DaimlerChrysler Reports Significant Increase In Third-Quarter Operating Profit

Posted by www.eMercedesBenz.com on October 25, 2005 at 2:30 PM CST

Warning:  monotonous financial information ahead.  Read at your own  
risk.

DaimlerChrysler noted an especially strong operating profit this  
quarter, recording a profit of EUR 1,838 million, compared to EUR  
1,332 million in the third quarter of 2004.  Ultimately,  
DaimlerChrysler reported group revenues of EUR 38.2 billion, up 9%  
from last year, but reported a net income of EUR 755 million, down  
EUR 196 million from 2004.

DaimlerChrysler attributes the increases in operating profit and  
group revenues to all automotive divisions, including the success of  
new products from both the Mercedes Car Group and the Chrysler Group.

For the Mercedes Car Group, third-quarter sales of 310,900 units was  
6% higher than sales in 2004, thanks to strong sales from the new M- 
Class, B-Class, and A-Class models, as well as an additional increase  
in sales from the E-Class line.

The Chrysler Group also noted a strong third quarter, increasing  
retail sales by 13% to 736,200 units. The increase is attributed to  
strong sales from new products as well as the employee-discount sales  
program.

For the remainder of 2005, DaimlerChrysler maintains its positive  
outlook and expects the positive sales growth to continue across all  
segments.  Despite a EUR 950 million charge for the workforce  
reduction at the Mercedes Car Group and a less than favorable EURO to  
Dollar exchange rate, DaimlerChrysler also maintains its forecast of  
a small increase in operating profit over the 2004 fiscal year.

If that wasn't enough financial info for you, you're in luck.  You  
can check out DaimlerChrysler's full financial press release below.   
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OFFICIAL PRESS RELEASE


Significant Increase In DaimlerChrysler’s Third-Quarter Operating  
Profit To €1.8 billion (+38%)


Stuttgart/Auburn Hills, Oct 25, 2005

DaimlerChrysler (stock-exchange abbreviation DCX) recorded an  
operating profit of EUR 1,838 million in the third quarter, compared  
with EUR 1,332 million in the same period of last year. All  
automotive divisions contributed to this positive development.

The Group posted third-quarter net income of EUR 755 million (Q3  
2004: EUR 951 million). The increase in operating profit was  
partially offset by higher income-tax expenses and financial  
expenses. Last year’s third quarter net income was positively  
influenced by a tax-free income from the sale of the interests in  
Hyundai Motor Company. Earnings per share amounted to EUR 0.74,  
compared with EUR 0.94 in the third quarter of 2004.

In the industrial business, DaimlerChrysler was able to maintain the  
very solid net liquidity position reached in the second quarter.

Strong increase in unit sales and revenues

Due primarily to the market success of new products from the Mercedes  
Car Group and the Chrysler Group and a significant increase in unit  
sales by the Commercial Vehicles Division, compared with last year’s  
third quarter figures, DaimlerChrysler increased its worldwide unit  
sales by 9% to 1.2 million vehicles.

As a result of the higher unit sales, DaimlerChrysler’s third-quarter  
revenues increased by 9% to EUR 38.2 billion.

At the end of this year’s third quarter, DaimlerChrysler employed a  
workforce of 388,014 people worldwide (end of Q3 2004: 386,195).

Details of the divisions in the third quarter of 2005

The Mercedes Car Group’s third-quarter unit sales of 310,900 vehicles  
were 6% higher than in 2004. Revenues reached EUR 12.5 billion (+3%).

Operating profit surpassed the prior-year level at EUR 436 million  
(Q3 2004: EUR 304 million), continuing its positive earnings trend.  
The better profitability was due in particular to the new products  
and the efficiency-improving measures.

The positive effects on earnings from increased unit sales were  
partially offset by the unfavorable model mix due to the S-Class  
model changeover.

In the third quarter of this year, the Mercedes-Benz brand increased  
its unit sales by 10% to 282,100 vehicles. The new M-Class and B- 
Class were again very successful, selling 21,300 and 23,000 units,  
respectively. Sales of the A-Class soared compared with the prior- 
year quarter (+125%), while the E-Class increased by 3%. Additional  
sales stimulus is also anticipated in the fourth quarter due to the  
launch of the new S-Class and the introduction of the R-Class in the  
United States.

The new S-Class, which sets a new benchmark with approximately a  
dozen pioneering innovations, made its world debut at the Frankfurt  
Motor Show in September. Feedback was exceptionally positive.

Mercedes-Benz also presented the European version of the R-Class and  
the ML 63 AMG - the high-performance version of the new M-Class.

