Daimler Gets Boost From Chrysler Unit
DaimlerChrysler surprised financial markets Tuesday, reporting an improved performance from its troubled U.S. unit and saying it would at least meet the lower end of its 2001 profit forecast range.
The world’s third-largest auto maker said third-quarter adjusted operating profit rose to $591.5 million from $480million a year earlier, well above a consensus forecast of $300million, after operating losses at Chrysler Group narrowed more sharply than expected.
Sales fell 3% to $32 billion.
The news, following reports of heavy third-quarter losses last week from Chrysler’s U.S. rivals General Motors Corp. and Ford Motor Co., sent DaimlerChrysler’s stock higher as the market welcomed signs of progress in the Chrysler turnaround plan. The shares gained 83 cents to $35.86 on the New York Stock Exchange.
Chrysler Group, in the middle of a $4-billion restructuring program expected to return it to profit next year, reported an operating loss of $237 million, a 54% improvement over a year earlier and far less than the $520-million loss that analysts had expected.
The narrower loss suggests that the ambitious cost-cutting program launched in February by Chrysler is bearing fruit.
“They are good numbers, but we still have some risk for the fourth quarter and the year 2002 because of the impact of the terror attacks on the car market,” said analyst Georg Stuerzer of HypoVereinsbank. “But in general, it is a very good indication that the turnaround of Chrysler is on track.”
U.S. sales of new cars and trucks were slowing even before last month’s hijack attacks increased the risks of full-blown recession, with earnings squeezed by expensive incentive programs.
DaimlerChrysler said forecasts for the rest of the year are more difficult after the attacks, but it still aims to post full-year adjusted operating profit at the lower end of its earlier forecast of $1.1 billion to $1.5 billion.
“It would be quite an achievement if they still manage to produce a number within that range,” said auto analyst John Lawson at Schroder Salomon Smith Barney.
Other earnings, excluding one-time gains and charges unless noted:
* American Home Products Corp. said third-quarter net income fell 67% as the drug maker had to add $950million to its more than $12-billion reserve for litigation for withdrawn diet pills. Net income fell to $252.1million, or 19cents a share, from $762.1million, or 58 cents, a year earlier. Revenue rose 6.6% to $3.74billion.
* Barr Laboratories Inc. reported third-quarter earnings of $67.1 million, or $1.80 per share, up from $10.4 million, or 28 cents per share, a year earlier. Sales tripled to $315.3 million after the Pomona, N.Y.-based company was cleared to sell a generic version of Prozac.
* Bristol-Myers Squibb Co. said third-quarter net income rose to $1.25 billion, or 63 cents a share, from $1.24 billion, or 62 cents, a year earlier, including special items. The drug company said operating earnings rose 11%. Sales rose 3.9% to $4.74 billion.
* Burlington Northern Santa Fe Corp.’s third-quarter net income slid to $225 million, or 58 cents a share, from $259 million, or 64 cents, a year earlier. Sales were little changed at $2.34 billion. The Fort Worth, Texas-based company said it will eliminate 400 jobs, 1% of its work force.
* Pharmacia Corp. earned $541 million in the third quarter, or 41 cents per share, up from $439million, or 33 cents per share, a year earlier. Pharmaceutical sales rose 7%, to $3.5billion. But the Peapack, N.J.-based drug maker lowered its profit forecast for next year as sales of arthritis drug Celebrex fail to live up to expectations. Pharmacia forecast 2002 earnings per share in the range of $1.91 to $1.96.
* Pulte Homes Inc., the largest home builder in the U.S., said its fourth-quarter earnings may miss Wall Street estimates and it is cutting 400 jobs in connection with its merger with Del Webb. In the third quarter, the Bloomfield Hills, Mich.-based company said earnings from continuing operations rose 27% to $83.2 million, or $1.53 cents per share, compared with $60.9 million, or $1.47 per share, a year ago. Revenue rose 38% to $1.48 billion.
* Schering-Plough Corp. earned $601 million in the third quarter, or 41 cents per share, compared with $591 million, or 40 cents per share, a year earlier. Sales were $2.4 billion, virtually flat with a year earlier, as the Kenilworth, N.J.-based drug maker struggled to fix manufacturing flaws that have held up a new version of its best-selling allergy drug Claritin.
