Chrysler returns to profit, announces profit sharing checks for workers

<br>SINDELFINGEN, Germany (AP) _ DaimlerChrysler AG's U.S. division Chrysler finished 2002 with an operating profit of $1.38 billion, rebounding from heavy losses the year before, the company said

Thursday, February 20th 2003, 12:00 am

By: News On 6

SINDELFINGEN, Germany (AP) _ DaimlerChrysler AG's U.S. division Chrysler finished 2002 with an operating profit of $1.38 billion, rebounding from heavy losses the year before, the company said Thursday.

That means Chrysler workers will get an average of $460 in profit-sharing checks for the year, the company said _ their first since 2000.

Last year's improved result follows a difficult 2001, when Chrysler lost more than $2 billion in the midst of a cost-cutting plan that meant laying off 26,000 workers and closing six plants.

DaimlerChrysler said it exceeded its original aim of simply returning the U.S. division to profitability in 2002.

``One year ago, some observers were skeptical that we could achieve our ambitious targets for profitability and cost reduction during 2002, much less overachieve them,'' Chrysler head Dieter Zetsche said in a statement.

In the fourth quarter, Chrysler earned $81 million.

DaimlerChrysler chief executive Juergen Schrempp said Chrysler made ``outstanding progress'' in improving efficiency.

``This result was achieved in a very challenging environment, as the U.S. market is still dominated by very high incentives,'' Schrempp told the company's annual press conference, referring to the costly come-ons such as zero-percent financing pushed by U.S. competitors GM and Ford to prop up sales.

Chrysler has had to match the incentives, but has criticized the practice.

The adjusted operating profit figures excluded financial items such as interest and taxes, and one-time costs such as those brought by the plant closings and layoffs. The company says they give the best picture of the strength of its core businesses.

DaimlerChrysler this month announced a full-year net profit of $5.1 billion and a fourth-quarter net profit of $182 million. Thursday's announcement broke out results for individual divisions.

``There were more positives than negatives,'' said Michael Raab, an analyst at Sal. Oppenheim in Frankfurt.

However, fourth-quarter earnings at Chrysler fell below his expectation of about $235 million, he said.

The company on Thursday issued a cautious 2003 forecast, avoiding a specific earnings target and saying only that earnings would be higher than in 2002.

It hedged even that, saying ``a precondition for this anticipated increase is that conditions remain stable in the most important markets.''

It said difficult market conditions would continue, particularly in the key North American market.

``We anticipate some decrease in overall demand in North America in 2003, even if car manufacturers continue to offer generous incentives,'' DaimlerChrysler said.

The company said it would pay its workers profit-sharing checks of $1,290 for its 143,000 German employees, while 86,000 eligible Chrysler workers would get an average of $460.

German employees' checks reflect the profits at the Mercedes-Benz and commercial vehicles division, the company said in a statement.

DaimlerChrysler, headquartered in Stuttgart, Germany, and Auburn Hills, Michigan, is the result of the 1998 merger of Daimler-Benz and Chrysler Corp.