Daimler profit falls; Chrysler earnings rise

FRANKFURT, Germany - DaimlerChrysler AG said yesterday that its second-quarter profit fell 14 percent, and it disclosed plans to spend about $10.2 billion buying back nearly 10 percent of its shares as it proceeds without its Chrysler division.

But profit for Chrysler Group and the related financial-services business in North America rose 18 percent to 406 million euros ($554.8 million) in the quarter from 342 million euros a year earlier.

20070830_inq_chry30-a
Part of the distinctive front grille of a Chrysler vehicle at a dealership. The automaker soon will be independent again.

DaimlerChrysler's profit decline excluding results from Chrysler and its finance arm was a steeper 20 percent.

The German automaker said it earned 1.44 billion euros ($1.91 billion) excluding the operations it sold, compared with 1.8 billion euros a year earlier.

It now expects a charge of 2.5 billion euros for the year from the sale of Chrysler Group and its financing arm, less than it had previously thought.

DaimlerChrysler also said it expected vehicle sales to be in line with the 2.1 million it sold in 2006, with revenue on par with the 99 billion euros it reported last year.

The company sold the Chrysler Group and North American financial-services units to Cerberus Capital Management L.P. this month in a $7.4 billion deal; the private-equity group took an 80.1 percent stake in Chrysler.

Including those operations, DaimlerChrysler posted an overall profit of 1.85 billion euros ($2.52 billion) for the April-to-June period, down 14 percent from 2.15 billion euros a year earlier. Sales fell to 23.84 billion euros ($32.52 billion) from 24.6 billion euros a year earlier.

DaimlerChrysler also said it "anticipates a charge against earnings" of 2.5 billion euros ($3.42 billion) for the year, below its initial estimates of 3 billion euros to 4 billion euros ($4.1 billion to $5.47 billion).

The company also said it would buy back shares, a move authorized by shareholders at its April 4 general meeting, in part to help "optimize the company's capital structure and make it more efficient."

Yesterday marked the last time that Chrysler's full earnings will be released to the public, because the company will not be required to publish results while controlled by a private-equity firm.

DaimlerChrysler retains a 19.9 percent share in Chrysler, so it will continue to report some Chrysler earnings starting with its third-quarter results in October.

But the German automaker plans to list Chrysler's results in a miscellaneous category, and it will not separate them from other holdings, such as its 22.5 percent share in the European Aeronautic Defence & Space Co.

The company's shareholders will meet in Berlin on Oct. 4 to approve a name change to Daimler AG. The proposal is expected to pass, despite concerns that, by not restoring the name to Daimler-Benz, the company is ignoring the work of Karl Benz, who designed and patented an internal-combustion flat engine before linking his company, Benz & Cie., with Daimler in 1926.