DaimlerChrysler Posts Third-Quarter 2005 Profit

FRANKFURT, Germany October 25, 2005; Matt Moore and Dee-Ann Durbin writing for the AP reported that DCX posted a $910 million net profit in the third quarter and its Mercedes Car Group showed signs of a turnaround.

The world's fifth-largest automaker said late Tuesday its net profit fell 21 percent in the July-September period compared to $1.1 billion last year, but analysts said it was markedly better than U.S. rivals General Motors Corp. and Ford Motor Co., both of which reported substantial losses last week.

Its earnings were boosted last year by tax-free income from the sale of a stake in Hyundai Motor Co.

DaimlerChrysler said its pretax operating profit for the quarter rose 38 percent. Revenues rose 9 percent to $46.2 billion as worldwide unit sales rose by 9 percent to 1.2 million vehicles.

The company said it expects full-year operating profits to be up slightly over last year's $7 billion, excluding restructuring costs for its Smart brand. It also expects vehicle sales to rise slightly.

DaimlerChrysler's flagship Mercedes Car Group showed signs of a turnaround. The division, troubled by quality problems, a strong euro and model changeovers, posted a scant operating profit of $14.4 million in the second quarter.

For the third quarter, Mercedes' operating profits were up 43 percent to $526 million from $367 million in last year's third quarter. Mercedes sold 6 percent more vehicles in the third quarter versus a year earlier thanks to new products like the B-Class sport wagon.

DaimlerChrysler said its plan to offer voluntary severance packages to 8,500 Mercedes employees in Germany over the next 12 months will cost $1.1 billion. Most of that charge will be taken in the fourth quarter.

The Chrysler division reported an operating profit of $374 million, up 43 percent from $262 million last year. It was the division's ninth consecutive quarterly profit. Chrysler's revenues rose 12 percent to $15.5 billion for the quarter.

With hot products like the Chrysler 300 and Mercedes M-Class sedans, DaimlerChrysler is enjoying some success in a competitive environment that is pummeling other automakers. GM, the world's largest automaker, said last week it lost $1.6 billion in the third quarter, while Ford lost $284 million.