Daimler Posts $2.1-Billion Loss

Massive red ink stained DaimlerChrysler’s bottom line once again as the world’s No. 5 auto maker said Wednesday that its ailing commercial truck unit joined its troubled Chrysler arm in racking up losses for the company.

Although its first-quarter earnings report initially tantalized investors by showing the German auto maker bled less than expected, it also showed that its luxury-brand Mercedes division was the sole automotive unit posting a profit.

“It’s the only bright point,” said Juergen Pieper, an auto analyst with Metzler Bank in Frankfurt. “Every other division seems to be between deep trouble and some trouble.”

In the previous quarter, only U.S.-based Chrysler had been in the red.

DaimlerChrysler beat expectations for the January-March period, despite posting a $2.1-billion loss that contrasts sharply with the net profit of $1.52 billion a year earlier. Revenue fell 13% to $31.2 billion.

After excluding one-time gains and charges, the company lost $328 million, or 33 cents a share.

Analysts surveyed by First Call/Thomson Financial had expected a 47-cent loss.

An operating loss of $536 million, which analysts said was a better gauge of the company’s core auto business, also beat expectations.

Analysts had been expecting a loss of $720 million to $900 million, contrasted with profit of $2.15 billion a year ago.

But analysts downplayed the importance of the slightly better results.

“It’s definitely a positive,” said Christian Breitsprecher, an analyst with Deutsche Bank in Frankfurt. “But it doesn’t matter much in the context of the whole group. It’s still a long way back up.”

DaimlerChrysler acknowledged as much Wednesday, trimming its sales forecast for 2001 to $130 billion, down from last year’s $145.7 billion.

It said revenue would be held down by its struggling Chrysler and commercial vehicles divisions, and because it has sold several units, including its aerospace and information technology arms.

U.S.-based Chrysler spilled most of the red ink, accounting for $1.2 billion in losses, less than the $1.35 billion many analysts had expected.

Chrysler got the lift because the U.S. auto market had not deteriorated as quickly as expected, but analysts warned that could change.

The commercial vehicles branch added to the gloom by posting a loss of $121 million. The trucks division was hammered by a sagging North American market, which has withered by more than 50% since 1999, the company said.

DaimlerChrysler Chief Executive Juergen Schrempp, assailed by shareholder calls to resign, warned in February that things would get worse before they get better.

At the time, Schrempp launched a $3.9-billion, three-year rescue plan aimed at returning the Chrysler unit to profitability by 2003. The plan also calls for about 35,000 job cuts at Chrysler and Japan’s Mitsubishi Motors Corp., which is 37.3% owned by DaimlerChrysler.

As part of the turnaround, DaimlerChrysler may sell a component factory in Dayton, Ohio, or an electronics plant in Huntsville, Ala., Dow Jones Newswires reported.

DaimlerChrysler wouldn’t comment on the report.

DaimlerChrysler shares fell 12 cents to close at $49.79 on the New York Stock Exchange.