- Net income of $363 million STUTTGART, Germany, April 27
/PRNewswire-FirstCall/ -- DaimlerChrysler (NYSE:DCX) recorded an
operating profit of $1,082 million in the first quarter of 2006 (Q1
2005: $762 million). Earnings in both years were negatively
affected by substantial expenses relating to smart. (Logo:
http://www.newscom.com/cgi-bin/prnh/20020212/DCXLOGO )
DaimlerChrysler posted first-quarter net income of $363 million (Q1
2005: $350 million). The increase in operating profit of $319
million was largely offset by the higher net interest expense and
other financial expense. The charges related to the discontinuation
of the smart forfour model and the realignment of the smart
business model in the prior year had a negative effect on net
income by $733 million and $622 million, respectively. Earnings per
share amounted to $0.35, compared with $0.34 in the first quarter
of 2005. Significant sales revival with increases in unit sales and
revenues DaimlerChrysler sold 1.15 million vehicles worldwide in
the first quarter of 2006, surpassing the figure for Q1 2005 by 6%.
As a result of the positive development of unit sales, the Group's
total revenues increased by 17% to $45.1 billion. Adjusted for
exchange-rate effects, revenues rose by 12%. At the end of the
first quarter of 2006, DaimlerChrysler employed a workforce of
368,853 people worldwide (end of Q1 2005: 386,789). The total
number of employees decreased compared with the position a year
earlier primarily due to the staff-reduction measures initiated at
the Mercedes Car Group (-6%) at the end of September 2005 and the
sale of the Off- Highway business with approximately 7,000
employees. New management model In connection with the new
management model, the Supervisory Board today authorized the Board
of Management to spend an additional sum of approximately $2.4
billion on the implementation of this model in the period until
2008, subject to the results of negotiations on the compensation of
interests. $0.6 billion of this total is likely to be accounted for
in 2006. Details of the divisions in the first quarter of 2006 The
Mercedes Car Group sold 281,500 vehicles in the first quarter of
this year, surpassing the figure for Q1 2005 by 14%. First-quarter
revenues increased by 19%. The division reported an operating loss
of $823 million (Q1 2005: operating loss of $1,158 million). The
planned discontinuation of the smart forfour resulted in expenses
totaling $1,192 million, primarily related to provisions for
compensation payments to contractual partners and the valuation of
vehicle inventories. In the prior year, charges of $971 million
were recognized for the realignment of the smart business model.
Earnings in the first quarter of 2006 were also reduced by $246
million due to the ongoing staff reduction program at Mercedes Car
Group in the context of the CORE program. Adjusted to exclude these
above-mentioned items in both years, the Mercedes Car Group
increased its operating profit significantly. This was due to
higher unit sales and an improved model mix, resulting in
particular from the launch of the new S-Class, M-Class and R-Class.
Furthermore, the efficiency improving measures initiated in the
context of the CORE program also had a positive effect. Unit sales
of the Mercedes-Benz brand increased by 16% to 255,200 vehicles in
the first quarter. In particular, the new M-Class and the B-Class
contributed to this growth, selling 25,400 and 30,600 units
respectively. Following its successful start in Europe and Asia,
the new S-Class has been available in the United States since
February. A total of 25,400 S-Class cars was sold in the first
quarter and set a new record for the S-Class sedan. Unit sales of
the R-Class, available in the United States since the fall of 2005
and now also in Europe since February amounted to 8,200 vehicles.
The Mercedes-Benz GL-Class had its world debut at this year's
Detroit Motor Show, and will be on sale in the United States in May
and in Europe as of September. At the Geneva Motor Show, the
exclusive high-performance models, CLS 63 AMG and CLK 63 AMG were
presented, as well as the SL roadster models with upgraded
technology, design and equipment, and their AMG versions, the SL 55
AMG and SL 65 AMG. The outstanding new models shown in Detroit and
Geneva included the pioneering BlueTec diesel technology. In the
fall of this year, the world's cleanest diesel car will be launched
in the US market: the E 320 BlueTec. Worldwide unit sales by smart
amounted to 26,200 vehicles - similar to the figure for the
prior-year quarter. The smart fortwo model continued to defend its
position, posting 3% growth in unit sales. As announced at the end
of March, the brand will focus on the smart fortwo in the future,
completely integrating all functions in the Mercedes-Benz
organization. This is intended to secure the profitability of smart
as of the year 2007 and to secure the brand's long-term future. The
successor model to the smart fortwo will be launched in Europe next
year. The Chrysler Group's first-quarter retail sales increased by
4% to 690,700 vehicles. The growth was primarily due to the market
success of the new products launched in 2005, including the new
Dodge Charger (31,400 units) and the Jeep(R) Commander (20,200
units). Factory shipments in the first quarter increased by 4% to
695,400 vehicles. Revenues of euro 12.6 billion were 17% higher
than the figure for the prior-year quarter. Measured in U.S.
