From The Horses Mouth: DaimlerChrysler Group Delivers Improved Earnings in the First Quarter

DaimlerChrysler Group with Improved Earnings in the First Quarter of 2002 Adjusted Group Operating Profit over EUR 1.0 billion Chrysler Group returns to profitability with a positive adjusted Operating Profit of EUR 127 million Continued success for Mercedes-Benz Passenger Cars & smart in a difficult market environment, gains in market share, excellent start for new E-Class Operating Profit including one-time effects of EUR 3.1 billion Adjusted Net Income rises to EUR 0.5 billion Revenues adjusted for changes in the consolidated Group up 7% Stuttgart / Auburn Hills, April 25, 2002

In the first quarter of 2002, DaimlerChrysler (stock abbreviation: DCX) achieved an Operating Profit excluding one-time effects of EUR 1.0 billion. This represents an improvement of EUR 1.6 billion compared with the loss sustained in the first quarter of 2001. Operating Profit including one-time effects reached EUR 3.1 billion. The sale of the Group's remaining stake in T-Systems ITS (formerly debis Systemhaus) resulted in one-time income of EUR 2.5 billion. As already announced in February 2001, there were additional one-time charges at Chrysler Group in conjunction with the implementation of the Turnaround Plan, totalling EUR 0.3 billion. Furthermore, in the Services division there was a one-time impairment charge of EUR 0.1 billion as a result of legislation passed in Argentina to deal with the crisis there.

Net Income adjusted to exclude one-time effects amounted to EUR 0.5 billion. (Q1 2001: Net Loss of EUR 0.4 billion); Earnings Per Share improved to EUR 0.50 (Q1 2001: Loss Per Share of EUR 0.37). Including one-time effects, Group Net Income was EUR 2.7 billion (Q1 2001: Net Loss of EUR 2.4 billion), and Earnings Per Share were EUR 2.65 (Q1 2001: Net Loss of EUR 2.35).

1.1 million vehicles sold

DaimlerChrysler sold 1.1 million vehicles worldwide in the first quarter of this year. Adjusted for changes in the consolidated Group, DaimlerChrysler's Revenues increased by 7% to EUR 36.9 billion in the first quarter.

At the end of the first quarter, DaimlerChrysler employed a workforce of 372,084 employees. The prior year's figure (410,451) included the employees of Adtranz (about 19,600) and of TEMIC (about 6,000). There were also workforce reductions due to the implementation of Turnaround Plans, particularly at Chrysler Group and Freightliner.

Continued concentration on automotive business

On January 1, DaimlerChrysler exercised its option to sell its remaining 49.9% interest in T-Systems ITS to Deutsche Telekom. The transaction was concluded during the first quarter. Also in January, the Services division sold a part of its Capital Services portfolio (non-automotive activities), as was previously announced. And on April 1, 2002, the Group sold its remaining 40% stake in TEMIC to Continental.

Outlook for full-year 2002

Due to uncertainties regarding future economic developments DaimlerChrysler had been cautious in its initial planning for 2002. In the first quarter, markets generally developed better than had been expected. There are now increasing signs that this positive trend might continue. But there is still a lot of uncertainty as to whether and to what extent the unstable political situation in some regions and a potential labor dispute in Germany might have a negative impact on the beginnings of economic recovery.

The Mercedes-Benz Passenger Cars & smart division expects Unit Sales, Revenues and Earnings to be similar to the high levels of last year.

Assuming that the US market continues its positive trend, Chrysler Group may do better than its targeted breakeven, and could achieve a positive result for the year.

Despite weak global demand, the Commercial Vehicles division anticipates positive operative earnings for the full year, at a higher level than in 2001.

DaimlerChrysler assumes that its Services division will achieve a higher adjusted Operating Profit than in the prior year.

Mitsubishi Motors will continue to implement its Turnaround Plan, and for this reason is expected to make a positive contribution to Group earnings for 2002. Despite the extremely difficult market situation, Mitsubishi Motors assumes that its Unit Sales in Japan will stabilize during the second half of its current financial year, which started on April 1, 2002.

The market environment of EADS is also still difficult. Nonetheless, DaimlerChrysler again expects a positive contribution to the Group's Operating Profit from this company.

In total, DaimlerChrysler expects Revenues of around EUR 150 billion in full-year 2002 (2001: EUR 152.9 billion). Compared with the prior year, negative effects will come from changes in the consolidated Group, while there will be positive effects from changed exchange-rate assumptions and, to a certain extent, rising Unit Sales, particularly in the US.

Improved economic conditions and a recovery of DaimlerChrysler's key markets would have a positive effect on the Group's earnings. However, given the economic and political uncertainties DaimlerChrysler's conservative earnings expectations remain in place.

