Chrysler Losses Cut Parent’s Operating Profit
DaimlerChrysler said its operating profit sank 49% to about $4.9 billion last year because of second-half losses at its Chrysler division.
The auto maker said total sales rose 8% to about $152 billion for the year.
DaimlerChrysler plans to report detailed financial results for the fourth quarter and all of 2000 at the end of the month but unexpectedly released some of its full-year numbers after a board meeting. It did not break out the Chrysler division’s results.
“It was no surprise,” said Gerold Granzeuer, who tracks auto companies at Hauck & Aufhaeuser in Munich. The company said earnings were significantly affected by second-half losses in North America, “especially at Chrysler.”
He said analysts had been expecting adjusted operating profit of $4.6 billion to $5.1 billion.
Xavier Gunner, an analyst at UBS Warburg in London, said the figures indicated Chrysler probably lost about $1.5 billion in the fourth quarter.
The company, which installed veteran German executive Dieter Zetsche in November to haul Chrysler back into profit, gave no new information on its plans for the U.S. unit, which has been forced to offer high discounts to shift stocks of older models.
Zetsche is to detail his turnaround plan Feb. 26 at DaimlerChrysler’s annual earnings news conference. Chrysler already has announced 26,000 job cuts and the closure of several plants, and it is leaning on its suppliers to cut prices.
Chief Executive Juergen Schrempp is courting key shareholders, including the second-largest, the Kuwait Investment Authority, to explain his strategy.
He has insisted there are no plans to spin off or sell Chrysler. The drop in the company’s value has raised speculation that DaimlerChrysler could attract a takeover bid from a rival.
Rolf-Ernst Breuer, chairman of the firm’s biggest shareholder, Deutsche Bank, confirmed last week that DaimlerChrysler had asked the bank to prepare a defense strategy.
DaimlerChrysler shares closed up 16 cents to close at $48.39 on the New York Stock Exchange.