dollars, revenues increased by 7%. Although market conditions
remained difficult in North America, the division posted an
operating profit of $144 million in the first quarter of this year,
compared with an operating profit of $306 million in Q1 2005. The
decrease in operating profit was primarily the result of negative
net pricing and the product and market mix, partially offset by an
increase in worldwide factory unit sales. The Chrysler Group
started production of the all-new Dodge Caliber compact car in the
first quarter of 2006. Other vehicles to be introduced in 2006
include the Jeep(R) Compass and Jeep(R) Patriot (compact SUVs),
two- and four- door versions of the Jeep(R) Wrangler, the Chrysler
Aspen, the Dodge Nitro and the Dodge Ram Chassis-Cab. The newly
created Truck Group division focuses on the worldwide truck
business. Therefore the Global Excellence program can be
implemented even more efficiently. The primary aim of this program
is to make the truck business less dependent on the market cycles
typical of the industry and to remain reasonably profitable also
when markets are weak. The Truck Group's unit sales continued the
positive development of last year in the first quarter of 2006.
Sales of 119,300 vehicles were close to the figure for Q1 2005.
Revenues increased by 10% to $9 billion. The Truck Group posted a
first-quarter operating profit of $517 million (Q1 2005: $847
million). The prior-year figure included income of $335 million
from the settlement agreement reached with Mitsubishi Motors
Corporation related to the expenses incurred for quality actions
and recall campaigns at Mitsubishi Fuso Truck and Bus Corporation.
Positive effects on earnings from the ongoing high level of unit
sales combined with an improved model mix and the efficiency
improvements resulting from the Global Excellence program almost
offset higher expenses for new vehicle projects and to fulfill
future emission regulations. Unit sales by Trucks Europe/Latin
America decreased by 7% compared with the prior-year period to
30,000 vehicles. Unit sales by Trucks NAFTA increased by 5% to
50,700 units. Fuso posted unit sales of 38,700 vehicles (Q1 2005:
41,300). As a result of the integration of 26 dealers in Japan
effective March 1, 2006, in the future Fuso will be able to attain
uniform standards in the key functions of sales and service, and to
allow a homogenous market image. Work began on the construction of
a new development and test center at the truck plant in Worth
during the first quarter of this year. This will promote even
closer integration of the functions of development and production.
Completion is planned for the year 2007. At the beginning of the
year, the new Sterling 360 truck was launched in North America. The
Financial Services division increased its first-quarter operating
profit from $398 million to $544 million. This increase in earnings
was aided by lower risk costs, the increased volume of business,
the positive earnings trend at Toll Collect and the stronger US
dollar compared with the prior-year period. These factors more than
offset the negative impact from a higher level of interest rates.
New business of $16.6 billion exceeded the level of Q1 2005 by 15%.
Contract volume of $141.2 billion at the end of the period was 9%
higher than a year earlier; the increase amounted to 3% after
adjusting for the effects of currency translation. In the Americas
region (North and South America), Financial Services' most
important market, the division expanded its new business by 15% to
$11.9 billion. Contract volume increased from $93.6 billion to
$103.1 billion. Adjusted for exchange-rate effects, the increase
amounted to 2%. Contract volume of $38.1 billion in the region of
Europe, Africa, Asia/Pacific exceeded the high level of the
prior-year quarter. In Germany, DaimlerChrysler Bank managed a
contract volume of $18.5 billion by the end of the quarter,
compared with $17.4 billion a year earlier, and its customer base
grew by 6% to approximately 994,000 customers. Financial Services
makes an important strategic contribution with its activities in
the Asia/Pacific region, helping the Group to enter new market
segments and to profit from the growth potential in this region.
