- Net profit of $2,637 million (Q1 2006: 1,045 million) STUTTGART,
Germany, May 15 /PRNewswire-FirstCall/ -- DaimlerChrysler
(stock-exchange abbreviation DCX) today presents its interim report
on the first quarter of 2007 for the first time in accordance with
International Financial Reporting Standards (IFRS). The pre-tax
performance measure operating profit, which was previously used to
report the profitability of the Group and its divisions, has now
been replaced by EBIT (earnings before interest and taxes) as shown
in the income statement. The measure of after-tax earnings is now
net profit instead of the previous net income. (Logo:
http://www.newscom.com/cgi-bin/prnh/20020212/DCXLOGO ) Within the
context of the changeover, the internal financial management and
the external reporting were converged even more closely. Items
previously accounted for in the Van, Bus, Other segment or under
eliminations have been allocated to the relevant divisions. This
mainly applies to central research activities and the sale of new
vehicles which are leased out by companies of the Group. This leads
to earnings effects within the divisions that were previously shown
at the Group level. DaimlerChrysler increased its EBIT to $2,730
million in the first quarter of this year (Q1 2006: $1,579
million). Earnings were reduced particularly by restructuring
expenses related to the implementation of the Chrysler Group's
Recovery and Transformation Plan ($1,222 million). There were
additional charges from the financial support provided to troubled
suppliers ($160 million) and the implementation of the new
management model ($72 million). Income of $2,090 million, however,
was realized in connection with DaimlerChrysler's equity interest
in EADS, partially offset by expenses of $152 million from the
Power8 restructuring program at EADS. In the prior-year quarter,
the discontinuation of the smart forfour and headcount reductions
at the Mercedes Car Group caused expenses of $1,585 million. There
were opposing effects from the disposed off-highway business ($318
million) and from reductions in healthcare benefits at the Chrysler
Group ($522 million). Improved operating results at the Mercedes
Car Group and the Truck Group largely offset the decline in
earnings at the Chrysler Group. Within the context of the
efficiency-improving programs, measures were defined to further
improve the utilization of production facilities. As a result,
depreciation of property, plant and equipment has been adjusted to
the extended useful lives. In the first quarter of 2007, this led
to a positive impact on Group EBIT in an amount of $285 million;
thereof $202 million is considered at the Mercedes Car Group, $32
million at the Truck Group and $51 million at Van, Bus, Other. Net
profit amounted to $2,637 million (Q1 2006: $1,045 million);
earnings per share amounted to $2.53 (Q1 2006: $1.03). Unit sales
below prior-year levels In the first quarter of 2007,
DaimlerChrysler sold 1.1 million vehicles worldwide, not equaling
the level of the prior-year quarter (-5%). DaimlerChrysler's total
first-quarter revenues decreased from $50.1 billion to $47.3
billion (-6%); adjusted for exchange-rate effects and changes in
the consolidated Group, revenues were at the same level as in 2006.
At the end of the first quarter of 2007, DaimlerChrysler employed a
workforce of 356,749 people worldwide (end of Q1 2006: 368,853). Of
this total, 165,779 were employed in Germany and 91,170 were
employed in the United States (end of Q1 2006: 171,176 and 96,531
respectively). Details of the divisions in the first quarter of
2007 The Mercedes Car Group sold 271,100 vehicles in the first
quarter of 2007 (Q1 2006: 281,500). Sales of 257,800 Mercedes-Benz
passenger cars exceeded the high figure for the first quarter of
2006 by 1%, despite the model change of the C-Class. As expected,
unit sales by the smart brand decreased to 10,800 units due to the
discontinuation of the smart forfour and the model change of the
smart fortwo at the end of March (Q1 2006: 26,200). The division's
revenues increased by 1% to $16.1 billion. The Mercedes Car Group
achieved first-quarter EBIT of $1,059 million compared with a loss
of $983 million in Q1 2006. The prior-year result had been
substantially impacted by charges relating to the discontinuation
of the smart forfour ($1,313 million) and expenses for headcount
reductions in the context of the CORE program ($271 million). In
the first three months of 2007, financial support for troubled
suppliers led to charges of $110 million. Even without the effects
of these special items, the Mercedes Car Group still increased its
operating results significantly. This was partially due to an
improved model mix, resulting from increased unit sales of the
S-Class, E-Class and the M-/R-/GL-/G-Class. In addition, the cost
efficiency of the Mercedes Car Group was further improved by the
implementation of the CORE program. Currency effects had a negative
impact on earnings in the first quarter of 2007. In January,
Mercedes-Benz celebrated its 100th anniversary of the
all-wheel-drive technology at the North American International Auto
Show (NAIAS) in Detroit and presented a concept study vehicle --
the Ocean Drive -- as well as the Vision GL 420 BLUETEC. BLUETEC
technology makes this vehicle the cleanest diesel in the world. In
March, the new C-Class was presented to the public for the first
time at the Geneva Motor Show. 80,000 orders had already been
received for this car by the time of its market launch at the end
of March. The new C-Class station wagon will be presented in fall.