At the end of September, the Board of Management of DaimlerChrysler  
AG approved a package of measures to be taken to reduce personnel  
levels at the Mercedes Car Group in Germany by 8,500 jobs. The staff  
reductions are to be achieved by means of voluntary severance  
agreements over the next twelve months. These measures will help to  
achieve much-needed advances in productivity and competitiveness for  
the Mercedes Car Group. Most of the anticipated charges of  
approximately EUR 950 million are expected to be taken in the fourth  
quarter of 2005.

Unit sales by the smart brand totaled 28,800 vehicles in the third  
quarter (Q3 2004: 36,500). During the first nine months of the year,  
dealers’ inventories were reduced significantly. Third-quarter retail  
sales amounted to 30,800 vehicles (Q3 2004: 36,000).

The implementation of the measures for the realignment of the smart  
business model, initiated on April 1, 2005, is making progress. In  
2005, smart has already reduced fixed costs by a quarter. In  
addition, the functions of procurement and supply as well as design  
and some IT functions have been integrated into the Mercedes-Benz  
organization.

The Chrysler Group’s worldwide third-quarter retail sales increased  
by 13% to 736,200 vehicles. The increase was due to the market  
success of new products as well as the attractive sales program for  
employees extended to all customers in the United States and Canada.  
Global unit sales (factory shipments) were 12% above the prior-year  
quarter, totaling 663,400 vehicles.

Revenues rose by 12% to EUR 12.9 billion; when measured in US dollars  
the increase was also 12%.

As a result of increased shipments, the Chrysler Group continued its  
positive earnings development by posting an operating profit of EUR  
310 million in a difficult market environment (Q3 2004: EUR 217  
million). The positive effects were partially offset by a slight  
negative net pricing.

At the Frankfurt Motor Show, the Chrysler Group presented the Dodge  
Caliber and the Dodge Nitro, two new models that will be launched in  
the US and Europe in 2006. Two concept vehicles were introduced: the  
Jeep® Compass and the Jeep® Patriot.

In September 2005, the Chrysler Group announced its intention to  
license production in China of the Chrysler 300C sedan as well as a  
minivan to be sold in the Chinese and Taiwanese markets from the end  
of 2006. An investment of EUR 300 million is planned for this project.

Also in September, the division and the National Automobile,  
Aerospace, Transportation and General Workers Union of Canada (CAW)  
agreed on a three-year contract covering approximately 11,400  
employees in Canada. The new agreement provides for moderate wage,  
pension and benefit increases for employees and allows management  
more flexibility in staff deployment, which the Chrysler Group  
believes will allow for improved productivity in its plants.

The Commercial Vehicles Division once again increased unit sales in  
the third quarter with sales of 210,400 vehicles surpassing the high  
level of Q3 2004 by 9%. Revenues also continued their rise to EUR  
10.6 billion (+15%).

The division continued the positive trend of this year and increased  
its third-quarter operating profit from EUR 159 million to EUR 498  
million. The result for Q3 2004 was impacted by expenses related to  
the quality measures and recall campaigns at Mitsubishi Fuso Truck  
and Bus Corporation (MFTBC).

The positive development of the truck business also continued in the  
third quarter of 2005. Unit sales by the Trucks Europe/Latin America  
business unit (Mercedes-Benz) of 37,000 trucks were slightly higher  
than in the same quarter last year (+3%). Unit sales by the Trucks  
NAFTA business unit (Freightliner, Sterling, Thomas Built Buses,  
Western Star) increased by 22% to 48,300 vehicles, primarily as a  
result of strong demand for Class 8 heavy-duty trucks. MFTBC  
increased its unit sales by 6% to 46,000 trucks and 2,200 buses.  
Sales of 64,200 vehicles by the Vans business unit were 7% higher  
than in Q3 2004. The DaimlerChrysler Buses business unit sold 9,200  
vehicles and chassis, 9% more than in last year’s third quarter.

In September, the Commercial Vehicles Division presented the second  
generation Mercedes-Benz Travego coach, the Mercedes-Benz urban and  
regional bus, the Citaro Low Entry, and the new Setra regional bus  
MultiClass 400.

The Financial Services division posted an operating profit of EUR 408  
million, compared with EUR 412 million in the prior-year quarter. The  
stable earnings situation in the third quarter was primarily due to  
the continuing positive development of risk costs partially offset by  
a higher level of interest rates, especially in the United States,  
and lower charges from the involvement in Toll Collect (EUR 15  
million; Q3 2004: EUR 119 million).

Contract volume increased by 8% to EUR 113.4 billion; after adjusting  
for exchange-rate effects the increase amounted to 5%. At the end of  
the quarter under review, the worldwide portfolio comprised a total  
of 6.4 million vehicles. New business decreased from EUR 14.7 billion  
to EUR 11.8 billion.

