DaimlerChrysler Slices Earnings Target in Half

DaimlerChrysler, confronting weakened demand for cars and trucks, cut this year’s earnings target by about half and pared its dividend, sending its shares down as much as 7% in Germany.

Operating profit in 2002 will be “a very significant amount” above 2.6 billion euros, or $2.3 billion, compared with a previous forecast of as much as 6.5 billion euros, the car maker said. The dividend will be cut 57% to 1 euro a share.

DaimlerChrysler shares fell 97 cents to $37.01, or 2.6%, in the U.S. in New York Stock Exchange trading after closing down 4.3% in Germany.

The maker of Mercedes-Benz cars, Chrysler Dodge cars and Freightliner and Mercedes heavy trucks will not reach profit targets because of “a weaker economic and market environment,” it said in a statement to the Frankfurt stock exchange.

“We’ll get further disappointments,” said Peter Braendle, who manages $1.8 billion at Swissca Portfolio Management in Zurich and sold DaimlerChrysler shares Wednesday. “I don’t believe their restructuring in the U.S. will be as smooth and easy as they’re telling us.”

Chief Executive Juergen Schrempp is shutting six car plants and cutting 26,000 jobs at the unprofitable Chrysler car unit, as demand falls by as much as 15%. He’s also cutting 2,700 jobs at the Freightliner truck unit in the U.S. and closing as many as three factories.

The U.S. car division’s market share dropped to 13.2% in 2001 from 14.5% the year before as its Dodge Ram pickup trucks and Jeep Grand Cherokee sport-utilities lost sales to Honda Motor Co., Toyota Motor Corp. and others.

The company said 2001 net income excluding one-time items was 700 million euros, or 73 cents a share, compared with income of 3.5 billion euros, or 3.47 euros a share, in the year-earlier period.