Although Wednesday (14 February) was a black day for 13,000 Chrysler workers who heard they were to lose their jobs, parent company DaimlerChrysler reported a profitable full-year result for 2006.

Operating profit of $7,281m in 2006 compared favourably with $6,843m in 2005.

Net income rose to $4.3bn from $3.8bn the previous year and earnings per share were up to $4.17 from $3.70.

Revenues rose 1% to $200.1bn.

“The development of the group’s operating profit was primarily impacted by the significant decline in earnings at the Chrysler Group,” DaimlerChrysler (DC) said in its result announcement.

“This was more than offset by the substantial earnings improvement at the Mercedes car group and the repeated increase in earnings at the truck group and the financial services division.

“The contribution to earnings from the van, bus, other segment was lower than in the prior year.”

The management board will propose a dividend of EUR1.50 per share, the same as for 2005.

DaimlerChrysler sold 4.7m vehicles in 2006, down from 2005’s 4.8m.

The German-US automaker said implementation of its new management model is running according to plan. By the end of January 2007, approximately 2,000 employees worldwide had either signed voluntary severance agreements or had already left the group.

“Important processes have been made faster and more efficient, allowing substantial efficiency gains. The total expenditure for the implementation of the programme in the years 2006 through 2008 is likely to be in the region of $2.6bn. Of this total, $519m was incurred in the year 2006,” DC said.

Worldwide, DaimlerChrysler invested $7.8bn in property, plant and equipment in 2006 (compared with $8.7bn in 2005. Capital expenditure at the Mercedes car group of $2.2bn was slightly higher than in the prior year ($2.1bn). To continue its product offensive and to make its production facilities more flexible, Chrysler group invested $3.8bn in property, plant and equipment though this was down on 2005’s $4.1bn. The truck group spent $1,197m in 2006, mainly related to new technologies, powertrains and safety concepts (2005: $1,275m).

Research and development spend was $7.0bn in 2006 (2005: $7.5bn). The most important projects at Mercedes cars were the new generation E-Class, the new CL-Class, and preparations for the C-class model change in 2007. Chrysler’s focus was on the new minivan generation and hybrid vehicles.

The Mercedes car group division, comprising the brands Mercedes-Benz, Maybach, smart, Mercedes-Benz AMG and Mercedes-Benz McLaren, sold 1,251,800 vehicles in 2006 (2005: 1,216,800).

Revenues of $72.0bn were 9% higher than in the previous year.

The group reported an operating profit of $3,187m in 2006, compared with an operating loss of $666m in 2005 but he results for both years were significantly affected by special items. There were expenses of $1,248m in connection with the discontinuation of production of the Smart Forfour in 2006, while the realignment of the Smart business model in 2005 resulted in charges of $1,466m.

Charges relating to staff reductions at Mercedes-Benz passenger cars decreased to $377m in 2006 (2005: $752m).

“The substantial increase in the division’s operating profit is due in particular to the efficiency improvements achieved in the context of the Core programme. Other positive factors were the higher unit sales of Mercedes-Benz passenger cars and the improved model mix,” DC said.

But currency effects had a negative impact, it added.

Mercedes-Benz unit sales rose 5% to 1,149,100 vehicles.

Smart unit fell to 102,700 from 124,300 in 2005 as Roadster and Forfour stocks were sold off. The brand is expecting a boost in 2007 as it launches a redesigned Fortwo which will be sold in the US as well.

Worldwide, Chrysler shipped 2.7m light vehicles to dealers in 2006 , down 100,000 on 2005 volume. Worldwide retail sales decreased 5% last year to 2.7m units.

As a result of lower volumes and a weaker US dollar on average for the year, Chrysler revenues for the year of $62.2bn were significantly lower than in 2005 ($66.1bn).

Chrysler posted an operating loss of $1,475m in 2006, compared with an operating profit of $2,024m in 2005.

“The deterioration in operating results was primarily the result of negative net pricing, unfavourable product and sales market mix, and a decline in factory unit sales in the United States,” DC said.

“These factors reflect the continuing difficult market environment in the United States during 2006 marked by an overall decline in market volume, a shift in consumer demand towards smaller, more fuel-efficient vehicles due to higher fuel prices, as well as the impact of higher interest rates. These negative factors were partially offset by the market success of the new models, most of which were launched in the second half of the year.”

Financial support provided to bankrupt supplier Collins & Aikman led to a charge of $87m in 2006, compared to $131m in 2005.

Chrysler prior-year operating profit was positively impacted by a $317m gain on the sale of the Arizona proving grounds vehicle testing facility.

Led by the Dodge brand, Chrysler is trying to expand sales outside the NAFTA region  and was rewarded last year with a 22% boost in volume to 214,400 vehicles.

DaimlerChrysler’s truck group increased unit sales last year by 1% to a new record of 537,000.

The higher sales volume and an improved model mix boosted revenues 5% to $42.2bn.

Trucks achieved an operating profit of $2,666m in 2006, a significant increase from the previous year’s $2,119m. 2005 operating profit included exceptional income of $364m from the settlement reached with Mitsubishi Motors relating to expenditure for quality actions and recall campaigns at Mitsubishi Fuso Truck and Bus.

The increase in operating profit was primarily the result of efficiency improvements plus improved product positioning and model mix, DC said.

But it noted that higher unit sales were mainly the result of purchases brought forward because of stricter emission limits in important markets, and contributed to the higher earnings.

The financial services division improved operating profit from $1,937m in 2005 to $2,262m in 2006, achieving record earnings for the fifth consecutive year.

The increase in operating profit was the result of higher new business and ongoing efficiency improvements which offset higher expenses resulting from higher interest rates and increased cost of risk, DC said.

The van, bus, other segment posted an operating profit of $1,205m in 2006, down on 2005’s $1,440m.
Volume at the vans unit was 256,900 vehicles worldwide in 2006 compared with 267,200 in 2005 due to the Sprinter model changeover and associated production bottlenecks at the Dusseldorf plant.

DaimlerChrysler expects the group’s total unit sales will increase “slightly” in 2007 and expects revenues to be much the same as last year.

But is expecting a “significant” increase in profitability in the period 2007 through 2009 due to a generally stable economic and political situation, as well as a moderate rise in the worldwide demand for passenger cars and commercial vehicles expected over the next three years.