Chrysler Shows Loss for Year 2003 Despite 4Q Profit

Auburn Hills February 19, 2004; Dow Jones reported that DaimlerChrysler struggling U.S. Chrysler division increased its earnings in the fourth quarter, but not enough to prevent a loss of 506 million euros ($637 million) for the full year, the company said Thursday.

Operating profit at Chrysler rose to 143 million euros from 77 million euros in the same quarter a year earlier.

The company said that, with one-time restructuring and plant closing costs removed, the division had a loss of 40 million euros for the year, and so came close to the company's target of break-even from ongoing operations. The division had a profit of 609 million euros in 2002.

Chrysler has struggled amid price wars with competitors General Motors and Ford, with the companies propping up sales with costly incentives such as interest-free credit and rebates.

DaimlerChrysler reported Feb. 4 that net profit for the company as a whole fell sharply to 448 million euros last year from 4.7 billion euros, hurt by a one-time two billion euro charge for the decline in the value of the company's 33% stake in aerospace firm EADS.

DaimlerChrysler said it expects the Chrysler division to increase earnings this year, helped by the introduction of new models. Chief Financial Officer Manfred Gentz Thursday said the launch of 25 new products between 2004 and 2006, as well as further efficiency gains, would lead to a rise earnings from this year.

But a new-model offensive for the company's Mercedes division will require " high expenditure" in 2004, he said, suggesting a decline in operating profit this year for the company's cash cow.

The company said the new models are expected to increase Mercedes' sales and profits, "in particular from 2005."

For 2003, Mercedes posted an operating profit of 3.13 billion euros, up 4% from the previous year.

DaimlerChrysler also said it expects its commercial-vehicles division to strengthen its market position and profitability this year. That division, the world's largest truck maker, posted a 2003 operating profit of 855 million euros, the company said.

Wednesday, DaimlerChrysler extended the contract of Chief Executive Juergen Schrempp for three years to April 2008, a vote of confidence at a time when increasing fire is being aimed at the architect of the historic merger that created the German-American car maker. The company also made several anticipated changes to its top management.