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Automotive Intelligence News

News of October 30, 2002


 


DaimlerChrysler: Third-Quarter Earnings Improve Significantly Despite Difficult Economic Environment

  • Operating Profit excluding one-time effects more than doubles to EUR 1.7 billion, including one-time effects at EUR 1.5 (Q3 2001: 1.5) billion
  • Net Income excluding one-time effects increases to EUR 0.9 billion
  • Revenues rise to EUR 36.3 billion, Unit Sales up by 7%
  • Operating Profit excluding one-time effects of more than EUR 5 billion expected for full-year 2002

Stuttgart/Auburn Hills - Despite the difficult economic environment, DaimlerChrysler achieved strong growth in third-quarter Operating Profit excluding one-time effects - rising from EUR 0.7 billion in Q3 2001 to EUR 1.7 billion. The significant improvement in Earnings was achieved despite the challenging environment. Net Income for the third quarter, adjusted to exclude one-time effects, rose from EUR 0.3 billion to EUR 0.9 billion (+214%), while adjusted Earnings per Share were up 214% to EUR 0.88. Unit Sales of 1.1 million vehicles, 7% better than the same period last year, were achieved in markets that in some cases weakened. Total Revenues increased by 1% to EUR 36.3 billion. Adjusted for exchange-rate effects, Revenues were up 6%.

Including one-time effects, Operating Profit amounted to EUR 1.5 billion, thus equaling the previous year's figure. There were one-time charges due to impairment adjustments and restructuring expenditures at Commercial Vehicles, Chrysler Group, and the Services division. The previous year's figures were influenced by the high positive one-time gain resulting from the integration of Airbus. Including one-time effects, Net Income and Earnings per Share were therefore lower than in the previous year, at EUR 0.8 billion and EUR 0.77 respectively.

For the first nine months of 2002, the Group achieved an adjusted Operating Profit of EUR 4.7 billion, well above the result for the same period of last year (EUR 0.8 billion). Including one-time effects, DaimlerChrysler posted an Operating Profit of EUR 6.3 billion compared with an Operating Loss of EUR 1.3 billion in 2001. This improvement was primarily due to the success of the restructuring activities initiated last year, particularly at Chrysler Group and Freightliner.

In the first nine months of this year, DaimlerChrysler's industrial businesses generated a Free Cash Flow of EUR 8.5 billion, compared with a Net Cash Outflow of EUR 0.7 billion in the same period of last year.

Mercedes-Benz Passenger Cars & smart division again increases Unit Sales and Revenues

The Mercedes-Benz Passenger Cars & smart division succeeded in boosting Unit Sales by 3% to 310,900 vehicles. Revenues increased by 6% to EUR 12.3 billion. Although the new E-Class was not launched in the United States and the United Kingdom until September, and an expenditure was incurred for the launch of the updated S-Class, Operating Profit of EUR 792 million almost equaled the high level attained in the third quarter of last year.

Despite difficult markets worldwide, Mercedes-Benz' Unit Sales of 280,600 vehicles were slightly higher than the figure for the third quarter of 2001 (+1%), and the brand's market share increased in almost all major markets.

In the United States Retail Sales were up by 2% to 50,800 vehicles. In Japan (11,600 units, +6%) and in Western Europe (185,700 units, +2%), Unit Sales increased against the market trend.

The smart brand achieved strong growth in Unit Sales during the third quarter (30,300 cars, +18%).

Chrysler Group posts substantially improved Operating Profit

Chrysler Group's third-quarter Retail Sales increased by 8% to 681,600 vehicles. Change in Unit Sales (factory shipments) was positive, rising by 11% to 650,500 vehicles.

Chrysler Group's Revenues decreased by 2% to EUR 14.3 billion due to currency-translation effects. Measured in US dollars, there was actually a Revenue increase of 8%.