Details of the divisions' performance in the first quarter of 2002

The Mercedes-Benz Passenger Cars & smart division sold 292,500 vehicles in the first quarter of 2002, and thus again exceeded the prior year's high level. Revenues also increased, by 7% to EUR 11.9 billion. And in terms of Operating Profit, a result of EUR 653 million was close to the prior year's level ( EUR 670 million), despite substantial expenditure for the model changeover of the E-Class and the CLK coupe and the resulting lower contributions to earnings from these models.

Unit Sales of 264,100 Mercedes-Benz cars exceeded expectations, nearly equalling the prior year's record. Whereas Unit Sales in Germany declined by 2%, in Western Europe (excluding Germany) they rose by 3%. Unit Sales in the United States actually increased by 7%. With overall market shrinkage in nearly all key markets Mercedes-Benz was able as anticipated to gain market share and strengthen its competitive position. Mercedes-Benz also expects to perform better than its markets in full-year 2002.

The strong 11% increase in Unit Sales of the A-Class to 47,200 vehicles was primarily due to the high demand for the new long-wheelbase version. The Unit Sales trend of the C-Class is also very positive (102,000 vehicles, +15%), especially caused by strong demand for the station wagon and the sports coupe.

The performance of the new SL roadster was extremely positive, with 7,700 units being sold last quarter (Q1 2001: 1,300). Unit Sales of the S-Class remained stable. As expected, there was a lifecycle-related decline in Unit Sales for the E-Class. The new E-Class sedan has only been available since the middle of March.

Unit Sales by smart increased by 13% in the first quarter to 28,400 cars.

Chrysler Group's retail sales were down 7% at 675,800 units. This decline mainly reflects a generally weak U.S. economy and increased competiton. Industry incentives remained relatively high.

Jeep Liberty continued its strong showing with U.S. sales of almost 35,000 units in the first quarter, and U.S. sales of the new Ram Pickup increased by 10% from the prior year to 93,700 units. However, in the US minivan and passenger car sales decreased 5% and 10% in the quarter versus the prior year.

Unit Sales (factory shipments) increased by 7% to 704,800 vehicles in the first quarter of 2002, reflecting growing dealer confidence in the Chrysler Group. In the US, Chrysler Group had a 59-day supply of vehicles, which represents a low level.

The increase in vehicle shipments and appreciation of the US Dollar against the Euro led to a 17% increase in Revenues, to EUR 16.0 billion. Adjusted for one-time effects, Operating Profit totalled EUR 127 million at Chrysler Group, the first positive result after six quarters. This improvement of EUR 1.5 billion was primarily due to an improved cost structure within Chrysler Group and increased vehicle shipments.

As a result of the worldwide decline in demand for Commercial Vehicles, the Unit Sales of this division fell, as expected, to 101,700. Whereas sales of buses increased by 3% over the prior year and Freightliner's sales remained low due to the state of the market, the Mercedes-Benz Trucks and Mercedes-Benz Vans business units recorded declines in Unit Sales of 15% and 18% respectively. But meanwhile, incoming orders are beginning to show a more positive trend. Revenues of EUR 6.1 billion were below the prior year's level (-6%). Particularly due to lower charges from Freightliner, the division's Operating Loss fell from EUR 138 million to EUR 85 million. The implementation of the Turnaround Plan at Freightliner is running according to schedule. Of the savings of $450 million planned for the year 2002, a figure of $400 million is already certain.

The Revenues generated by the Services division (DaimlerChrysler Services) were slightly lower than in the first quarter of 2001 at EUR 3.9 billion. Operating Profit was higher at EUR 2.6 billion (+ 479%). Adjusted to exclude the one-time gain on the sale of the remaining stake in T-Systems ITS (formerly debis Systemhaus) and the one-time expense as a result of the crisis in Argentina, Operating Profit increased to EUR 178 million (Q1 2001: EUR 149 million). This improved profitability is explained by the beginnings of economic recovery in the United States and the reduced need for additional provisioning, especially for Freightliner vehicles.

In the segment of Other Activities, the MTU Aero Engines business unit increased its Revenues to EUR 562 million in the first quarter. Incoming orders of EUR 583 million were slightly higher than in the prior year. EADS publishes its quarterly figures on May 17. As expected, Mitsubishi Motors' first-quarter Unit Sales in Japan in the first three months of 2002 fell to 138,500 vehicles in a generally weak market. In the US market, after its best-ever year in 2001, Mitsubishi Motors was again able to improve its position, setting a new quarterly record of 90,300 passenger cars sold. Mitsubishi Motors continues to make good progress with the reduction of material costs and fixed costs as part of the implementation of its Turnaround Plan. For its last financial year, which ended on March 31, 2002, Mitsubishi Motors expects to have achieved its announced breakeven.