(updates with division results, details on Chrysler outlook)
STUTTGART (AFX) - DaimlerChrysler AG said operating profit in the second quarter rose by 11 pct to 1.857 bln eur, surpassing the 1.707 bln predicted by analysts, thanks mainly to the significant earnings improvement in Mercedes Car Group.
The Truck Group and Financial Services divisions also increased their earnings to more than offset the decrease in the operating result of Chrysler.
Group net profit amounted to 1.810 bln eur, up from 737 mln and way above the 844.4 mln forecast by analysts polled by AFX News.
The mark-to-market valuation of derivatives to hedge the price risks of shares of the European Aeronautic Defence and Space Company (EADS) had a positive impact on net income of about 800 mln eur, it said.
Group sales were at 38.6 bln eur, unchanged from last year and below the 39.993 bln consensus forecast.
DaimlerChrysler reiterated its full year 2006 forecast for the whole group that operating profit, including one-offs, will exceed 6 bln eur.
It warned however that Chrysler is expected to post an operating loss of up to 500 mln eur in the third quarter this year but that Chrysler plans to achieve positive results for the fourth quarter as well as for the whole of 2006.
Chrysler's operating profit in the second quarter plunged to 51 mln eur from 544 mln for the same period last year, due mainly to a decrease in worldwide unit sales and negative net pricing.
Mercedes Car Group's operating profit during the quarter jumped to 807 mln eur from 12 mln.
One-off costs booked during the quarter were 20 mln eur for the CORE efficiency programme in Mercedes Car Group, 13 mln for restructuring expenses in Smart and 145 mln expenses relating to the new management model for the whole DaimlerChrysler group.
Operating profit in the Truck division rose 5 pct to 8.547 bln eur and up 12 pct at 4.276 bln for the Financial Services unit.
The Van/Bus division's operating result dropped by 12 pct to 3.359 bln.
For the full year 2006, DaimlerChrysler reiterated it still anticipates group unit sales to be in the magnitude of the prior year's level of 4.8 mln vehicles.
Mercedes Car Group expects full-year unit sales at least as high as those in 2005 and further earnings improvements in the coming quarters.
Chrysler Group assumes that unit sales in 2006 will be flat and for the third quarter, it intends to reduce production volumes and shipments to dealers.
In addition, the upcoming model changeovers will cause downtime in certain plants of Chrysler, it added.
The development of Chrysler's earnings in the second half of the year will also be impacted by the launch costs of the eight new models.
Chrysler expects positive earnings once again in the fourth quarter as a result of new models to be launched in the second half of the year. marilyn.gerlach@afxnews.com mog/jc1/mog/joy COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
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