DaimlerChrysler Earns $1.67 Billion
Wednesday, July 26th 2000, 12:00 am
By: News On 6
DETROIT (AP) â€” Second-quarter profits rose 18 percent at DaimlerChrysler AG, topping expectations, but the automaker warned that earnings for the rest of the year would be hurt by larger U.S. sales incentives and the cost of launching new Chrysler cars and minivans.
The U.S.-German company reported Wednesday that profits totaled $1.67 billion, or $1.66 a share, from April to June as a strong showing for Mercedes-Benz and other units offset lower earnings from the Chrysler division.
In the second quarter of 1999, the automaker posted a net profit of $1.41 billion, or $1.41 a share. Wall Street analysts had expected a per-share profit of $1.52 a share for the just ended quarter, according to a survey by First Call/Thomson Financial.
Second-quarter revenues rose 17 percent to $35.6 billion compared with a year-ago tally of $41.7 billion.
Once again, the Chrysler division accounted for well over half of the company's profits, earning $1.1 billion in the quarter, but that was 12 percent lower the unit earned in the same period last year â€” even though revenues rose 11 percent to $17.2 billion.
The company said the division was hurt by the cost of launching new versions of its minivans, mid-size sedans, coupes and the popular Chrysler PT Cruiser. Profits also took a hit in June when Chrysler increased sales incentives as business began to sag.
Profits also declined at DaimlerChrysler Services, the company's finance arm, falling 18 percent to $210 million despite a 50 percent increase in revenues. The company said profits were hurt by weak prices for used cars, higher refinancing costs and more competition for leasing.
DaimlerChrysler warned that its operating profits will decline in the second half of 2000, especially the final three months of the year, due to the Chrysler incentives and launch costs.
But on a more positive note, Chairman Juergen Schrempp said in a statement, the company's stakes in European aerospace and telecommunications ventures are expected to boost net earnings
Other parts of the company reported improved second-quarter results.
The Mercedes-Benz and Smart division increased earnings 22 percent to $719 million, as revenues rose 18 percent to $10.9 billion on stronger sales of Mercedes luxury cars in the United States and Europe and improved sales of the Smart minicar.
Profits in DaimlerChrysler's commercial vehicle division totaled $362 million, a 19 percent increase, as revenues rose 13 percent. The company said sales in North America weakened slightly from last year, while South American sales improved.
The aerospace division saw profits increase 30 percent to $234 million, as revenues increased 6 percent to $2.3 billion.
DaimlerChrysler reduced losses in its other businesses. In the Adtranz rail unit, second-quarter losses shrank 64 percent to $59 million.