Though revenue rose 6% to EUR25.4bn and unit sales were up 10% to 566,500 cars and commercial vehicles, Daimler net profit in the second quarter fell to EUR1,395m from EUR1,849m a year ago. Earnings per share were down to EUR1.40 from EUR1.74.
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“The decrease in group earnings was mainly related to Daimler’s interest in Chrysler,” the German automaker said.
“Our interest in Chrysler negatively affected EBIT [earnings before interest and taxes] in the second quarter by EUR373m; this result includes proportional expenses of EUR93m resulting from the restructuring measures at Chrysler.”
As the group generally applies the equity method of accounting for its interests in EADS and Chrysler with a three-month time lag, these figures mainly reflect the first quarter.
“The results for Chrysler are by no means indicative for the results to be reported by Chrysler Holding due to substantial valuation differences between US-GAAP used by Chrysler and IFRS accounting used by Daimler,” the German firm said.
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By GlobalDataThat, as in the previous quarter, drew a response from Chrysler.
It said: “Daimler reported on its 19.9% share of Chrysler Holding’s first quarter 2008 results under IFRS. Daimler’s results for Chrysler Holding include net losses of EUR65m on a US GAAP basis, of which a EUR55m net loss is attributable to the automotive business of Chrysler.
“The difference between the loss of EUR373m reported by Daimler related to its 19.9% interest in Chrysler Holding and the EUR65m of net losses is attributable to… adjustments for differences between US GAAP and International Financial Reporting Standards (IFRS) – (EUR130m loss); Daimler adjustments related to Chrysler’s 2007 restructuring actions – (EUR73m loss); other Daimler adjustments not related to Chrysler Holding results – (EUR88m loss) [and] Daimler impairment of its rights related to Chrysler vehicle residual values – (EUR17m loss).”
Mercedes-Benz Cars increased unit sales by 11% in the second quarter and Mercedes-Benz brand sales grew 9% to a new record of 312,000 vehicles. Smart sales rose 24% to 39,500 vehicles.
Daimler Trucks sales were up 10% to 122,800 vehicles despite the weakness of the US economy. Daimler Financial Services increased contract volume by 4% to EUR60.4bn in the second quarter and Mercedes-Benz Vans increased unit sales by 7%, setting a new quarterly record of 78,600.
Outlook
Daimler said it expected all divisions to achieve full-year unit sales targets for an overall increase on last years 2.1m vehicles.
The group “anticipates a slight increase in the total revenue in full-year 2008” versus 2007’s EUR99.4bn.
“The [group] believes it continues to be very well positioned with regard to the competition. However, it will not be possible to fully compensate for negative macroeconomic factors such as the slowdown of global growth, rising raw-material prices and unfavourable exchange-rate effects by means of higher unit sales and further efficiency improvements,” Daimler said.
Chairman Dieter Zetsche added: “We have prepared the group well for this situation and fulfill all the requirements to rank among the best in our industry also in more difficult times.”
The group expects to post EBIT from ongoing operations of “more than EUR7bn” in 2008, excluding Chrysler.
This is down from a previous estimate of “significantly above” 2007’s EUR7.7bn.
