DaimlerChrysler reports quarterly profit down 14%
DaimlerChrysler said Wed- nesday that its second-quarter profit fell 14% and that it planned to spend about $10.2 billion buying back nearly 10% of its shares as it moved forward without its Chrysler division.
DaimlerChrysler’s profit decline excluding results from Chrysler and its financing arm -- which did better in the latest quarter than a year earlier -- was a steeper 20%.
The Stuttgart, Germany-based automaker said it earned 1.44 billion euros ($1.91 billion) excluding the operations it sold, compared with 1.8 billion euros a year earlier.
It now expects a charge of 2.5 billion euros for the year from the sale of Auburn Hills, Mich.-based Chrysler Group and its financing arm, less than it had previously thought.
DaimlerChrysler also said it expected vehicle sales to be in line with the 2.1 million it sold in 2006, with revenue on par with the 99 billion euros it reported last year.
The company sold Chrysler Group and its North American financial services units to Cerberus Capital Management this month in a $7.4-billion deal that saw the private equity group take an 80.1% stake in Chrysler.
Including those operations, DaimlerChrysler posted a profit of 1.85 billion euros ($2.52 billion) for the April-June period, down 14% from 2.15 billion euros last year. Sales dropped to 23.84 billion euros ($32.52 billion) from 24.6 billion euros last year.
Chrysler Group and the related financial services business in North America saw their profit rise 18% to 406 million euros ($554.8 million) in the quarter, compared with 342 million euros a year earlier.
DaimlerChrysler also said it “anticipates a charge against earnings” of 2.5 billion euros ($3.42 billion) for the year, below its initial estimates of 3 billion euros to 4 billion euros ($4.1 billion to $5.47 billion).
The company said it would buy back shares, a move authorized by shareholders at its April 4 general meeting, in part to help “optimize the company’s capital structure and make it more efficient.”
DaimlerChrysler shares rose $3.27 to $87.61.
Wednesday marked the last time that Chrysler’s full earnings would be released to the public, because the company as controlled by a private equity firm will not be required to publish results.
DaimlerChrysler retains a 19.9% share in Chrysler, so it will continue to report some Chrysler earnings beginning with its third-quarter results in October.
But the German automaker plans to list Chrysler’s results in a miscellaneous category with other holdings.
