Greatly improved operating profits at German-American auto giant DaimlerChrysler, the world’s fifth largest car manufacturer, have swung the previously ailing giant back into the black – its first emergence from the red ink since the summer of 2000.
First quarter operating profits hit €308 billion ($2.76bn; £1.90bn), thanks to three main factors – income from disposals, steady demand for the group’s flagship Mercedes marque and a painful restructuring programme.
Despite this improved performance at operating level, the group posted a net loss after a further restructuring charge of €300m, primarily asset write-downs and redundancy costs. Without this charge, group profits rose to €2.66bn, a dramatic reversal of the €2.36bn deficit incurred during the first quarter of last year.
Restructuring, it warned, is not yet complete. Up to €700m in further charges – covering plant closures, disposal of non-core businesses and further redundancies – are on the cards.
However, DaimlerChrysler chief executive Dieter Zetsche was in bullish mode, expecting the launch of new models to lead to increased volumes and a steady increase in market share. A better product mix and lower costs had offset the fall in US car prices: “The trend for this company is positive. Assuming the economy continues to develop positively Chrysler may do better than break even [this year] and deliver a profit."
Data sourced from: Financial Times; additional content by WARC staff