Chrysler Expects to Post Operating Profit
DaimlerChrysler’s U.S. arm Chrysler is expected to post a small operating profit for the first quarter, climbing back into the black after six quarters of losses, DaimlerChrysler Chief Executive Juergen Schrempp said Wednesday.
Schrempp didn’t offer specific numbers at a shareholders’ meeting in Berlin, but said the company will post “slightly positive” earnings at the end of this month.
Operating results ignore such financial items as interest and taxes, and the cost of Chrysler’s ongoing three-year restructuring. But many auto analysts look to the operating figure as the best clue to the health of a company’s core business.
Schrempp has endured sharp shareholder criticism for taking Daimler-Benz into a 1998 merger with the U.S. auto maker in an attempt to forge a global auto giant. Turning around Chrysler would be a big step toward justifying his grand strategy, which included the company taking a 37% stake in Mitsubishi Motors Corp. of Japan.
Chrysler head Dieter Zetsche, a former Mercedes-Benz executive, has been leading a cost-cutting campaign at the U.S. group. Chrysler lost $4.7 billion last year including the costs of the restructuring, which includes closing six plants and eliminating 26,000 jobs, or about 20% of Chrysler’s work force.
Schrempp also said DaimlerChrysler was sticking with its earlier forecast that the parent company would more than double its 2001 operating profit of $1.1billion in 2002 this year, while reiterating that the car maker would not reach an earlier target of operating profit between $4.8billion and $5.2billion for the year.
“Due to projected economic trends, we will only be able to achieve these targets at a somewhat later date,” he said.
Some securities analysts have expressed frustration at Schrempp’s pronouncements on future earnings, saying they are too vague.
Including one-time costs such as the restructuring expenses, DaimlerChrysler posted a net loss of $1.1billion last year.
In trading Wednesday on the New York Stock Exchange, DaimlerChrysler shares rose $1.65 to close at $45.81.
