DaimlerChrysler’s Earnings Double

DaimlerChrysler said Thursday that its profit more than doubled in the second quarter as improvement at its Mercedes-Benz unit and other businesses outweighed a dramatic slump at its U.S.-based Chrysler Group.

The German-U.S. automaker said it expected a slight rise in revenue this year.

The company also announced that Tom LaSorda, named Chrysler chief executive in September, had been awarded a five-year contract extension through 2012.

Shares of DaimlerChrysler rose 60 cents to $50.12.

The automaker earned 1.8 billion euros ($2.3 billion) in the April-to-June period, compared with 737 million euros in the second quarter of 2005.

Sales were little changed at 38.6 billion euros ($49.3 billion); that compares with 38.4 billion euros in the year-earlier period.

The company said that second-quarter operating profit, a key gauge of underlying profitability, rose 11%.

But Chrysler Group -- maker of Chrysler, Dodge and Jeep vehicles -- reported a 91% drop in profit to $65 million for the quarter from $695 million a year earlier.

The automaker said its improved overall earnings were primarily a result of a significant increase in operating profit achieved by the Mercedes group. Its truck business and financial services division also boosted results.

DaimlerChrysler, which has headquarters in Stuttgart, Germany, and Auburn Hills, Mich., has struggled to get both of its auto units progressing at the same time.

It spent billions reviving Chrysler after the 1998 linkup of Daimler-Benz of Germany and U.S. automaker Chrysler Corp.

DaimlerChrysler Chairman Dieter Zetsche attributed the lower earnings at Chrysler Group to a 6% decline in sales and decreased per-vehicle margins as the U.S. market shifts from sport utility vehicles and pickup trucks to passenger cars.

Chrysler revenue fell 4% to 12.5 billion euros ($15.7 billion), and the company warned of further declines.

Although the new Dodge Charger and Caliber models showed strong sales, Chrysler Group’s SUVs, pickups and minivans posted declines, Zetsche said. “As fuel prices have been increasing in the U.S., there has been a shift in demand to more fuel-efficient vehicles.”

The company aims to turn its sales around later in the year by moving toward smaller vehicles, he said. Chrysler Group expects to introduce eight new models this year, most with new fuel-efficient four-cylinder or six-cylinder engines, Zetsche said.

Yet Chrysler Group still expects to post a $630-million loss in the third quarter, the company said.

LaSorda, citing growing inventory, said the company planned to cut production of its truck-based products.