fuel prices continue to rise.

The company is assuming that competitive pressure in the automotive industry will remain intense as a result of worldwide over-capacity.

The Mercedes Car Group expects full-year unit sales at least as high as in 2005 and says Mercedes-Benz sales will exceed last year's figure due to the brand's new products. The group is on track to achieve the 7% return on sales targeted for 2007.

In an unchanged difficult market environment, Chrysler is assuming that unit sales in 2006 will be in the range of last year.

Due to high dealer inventories, the group intends to reduce production volumes and shipments to dealers in the third quarter and upcoming model changeovers will cause downtime in some plants.

Earnings in the second half will also be impacted by the launch costs of eight new models. The division therefore expects a third-quarter operating loss of up to EUR0.5bn followed by positive earnings in the fourth quarter as new model sales ramp up.

"For full-year 2006, the Chrysler Group plans for a positive result," the company said.

Truck Group full-year unit sales are also assumed to remain stable. But the Vans unit expects lower unit sales than in 2005, due to the Sprinter model changeover.

DaimlerChrysler expects a slight increase in revenues in full-year 2006 over 2005's EUR149.8bn and operating profit over EUR6bn after charges for the implementation of the new management model (EUR0.5bn), the focus on the smart fortwo (EUR1bn), staff reductions at the Mercedes Car Group (EUR0.4bn), plus gains on the disposal of the off-highway business (EUR0.2bn), on the sale of real estate no longer required for operating purposes (EUR0.1bn) and the release of provisions for retirement-pension obligations (EUR0.2bn).