The new segment of Van, Bus, Other comprises the units Vans and
Buses, DaimlerChrysler's equity interest in the European Aeronautic
Defence and Space Company (EADS), the Corporate Research area, the
real-estate activities and the holding and finance companies. In
the year 2005, the Vans and the Buses were included in the
Commercial Vehicles division. The figures for the prior- year
quarter have therefore been adjusted for comparability. The
operating profit reported by the Van, Bus, Other segment increased
to $513 million, compared with $284 million in the first quarter of
last year. The result includes income of $284 million from the
disposal of DaimlerChrysler's Off-Highway business to EQT, a
Swedish financial investor. Vans and Buses made a positive
contribution to the segment's operating profit. The Mercedes-Benz
Vans unit sold 59,700 vehicles worldwide in the first quarter of
2006, an increase of 16% compared with the prior-year period.
Revenues amounted to $2.3 billion (Q1 2005: $1.9 billion). The
increase in unit sales was primarily due to significantly stronger
demand for medium-sized vans in Western Europe. Despite the
upcoming model changeover, unit sales of the Sprinter increased by
another 12% to 37,400 units. The new Sprinter was presented to the
public at the end of January, and customers' reactions have been
very positive. Sales of buses and chassis by the brands
Mercedes-Benz, Setra and Orion increased by 5% to 7,800 units in
the first quarter. Revenues increased by 15% to $948 million. The
Bus unit continued to maintain its innovation and technology
leadership in 2006. The buses launched in Europe in 2005 -
Mercedes-Benz Travego, Citaro Low Entry and Integro and the Setra
MultiClass 400 - have been offered with the new Euro-4 engines
featuring BlueTec technology since the beginning of 2006. EADS will
publish its figures on the first quarter of 2006 on May 16, 2006.
The contribution to earnings from EADS was positive once again. At
the beginning of April, DaimlerChrysler decided to reduce its 30%
equity interest in EADS to 22.5%. DaimlerChrysler will continue to
be an important shareholder in EADS in the future, with an equity
interest of at least 15%. Outlook for full-year 2006 Parallel to
the development of the world economy, the dynamism of global demand
for automobiles is likely to decrease slightly. For full-year 2006,
DaimlerChrysler therefore anticipates a growth rate similar to that
in 2005. Whereas market volumes at prior-year levels are the best
that can be expected for the United States and Western Europe,
demand should increase significantly in almost all of the large
emerging economies. Slight growth is expected for Japan. Worldwide
demand for commercial vehicles is likely to remain at a high level
in 2006. DaimlerChrysler assumes that competitive pressure in the
automotive industry will intensify as a result of worldwide
overcapacity. DaimlerChrysler anticipates unit sales in 2006 in the
magnitude of the prior year (2005: 4.8 million vehicles). At the
Mercedes Car Group, the company expects full-year unit sales at
least at the level of 2005, combined with an improved model mix.
The product offensive will continue this year with the new
GL-Class, the CL coupe based on the new S-Class, the revised SL
roadster and above all the new generation of the E-Class, which was
presented in the middle of April. At smart, DaimlerChrysler will
focus on the smart fortwo. At the same time, the CORE
efficiency-improving program will be continued. The Chrysler Group
assumes that unit sales will remain stable in an unchanged
difficult market environment in 2006. The division will launch a
total of ten new models on the market in the course of the year,
although a large number of them will not be available for sale
until the second half of the year. However, the Chrysler Group will
continue its actions to improve productivity, quality and customer
satisfaction in the current year. The Truck Group anticipates
stable unit sales for full-year 2006. The division will continue
modernizing its product range with the Mitsubishi Fuso Canter light
truck with hybrid drive, the Stratosphere heavy-duty truck from
Western Star and the Sterling 360 light-duty delivery truck. The
Truck Group will also continue with the consistent implementation
of the Global Excellence program. The Financial Services division
looks forward to moderate growth in contract volume during the
course of the year, taking into consideration the rising level of
interest rates. Financial Services will further intensify its
cooperation with the vehicle units. In the coming years, the
division intends to further enhance customer and dealer satis
faction and process quality while achieving efficiency
improvements. The Vans unit expects lower unit sales than in 2005
due to the Sprinter model change. For the Bus activities,
DaimlerChrysler assumes that unit sales will remain at the high
level of the prior year. EADS plans for a stable market for civil
aircraft in the year 2006; Airbus deliveries should increase again
compared with the prior year. The DaimlerChrysler Group anticipates
a slight increase in revenues in the year 2006 (2005: $181.8
billion). For full-year 2006, DaimlerChrysler anticipates an
improvement in profitability and operating profit to exceed $7.3
billion. This figure includes charges for the implementation of the
new management model ($0.6 billion), for the focus on the smart
fortwo ($1.2 billion) and for the staff reductions at the Mercedes
Car Group ($0.5 billion), as well as a gain on the disposal of the
off-highway business ($0.2 billion). For the reader's convenience,
the financial information has been translated from euros into U.S.
