DaimlerChrysler has improved its first-quarter 2004 operating profit from $1.7 billion to $1.9 billion. Operating Profit increased by 10%, despite the negative impact on earnings from Toll Collect amounting to $343 million and further restructuring expenses of $93 million at the Chrysler Group.
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Strong earnings at Chrysler helped DC to beat analysts’ expectations in Q1. Rumours remain however, that CEO Jurgen Schrempp may resign over the apparent rejection of his Mitsubishi strategy by the board last week.
However, net income was down at $483 million in the first quarter (Q1 2003: $723 million). Earnings per share amounted to $0.48 (Q1 2003: $0.71). DC said this was largely caused by a lower financial result and higher taxes.
DaimlerChrysler sold 1.1 million vehicles worldwide in the first quarter of this year, surpassing by 3% the figure sold in the same period of last year. The group generated first-quarter total revenues of $39.8 billion (Q1 2003: $40.9 billion). DC said the main reason for the decrease was the appreciation of the euro against the US dollar. After adjusting for currency-translation effects, there was an increase of 7%.
Unit sales by the Mercedes Car Group of 266,000 vehicles were 9% lower than in the prior-year period due to weak demand in major markets, the upcoming market launch of the C-Class and the lifecycle-related decrease in unit sales for the M-Class. However, as a result of a higher-value model-mix, DC said revenues decreased by only 6% to $14.4 billion.
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By GlobalDataOperating profit of $785 million was lower than in the first quarter of 2003 ($846 million) as a result of the lower unit sales, expenditures on the market launch of the SLK and the smart forfour, as well as costs related to the preparation of additional vehicles in the second product offensive.
The smart brand further improved its position in a sharply declining market segment. Deliveries to dealers of 20,000 vehicles did not equal the level of the prior-year quarter (-17%) which is primarily the effect of a structural change in the sales organization. However, retail sales rose by 11% to 24,500 units. Orders received for the new, third model series of the smart brand, the smart forfour, are developing positively, DC said.
The Chrysler Group increased its first-quarter retail sales by 3% to 631,600 vehicles. There was growth for, among others, the new Chrysler Pacifica and Chrysler Crossfire models, which were launched in 2003. Shipments to dealers increased by 6% to 684,800 vehicles. At the end of the first quarter, dealers’ vehicle inventories in the United States rose to 585,100 vehicles (end of Q1 2003: 535,800), equivalent to 77 days’ supply (end of Q1 2003: 69 days). DC said that the increase in vehicle inventories is a result of the build- up for the market launch of the Chrysler Group’s new products this year.
Revenues in euro decreased by 5% to €12.1 billion, primarily reflecting the appreciation of the euro against the US dollar. Measured in dollars, however, revenues increased by 11%.
Operating profit improved from $187 million to $366 million as a result of the higher shipments, an improved model-mix and further significant cost reductions. On the other hand, there were negative effects on profits from the higher level of price incentives in the United States compared with the first quarter of 2003. In addition, restructuring charges of $93 million were included in the operating profit of the first quarter of 2004, which primarily relate to further workforce reductions in connection with planned divestitures.
In the period under review, production of six new Chrysler Group models has started: the Chrysler 300C sedan, the Chrysler PT Cruiser convertible, the Chrysler Town & Country and Dodge Grand Caravan, the Dodge Magnum sport wagon, the Dodge Ram SRT-10 pickup truck and the Jeep Wrangler Unlimited. Three more new models will be launched during the balance of 2004: the Dodge Dakota, the Jeep Grand Cherokee and the Chrysler Crossfire roadster.
Dc said by way of outlook that as the year progresses, gradual improvements in economic conditions should also have a positive effect on the international demand for automobiles. For the United States, Western Europe and Japan, little growth in sales of passenger cars is expected.
For full-year 2004, the Mercedes Car Group expects that unit sales, revenues and earnings will be similar to the high levels of 2003. It assumes that the decrease in unit sales during the first quarter can be offset over the rest of the year by the model change for the SLK and the A-Class, the new generation of the C-Class, and the market launch of the smart forfour and the CLS.
The Chrysler Group expects its markets to remain highly competitive in the year 2004, with a continuation of high price incentives in the United States. Despite the expenditure for the launch of nine new products, DC maintained that the Chrysler Group is expected to end the year with considerable positive earnings as a result of the efficiency improvements that it has achieved.
DaimlerChrysler expects to achieve an improvement in operating profit for the full year compared with 2003 results (excluding restructuring expenditures at the Chrysler Group and excluding the capital gain realized on the disposal of MTU Aero Engines).
