DaimlerChrysler's Second-Quarter Operating Profit Increases To EUR 1.9 Billion

Posted by www.eMercedesBenz.com on July 27th, 2006 At 7:50 AM CST

For those interested in a comprehensive analysis of DaimlerChrysler's
second-quarter operating profit, the company has published a press
release this morning detailing that exact subject.

As a whole, Daimler managed to increase their operating profit by 11%
to EUR 1,857 million when compared to the previous year. The company
attributes the growth primarily to the significant increase in
operating profit achieved by the Mercedes Car Group, noting also that
both the Truck Group and Financial Services achieved gains as well.

At the Mercedes Car Group, the division noted sales of 325,000
vehicles during the the second quarter of the year, an increase over
Q2 2005 of 6%. Revenues for the Mercedes Car Group were up as well,
increasing 7% to EUR 13.4 billion. As for operating profit, the
division reported a total of EUR 807 million, a substantial
improvement when compared to Q2 2005's operating profit of EUR 12
million. The company attributes the growth to the unit's increase in
sales of approximately 17,000 units, along with a diverse model
lineup and their new CORE efficiency-improving program.

While I could continue listing all of DaimlerChrysler's second
quarter financial highlights, I think its best if I let the press
release take it from here. To learn more, keep scrolling for the full
press release detailing all of DCX's individual units.

Enjoy.

OFFICIAL PRESS RELEASE

DaimlerChrysler: second-quarter operating profit increases to €1.9
billion

Net income of €1.8 billion (Q2 2005: €0.7 billion)
Earnings per share of €1.77 (Q2 2005: €0.73)
Net income and earnings per share include €0.8 billion and €0.78
respectively due to valuation gain related to the derivative
contracts to hedge EADS shares
Revenues of €38.6 billion at prior-year level
Operating profit of more than €6 billion still anticipated for full-
year 2006
Figures for the 2nd Quarter 2006

Stuttgart, Jul 27, 2006
In the second quarter of 2006, DaimlerChrysler (stock-exchange
abbreviation DCX) increased its operating profit by 11% compared with
the same period of last year to €1,857 million.

The earnings improvement was primarily due to the significant
increase in operating profit achieved by the Mercedes Car Group. The
Truck Group and Financial Services also improved their operating
profit. In total, these increases more than offset the decrease in
operating profit recorded by the Chrysler Group.

Net income amounted to €1,810 million (Q2 2005: €737 million). The
mark-to-market valuation of derivatives to hedge the price risks of
shares of the European Aeronautic Defence and Space Company (EADS)
had a positive impact on net income of approximately €800 million
(after taxes). Earnings per share amounted to €1.77, compared with
€0.73 in the second quarter of 2005. €0.78 of this amount resulted
from the valuation gain related to the derivative contracts to hedge
EADS shares.

Revenues at prior-year level

DaimlerChrysler sold 1.3 million vehicles in the second quarter,
which was 3% lower than in Q2 2005.

The Group’s total revenues of €38.6 billion were on par with the
second quarter of 2005.

At the end of the second quarter of 2006, DaimlerChrysler employed
368,321 people worldwide (end of Q2 2005: 388,758). Of this total,
169,603 were employed in Germany and 97,518 in the United States (end
of Q2 2005: 184,029 and 100,442, respectively).

Details of the divisions in the second quarter of 2006

The Mercedes Car Group sold 325,500 vehicles in the second quarter of
this year, surpassing the figure for Q2 2005 by 6%. The Mercedes-Benz
brand increased its second-quarter unit sales by 6% to 291,000
vehicles. smart unit sales of 34,500 vehicles were at the prior-year
level. Revenues increased by 7% to €13.4 billion.

The Mercedes Car Group reported an operating profit of €807 million,
a substantial improvement compared with the second quarter of last
year (€12 million). The increase was caused by the division’s higher
unit sales (+17,400 vehicles) and an improved model mix, due to the
full availability of the new S-Class and M-/R-Class. Within the frame-
work of the CORE program, additional important efficiency-improving
actions were implemented, which also had a significant positive
effect on earnings.

CORE examines the Mercedes Car Group’s entire value chain and
develops it further – to make processes leaner and faster, to reduce
costs and to continue improving quality.

The staff reductions planned at Mercedes-Benz Passenger Cars led to
additional expenses of €20 million. Furthermore, charges arising from
the discontinuation of the smart forfour model reduced operating
profit by €13 million; in the prior-year quarter, expenses of €311
million arose in connection with the realignment of the smart
business model.

The new generation of the E-Class has been available since June. With
all versions on sale, this car offers the most versatile model range
in its market segment. In June, the CL-Class, the new luxury coupe
from Mercedes-Benz, was presented to the press, which will be
delivered to customers beginning in September. At the same time, the
GL-Class, the first Mercedes-Benz full-size SUV, will be launched in
Europe.