In the ‘Americas’ region, the division increased its contract volume  
by 8% to EUR 82.7 billion. Adjusted for exchange-rate effects the  
growth amounted to 4%. Contract volume of EUR 30.7 billion in the  
region of Europe, Africa, Asia/Pacific exceeded the high level of  
last year’s third quarter. In China, Financial Services received  
official approval to establish a financing company. In Germany,  
DaimlerChrysler Bank’s attractive products enabled it to further  
increase the proportion of Group vehicles sold that are leased or  
financed by the Group. Contract volume grew by 6% to EUR 14.8  
billion. DaimlerChrysler Bank provided services to 973,000 customers,  
7% more than a year earlier.

The toll-collection system for trucks on German autobahns operates  
smoothly.

Other Activities achieved a third-quarter operating profit of EUR 242  
million, compared with EUR 258 million in 2004. The prior-year result  
included exceptional income from the agreement reached with  
Bombardier to settle all disputes relating to the sale of  
DaimlerChrysler Rail Systems GmbH (Adtranz). The European Aeronautic  
Defence and Space Company (EADS) made an increased contribution to  
the Group’s operating profit in the past quarter, due in part to  
higher deliveries of Airbus aircraft. EADS will publish its third- 
quarter figures on November 9, 2005.

The DaimlerChrysler Off-Highway business unit posted third-quarter  
revenues of EUR 514 million, exceeding the last year’s result by 17%.

Incoming orders of EUR 592 million were also significantly higher  
than in Q3 2004 (EUR 434 million).

In September, DaimlerChrysler reached an agreement with the minority  
shareholders of MTU Friedrichshafen to acquire their 11.65% interest  
in that company, thus increasing DaimlerChrysler’s ownership of MTU  
Friedrichshafen to 100%. In mid-October, the bidding process opened  
for the intended sale of MTU Friedrichshafen.

Outlook for full-year 2005

DaimlerChrysler assumes that dynamic growth in demand for passenger  
cars will continue in the emerging markets, while only slight growth  
is expected for the markets of North America, Western Europe and  
Japan. Global demand for commercial vehicles is expected to further  
increase in the fourth quarter. Prospects are still generally  
positive in the United States, while demand may weaken slightly in  
Western Europe. The Group expects a slight increase in demand for  
commercial vehicles in Japan, while emerging markets should continue  
their dynamic development. In view of further reductions in model  
lifecycles and continuing over-capacity, DaimlerChrysler does not  
expect any alleviation of the intensely competitive pressure in the  
automobile industry.

Compared with 2004, DaimlerChrysler still expects a slight increase  
in unit sales for full-year 2005.

The Mercedes Car Group is confident that the positive unit-sales  
trend will continue in the fourth quarter. Stimulus is expected from  
the M-Class and the B-Class as well as from the new S-Class, which  
was launched in Europe in September. The division assumes that unit  
sales for the full year will be of the same magnitude as in 2004,  
while retail sales are expected to rise.

The Chrysler Group anticipates a continuation of the tough  
competition in the North American market during the fourth quarter.  
Due to the continued success of its attractive products, the division  
expects full-year unit sales to surpass last year’s figure.

The Commercial Vehicles Division assumes that unit sales will remain  
stable in the fourth quarter. Due particularly to the strong demand  
for trucks, unit sales are expected to increase substantially in full- 
year 2005.

The Financial Services division anticipates moderate growth in  
contract volume in 2005.

EADS expects the recovery of the market for civil aircraft to  
continue in the fourth quarter. Incoming orders in the full year  
should significantly exceed last year’s figure. EADS plans to deliver  
more than 360 Airbus aircraft in 2005 (2004: 320).

The DaimlerChrysler Group anticipates a significant increase in  
revenues in 2005.

Compared with the end of 2004, the Group’s workforce is expected to  
grow slightly, although the headcount at the Mercedes Car Group  
should decrease slightly by the end of this year. Year-end employment  
levels at the Commercial Vehicles Division should be higher than at  
the end of last year.

Earnings in full-year 2005 will be impacted above all by the less  
favorable dollar-euro exchange rate and hedging rates than in the  
prior year, as well as by increases in raw-material prices. An  
additional factor is that over the next twelve months,  
DaimlerChrysler expects to incur costs of EUR 950 million in  
connection with workforce adjustments at the Mercedes Car Group. Most  
of this expense is expected to be recorded in the fourth quarter of  
2005.

DaimlerChrysler assumes that the expenditure for headcount reductions  
will be offset by income from special items and improvements in the  
ongoing business. Therefore, the earnings guidance for full-year 2005  
remains unchanged: The Group continues to expect a slight increase in  
operating profit compared with the prior year (EUR 5.8 billion),  
excluding charges related to the realignment of the smart business  
model.

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