In the third quarter, the effects of the Turnaround Plan and higher Unit Sales led to a strong rise in earnings compared with the same period last year. Excluding one-time effects, Chrysler Group achieved an Operating Profit of EUR 325 million, after an Operating Loss of EUR 267 million in the third quarter of 2001.

Significantly higher earnings by the Commercial Vehicles division

Despite challenging conditions throughout international commercial vehicle markets, the Commercial Vehicles division increased its third-quarter Unit Sales by 2% to 121,300 vehicles. Revenues of EUR 7.1 billion were similar to last year's level. Operating Profit excluding one-time effects of EUR 143 million was significantly higher than both the second quarter of 2002 and the third quarter of 2001.

The Freightliner/Sterling/Thomas Built Buses business unit continued its positive development in the third quarter (31,800 vehicles, +27%). Due to unchanged difficult market conditions in South America and Western Europe, Unit Sales by the Mercedes-Benz Trucks and DaimlerChrysler Buses & Coaches business units did not equal the previous year levels (25,100 trucks, -6% / 6,000 buses, -11%). Unit Sales by Mercedes-Benz Vans were similar to last year's figure at 56,300 vehicles.

Repeated earnings improvement by Services

At DaimlerChrysler Services, Operating Profit excluding one-time effects of EUR 283 million significantly exceeded last year's figure (+102%). The increase was primarily due to lower costs, more favorable refinancing conditions and a considerable improvement in the marketing of ex-lease vehicles.

As projected, Revenues of EUR 3.9 billion in the third quarter were lower than in the same period of last year. New business increased by 23% to EUR 15.4 billion, while total contract volume decreased mainly due to exchange-rate effects to EUR 114.6 billion.

Other Activities

The Revenues of EUR 537 million generated by the MTU Aero Engines business unit were lower than in the third quarter of last year (-7%).

EADS, the European Aeronautic Defence and Space Company, achieved earnings before interest and taxes (EBIT) of EUR 775 million for the first half of the year - a similar result to the previous year despite the generally weaker demand from civil aerospace markets and higher research and development expenditure. EADS will publish its interim report on the third quarter on November 14, 2002.

Mitsubishi Motors Corporation

During the period of July through September, the restructuring plan at Mitsubishi Motors (MMC) continued to be implemented according to plan. MMC achieved a strong increase in Retail Sales in the United States, where it sold 87,700 (+17%). Retail Sales in Japan decreased to 89,400 vehicles (-9%) while unit sales in other important Asian markets increased.

Outlook 2002

DaimlerChrysler anticipates total Revenues of EUR 150 billion for full-year 2002 (2001: EUR 152.9 billion).

Political and economic uncertainty continued to grow in the third quarter, and DaimlerChrysler thus remains cautious in its assessment for the rest of the year 2002. Assuming steady market developments, DaimlerChrysler would now expect that Operating Profit excluding one-time effects should exceed EUR 5 billion for full-year 2002.

The Mercedes-Benz Passenger Cars & smart division assumes that, despite the difficult market conditions, in full-year 2002 it will equal the high figures for unit sales, revenues and earnings achieved in 2001, and will increase its market share in generally weakening markets.

Due to the good progress made with restructuring, and assuming continuing stable demand, for full-year 2002 Chrysler Group expects to achieve a significantly positive Operating Profit. There will also be a positive result for the fourth quarter.

The Commercial Vehicles division also anticipates positive earnings (excluding one-time effects) for 2002, at a higher level than in the previous year.

In the Services division the concentration on automotive services combined with more favorable refinancing costs should lead to a significant increase in operating profit (excluding one-time effects) for the full year.

In its current 2002/2003 financial year, Mitsubishi Motors expects to achieve further improvements in earnings. It should therefore make a positive contribution to DaimlerChrysler's operating profit and improve on last year's result.

DaimlerChrysler also assumes that EADS and the MTU Aero Engines business unit will again make positive contributions to the operating profit of the DaimlerChrysler Group.

(Oct 23, 2002)

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