At the end of June, DaimlerChrysler announced that the successor to
the smart fortwo is intended to be launched in the United States in
2008. For the U. S. launch, a cooperation with the United Auto Group
is planned.

The Chrysler Group’s worldwide retail and fleet sales in Q2 2006
totaled 713,600 units, a decrease of 9% compared with the second
quarter of last year. Factory shipments decreased to 761,700 vehicles
(Q2 2005: 812,200 vehicles).

Second-quarter revenues amounted to €12.5 billion (Q2 2005: €13.0
billion); measured in U.S. dollars, there was a decrease of 4%.

The Chrysler Group posted an operating profit of €51 million in the
second quarter of 2006, compared with an operating profit of €544
million in the second quarter of 2005. The decrease in operating
profit was primarily the result of a decrease in worldwide factory
unit sales, a higher mix of fleet vehicles and negative net pricing.

The Chrysler Group improved its overall manufacturing productivity by
6% in 2005 and by 24% over the last four years, according to the
Harbour Report North America 2006. These improvements were the
largest of all automakers for the two periods.

The Chrysler Group’s Chrysler and Dodge minivans led J. D. Power’s
2006 Initial Quality Survey in the Van category, ranking first and
third respectively for the entire industry.

Production of the all-new Jeep� Compass commenced in June 2006 at the
Belvidere Assembly Plant in Illinois. The first of these vehicles
were shipped to dealers in the U.S. during July. The Chrysler Group
will expand its product range with the launch of eight new models in
the second half of the year.

Unit sales by the Truck Group of 138,600 units were slightly lower
than in the prior-year period, while revenues climbed from €8.1
billion to €8.5 billion. The Truck Group increased its second-quarter
operating profit by 34% to €551 million.

An improved model mix, as well as the efficiency-improving measures
taken as part of the Global Excellence program contributed to these
increased earnings.

Unit sales of 36,600 Mercedes-Benz brand vehicles by Trucks Europe/
Latin America were 9% below the prior-year quarter. An increase in
unit sales in Western Europe, particularly in Germany, was offset by
lower sales in the Middle East and in Brazil. Unit sales by Trucks
NAFTA of 53,000 vehicles under the Freightliner, Sterling, Western
Star and Thomas Built Buses brands nearly reached the very high
figure of the prior-year quarter (-2%). Mitsubishi Fuso’s unit sales
increased by 4% to 49,800 vehicles.

The Financial Services division continued its positive development in
the second quarter of 2006, achieving an operating profit of €422
million (Q2 2005: €385 million). This increase in earnings was aided
by the increased volume of business and the positive earnings trend
at Toll Collect. These effects compensated the negative impact from
the higher level of interest rates.

New business of €14.1 billion was 9% higher than in Q2 2005. Con-
tract volume increased slightly by 1% to €115.3 billion; the increase
amounted to 4% after adjusting for the effects of currency translation.

Contract volume of €83.8 billion in the Americas region (North and
South America) was of the same magnitude as a year earlier. Adjusted
for exchange-rate effects, the increase amounted to 4%. Contract
volume of €31.4 billion in Europe, Africa, and Asia/Pacific exceeded
the level of the prior-year quarter by 3%. In Germany,
DaimlerChrysler Bank’s contract volume increased by 6% to €15.5 billion.

The Van, Bus, Other segment posted a second-quarter operating profit
of €159 million (Q2 2005: €277 million). Second-quarter operating
profit included expenses of €145 million incurred for staff
reductions in administrative functions in connection with the new
management model.

As expected, Mercedes-Benz Vans’ unit sales of 65,600 were 9% lower
than the very high level of unit sales in the second quarter of last
year. The reduction was mainly a result of the startup of the new
Sprinter and the related production changes in the D�sseldorf and
Ludwigsfelde plants in Germany.

Worldwide sales of buses and chassis by the brands Mercedes-Benz,
Setra and Orion increased by 9% to 10,300 units in the second quarter.

The contribution to earnings from the European Aeronautic Defence and
Space Company (EADS) also increased, mainly due to higher Airbus
deliveries, to €231 million from €154 million in the prior-year quarter.

Outlook

Parallel to the development of the world economy, the dynamics of
global demand for automobiles will probably decrease slightly. For
full-year 2006, DaimlerChrysler, therefore, anticipates a growth rate
simi-lar to that in 2005. Whereas automobile sales in the United
States, the world’s largest market, are likely to decrease slightly,
demand should slightly increase in Western Europe and Japan. Car
sales are expected to increase in nearly all of the larger emerging
markets this year, with significant growth rates in some of those
countries. Worldwide demand for commercial vehicles is likely to
remain at a high level in the second half of 2006. However, risks
will arise if oil and fuel prices continue to rise. The company
assumes that competitive pressure in the automotive industry will
remain intense as a result of worldwide over-capacity.