dollars at an assumed rate of euro 1 = $1.2139 (noon buying rate on
March 31, 2006). The convenience translation does not mean that the
euro amounts actually represent the corresponding dollar amount
stated or could be converted into dollars at the assumed rate.)
This document contains forward-looking statements that reflect
management's current views with respect to future events. The words
"anticipate," "assume," "believe," "estimate," "expect," "intend,"
"may," "plan," "project" and "should" and similar expressions
identify forward- looking statements. Such statements are subject
to risks and uncertainties, including, but not limited to: an
economic downturn in Europe or North America; changes in currency
exchange rates, interest rates and in raw material prices;
introduction of competing products; increased sales incentives; the
effective implementation of our New Management Model, and the CORE
program, including the new business model for smart, at the
Mercedes Car Group; renewed pressure to reduce costs in light of
restructuring plans announced by our major competitors in NAFTA;
disruption of production or vehicle deliveries, resulting from
shortages, labor strikes or supplier insolvencies; the resolution
of pending governmental investigations; and decline in resale
prices of used vehicles. If any of these or other risks and
uncertainties occur (some of which are described under the heading
"Risk Report" in DaimlerChrysler's most recent Annual Report and
under the heading "Risk Factors" in DaimlerChrysler's most recent
Annual Report on Form 20-F filed with the Securities and Exchange
Commission), or if the assumptions underlying any of these
statements prove incorrect, then actual results may be materially
different from those expressed or implied by such statements. We do
not intend or assume any obligation to update any forward-looking
statement, which speaks only as of the date on which it is made.
Further information on DaimlerChrysler is available on the internet
at: http://www.media.daimlerchrysler.com/ DaimlerChrysler - Figures
for the 1st Quarter 2006 (in US-$) All values, including the 2005
figures, are converted from euro figures with the exchange rate of
1 Euro = US-$ 1.2139 (based on the noon buying rate on March 31,
2006). DaimlerChrysler Group Q1/2006 Q1/2005 US-$ US-$ Revenues, in
millions 45,139 38,534 Operating profit, in millions 1,082 762 Net
income (Loss), in millions 363 350 Earnings Per Share (EPS) 0.35
0.34 Employees (March 31) 368,853 386,789 Operating profit (loss)
by segments Q1/2006 Q1/2005 in millions US-$ US-$ Mercedes Car
Group (823) (1,158) Chrysler Group 144 306 Truck Group 517 847
Financial Services 544 398 Van, Bus, Other 513 284 Revenues by
segments Q1/2006 Q1/2005 in millions US-$ US-$ Mercedes Car Group
14,960 12,604 Chrysler Group 15,261 13,031 Truck Group 8,956 8,173
Financial Services 4,988 4,330 Van, Bus, Other 3,888 3,405 Unit
sales by segments Q1/2006 Q1/2005 Mercedes Car Group 281,500
247,000 Chrysler Group 695,400 666,700 Truck Group 119,300 121,700
Vans 59,700 51,600 Buses 7,800 7,500
http://www.newscom.com/cgi-bin/prnh/20020212/DCXLOGODATASOURCE:
DaimlerChrysler CONTACT: Thomas Frohlich, +49-7-11-17-9-33-11, or
Han Tjan, +1-212-909-9063, both of DaimlerChrysler Communications
Web site: http://www.daimlerchrysler.com/
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