Chrysler group posts $1.46 billion loss for third quarter

Parent company notches $1.12 billion operating profit

Reuters / October 25, 2006 - 8:00 am UPDATED: 10/25/2006 9:48 A.M. FRANKFURT (Reuters) -- The Chrysler group had an operating loss of $1.46 billion (1.16 billion euros), DaimlerChrysler said today. The world's fifth-biggest carmaker generated third-quarter group operating profit of $1.12 billion (892 million euros) and said it still saw 2006 operating profit around $6.29 billion (5 billion euros).

DaimlerChrysler said it expected the profit contribution from EADS to be $251.4 million (200 million euros) less than planned, citing the delayed delivery of the Airbus A380 superjumbo.

But it added, "DaimlerChrysler is maintaining this earnings target due to very positive business developments in the divisions Mercedes Car Group, Truck Group and Financial Services."

The group is cutting its EADS stake to 22.5 percent from around 30 percent, and wants to sell a further 7.5 percent.

DaimlerChrysler group net income fell to $680.1 million (541 million euros) from 855 million euros a year earlier on sales of $44.26 billion (35.2 billion yen), down from 38.2 billion yen.

"Excellent results in the commercial vehicles division, especially trucks, and for the Mercedes Car Group," said analyst Marc Rene Tonn at M.M. Warburg. "Good results for financial services. Chrysler was as expected."

CHRYSLER'S WOES

Caught out by U.S. consumers' sudden aversion to pickups and SUVs given high fuel prices, DaimlerChrysler had warned investors that Chrysler could lose $1.51 billion (1.2 billion euros) in the quarter and $1.26 billion (1 billion euros) in 2006. The Chrysler group's third quarter loss totaled $1.46 billion (1.16 billion euros).

DaimlerChrysler stopped short of detailing a restructuring plan for the Chrysler group, which has suffered from high numbers of unsold cars parked at U.S. dealerships.

The Chrysler group says it would now target dealer inventory levels in the low-to-mid-500,000's, depending in part on the timing of new model launches, compared with the 534,000 units on U.S. dealers' lots at the end of September.

"We are in no way satisfied with our third-quarter results," Chrysler CEO Tom LaSorda said. "We have taken dramatic steps to reduce production and shipments to address the inventory situation in the U.S. and we continue to work to find new ways to eliminate waste, lower our costs."

The Chrysler group's loss eclipsed rebounding earnings at premium division Mercedes Car Group, whose operating profit rose 127 percent to $1.25 billion (991 million euros), easily beating the poll average.

Finance chief Bodo Uebber said the group expects a weaker showing at Mercedes Car Group in the first quarter of 2007.

He said the division was on track to keep improving earnings and hit its 7 percent operating margin target in 2007.

"However, due to seasonality and the model changeover of the (Mercedes-Benz) C class we expect a weaker first quarter in 2007 subsequently followed by stronger quarters," he told a conference call with analysts and reporters.

The company's industry-leading trucks business boosted operating profit by 57 percent to $699.1 million (556 million euros) amid a global boom that is now showing signs of waning.