DaimlerChrysler continues to anticipate unit sales in 2006 in the
magnitude of the prior year (2005: 4.8 million vehicles).

The Mercedes Car Group expects full-year unit sales at least as high
as in 2005. The company assumes that unit sales by Mercedes-Benz will
exceed last year’s figure due to the brand’s new products. The
Mercedes Car Group will continue to effectively implement the CORE
efficiency-improving program. The division therefore anticipates
further earnings improvements in the coming quarters. The Mercedes
Car Group is thus on track to achieve the 7% return on sales targeted
for 2007.

In an unchanged difficult market environment, the Chrysler Group
assumes that unit sales (shipments) in 2006 will be in the range of
last year. The division will launch a total of ten new models this
year, although a large number of them will not be available at
dealerships until the second half of the year. The Chrysler Group
will continue to implement its activities to improve productivity,
quality and customer satisfaction. Due to high dealer inventories,
the Chrysler Group intends to reduce production volumes and shipments
to dealers in the third quarter. In addition, the upcoming model
changeovers will cause downtime in certain plants. The development of
earnings in the second half of the year will also be impacted by the
launch costs of the eight new models. The division, therefore,
anticipates a third-quarter operat-ing loss of up to €0.5 billion.
The Chrysler Group then expects positive earnings once again in the
fourth quarter as a result of the new models to be launched in the
second half of the year. For full-year 2006, the Chrysler Group plans
for a positive result.

The Truck Group assumes that full-year unit sales will remain stable.
A high level of earnings should continue to be achieved, due not
least to the efficiency improvements resulting from the Global
Excellence program. There will be a positive impact on demand for
trucks from upcoming stricter emission regulations planned in the
core markets of Europe, the United States and Japan. The Truck Group
is very well prepared for these changes, not the least due to its
innovation leader-ship in Bluetec diesel technology.

The Financial Services division anticipates a continuation of its
stable business and earnings development during the second half of
the year. However, rising interest rates will be a challenge. The
division intends to further improve its competitive position as a
result of optimized processes, enhanced efficiency, comprehensive
market coverage and even closer cooperation with the vehicle
divisions and their dealer-ships.

The Vans unit expects lower unit sales than in 2005, due to the
Sprinter model changeover. Unit sales of buses are likely to exceed
the high level of the prior year. EADS continues to plan for a stable
market for civil aircraft in the year 2006; Airbus deliveries are
expected to increase again compared to the prior year.

The DaimlerChrysler Group anticipates a slight increase in revenues
in full-year 2006 (2005: €149.8 billion).

Due to the implementation of the staff-reduction program, the number
of persons employed by the Group will continue to decrease until the
end of this year.

For full-year 2006, DaimlerChrysler continues to anticipate an operat-
ing profit in excess of €6 billion. This figure includes charges for
the implementation of the new management model (€0.5 billion), the
focus on the smart fortwo (€1 billion), the staff reductions at the
Mercedes Car Group (€0.4 billion), as well as gains on the disposal
of the off-highway business (€0.2 billion), on the sale of real
estate no longer required for operating purposes (€0.1 billion) and
the release of provisions for retirement-pension obligations (€0.2
billion).

The development of the Group’s earnings in the second quarter of 2006
was affected by the special items shown in the following table:

Amounts in millions of €
Q2 2006
Q2 2005
Mercedes Car Group
Expenses relating to staff reductions in the context of CORE

Restructuring expenses at smart

(20)

(13)

(311)

Truck Group
Impairment American LaFrance

(24)
Van, Bus, Other
Expenses relating to the new management model
(145)

This document contains forward-looking statements that reflect
management's current views with respect to future events. The words
„anticipate,“ „assume,“ „believe,“ „estimate,“ „expect,“ „intend,“ „may,
“ „plan,“ „project“ and „should“ and similar expressions identify
forward-looking statements. Such statements are subject to risks and
uncertainties, including, but not limited to: an economic downturn in
Europe or North America; changes in currency exchange rates, interest
rates and in raw material prices; introduction of competing products;
increased sales incentives; the effective imple-mentation of our New
Management Model, and the CORE program, including the new business
model for smart, at the Mercedes Car Group; renewed pressure to
reduce costs in light of restructuring plans announced by our major
competitors in NAFTA; disruption of production or vehicle deliveries,
resulting from shortages, labor strikes or supplier insolvencies; the
resolution of pending governmental investi-gations; and decline in
resale prices of used vehicles. If any of these or other risks and
uncertainties occur (some of which are described under the heading
"Risk Report" in DaimlerChrysler's most recent Annual Report and
under the heading "Risk Factors" in DaimlerChrysler’s most recent
Annual Report on Form 20-F filed with the Securities and Exchange
Commission), or if the assumptions underlying any of these statements
prove incorrect, then actual results may be materially different from
those expressed or implied by such statements. We do not intend or
assume any obligation to update any forward-looking statement, which
speaks only as of the date on which it is made.

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