DaimlerChrysler reports operating loss for Chrysler, gain for Mercedes

Posted 8:12AM on Wednesday 20th February 2002 ( 22 years ago )

SINDELFINGEN, Germany - DaimlerChrysler reported a 2.18 billion euro ($1.9 billion) operating loss in 2001 for its Chrysler division Wednesday, but said a turnaround plan had prevented even bigger losses. The U.S.-German automaker -- the world's fifth-biggest -- said it made a 39 million euro ($35 million) net loss in the fourth quarter, compared to a 1.4 billion euro net profit in the same quarter the year before. But operating profit, excluding one-time gains and losses, in the quarter was up, to 564 million euros ($502 million) compared to a loss of 405 million euros in the same quarter the year before. Chrysler showed a 359 million euro ($320 million) operating loss for the fourth quarter, compared to a 1.4 billion euro operating loss the same quarter the year before, DaimlerChrysler said in a statement. The company said its plan to return Chrysler to profit, launched last year, went unexpectedly well. Better-than-expected costs savings and efficiency improvements offset the negative impact of declining unit sales and revenues, it said. Mercedes, the company's mainstay, recorded 2001 operating profits of 2.96 billion euros ($2.6 billion), up 3 percent from 2.87 billion euros in 2000, DaimlerChrysler said in a statement. However, the announcement did not address investor concerns about DaimlerChrysler's reduced earnings forecast for 2002. Analysts were looking to chief executive Juergen Schrempp to clarify the outlook at the company's annual earnings news conference later Wednesday. On Feb. 6, the automaker warned it would fall short of its original earnings forecast, but didn't say where its profits would be hit or specify why. DaimlerChrysler originally said simply that its 2002 goal of 5.5 billion euros to 6.5 billion euros ($4.7 billion to $5.6 billion) in adjusted operating profit wouldn't be met until "slightly later," because the projection was based on an assumption of more favorable economic conditions. DaimlerChrysler has been battered by the fallout of the Sept. 11 terror attacks and by brutal price-cutting on the crucial U.S. auto market. It also has incurred heavy charges to restructure Chrysler and Freightliner, its Oregon-based truck and bus maker division. Georg Stuerzer, an analyst at HVB in Munich, said many market watchers are wondering where the problem is -- and whether the Chrysler turnaround remains truly on track. Amid fears of more bad news, DaimlerChrysler shares closed down 4.25 percent Tuesday on the Frankfurt stock exchange. Schrempp's three-year rescue plan for Chrysler calls for the U.S. unit to break even in 2002 and make a profit in 2003. To achieve those targets, the company would cut 26,000 jobs, or about one-fifth of the Chrysler work force. Although the lowered profit prediction has raised speculation about the state of the Chrysler turnaround, Schrempp has said Chrysler's target of breaking even this year remains unchanged. DaimlerChrysler has already announced a 662 million euro ($569 million) net loss for last year, compared with a net profit of 7.89 billion euros ($6.86 billion) in 2000. Its operating profit barely made the lower end of DaimlerChrysler's target range of 1.2 to 1.7 billion euros ($1 billion to $1.5 billion). Chrysler merged with German automaker Daimler-Benz AG in November 1998.

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