DaimlerChrysler expected to post sharp fourth-quarter profit rise

FRANKFURT January 29, 2003; Reuters reported that the world's fifth-largest carmaker DaimlerChrysler is next week expected to post a sharp rise in fourth-quarter profits from the previous year, helped by a recovery at its U.S. Chrysler arm. A Reuters poll of 18 analysts put an average foreast for DaimlerChrysler's fourth-quarter adjusted operating profit at 1.394 billion euros, more than double the previous year.

That would bring its 2002 adjusted operating profit to 6.216 billion euros, way above its latest goal of over five billion euros. Forecasts ranged from 5.720 billion to 7.986 billion.

The German group said in Janaury it was on track to meet its profit target and would post sales of about 150 billion euros for 2002, but analysts say the guidance may be conservative. The company is reaping the rewards of a deep restructuring at Chrysler including cost reductions and 26,000 job cuts.

Investors will be hoping for an outlook for 2003 which could be marred by weak U.S. demand, continued pricing pressure and pension fund issues. DaimlerChrysler has said its pension costs will rise by 700 million euros this year.

At the start of the Chrysler overhaul in February 2001, the company set a group adjusted operating target of 8.5 billion euros to 9.5 billion euros for 2003 but last year it said it may achieve its goals late due to economic weakness.

DaimlerChrysler is the first European carmaker to report earnings but General Motors and Ford Motor Co posted slightly better-than-expected fourth-quarter earnings, helped by cost cuts and robust demand, supported by incentives.

While Mercedes is set to prove its mettle as the company's main profit driver for another year, the trucks division is expected to show weakness, especially in the fourth quarter.