The Vision C 220 BLUETEC was also unveiled in Geneva, pointing the
way to the future of emission technology. The new smart fortwo also
received a very positive response from customers and the media.
50,000 customer orders had been received for the smart fortwo by
the end of March. The CORE efficiency-improvement program is
continuing according to plan. In the first quarter of 2007, several
thousand changes were made along the entire value chain with the
goal of further enhancing the profitability and competitiveness of
the Mercedes Car Group. The main focus in the coming months is on
implementing actions that have already been defined in order to
achieve the division's goals at the year 2007. The Chrysler Group
posted worldwide unit sales (factory shipments) of 642,200 vehicles
in the first quarter of 2007, 8% lower than in the first quarter of
the prior year. Overall retail and fleet sales fell by 2% to
673,500 vehicles. As a result of lower unit sales, revenues of
$13.7 billion were 18% lower than in Q1 2006; measured in US
dollars, revenues decreased by 11%. The Chrysler Group posted an
EBIT of minus $1,986 million in the first quarter of 2007, compared
with EBIT of $857 million in the prior-year. The result for the
first quarter of 2007 includes restructuring charges of $1,222
million incurred in connection with the Chrysler Group's Recovery
and Transformation Plan. The result for the first quarter of 2006
included a gain of $522 million related to changes to the
healthcare programs offered to active and retired employees. The
decline in the first quarter of 2007 result also reflects a
decrease in factory unit sales in the United States and an
unfavorable product and market mix. However, as a result, the
Chrysler Group further reduced its dealer inventories to
approximately 500,500 vehicles at the end of the quarter.
Additional charges resulted from negative net pricing developments
and financial support provided to suppliers. These negative factors
were partially offset by an increase in unit sales outside the
United States. The Chrysler Group continued its product offensive
in the quarter under review with the market launch of the Dodge
Avenger mid-size sedan and the continued deliveries of the Jeep(R)
Patriot compact SUV. In January, the Chrysler Group revealed the
all-new 2008 Chrysler Town & Country and Dodge Grand Caravan
minivans at the North American International Auto Show in Detroit.
These vehicles are to be launched in the fall of 2007. The Truck
Group sold 119,200 vehicles worldwide in the first quarter, similar
to the high level of Q1 2006 (119,300); adjusted for the Sprinter
vans still produced by Trucks NAFTA last year, unit sales increased
by 5%. Revenues of $9.8 billion were of the same magnitude as in
the prior-year quarter. The Truck Group reported EBIT of $706
million in the first quarter (Q1 2006: $564 million). The earnings
increase is primarily due to efficiency improvements related to the
Global Excellence program. Higher truck sales in Europe and Latin
America also contributed to the positive earnings trend. On the
other hand, currency effects slightly reduced earnings in the first
three months of 2007. In the NAFTA region, the Truck Group
continued to profit from the high order backlog carried over from
the prior year. Unit sales by Trucks Europe/Latin America of 33,600
Mercedes-Benz brand trucks were significantly higher than in the
prior-year quarter (+12%). The Trucks NAFTA unit sold 46,200
vehicles of the Freightliner, Sterling, Western Star and Thomas
Built Buses brands in the first quarter (Q1 2006: 50,700). Trucks
Asia increased its unit sales to 39,600 vehicles of the Mitsubishi
Fuso brand (+2%). At the National Truck Equipment Association
(NTEA) Work Truck Show in Indianapolis in March, the new Sterling
Bullet pickup was unveiled, a light truck for US Classes 4 and 5.
The new generation of the light Mitsubishi Fuso Canter was launched
in Taiwan and Indonesia in the quarter under review. At the
beginning of the year, the Series 60 engines from Detroit Diesel
and the MBE 900 and MBE 4000 from Mercedes-Benz were certified by
the US Environmental Protection Agency (EPA) and are thus approved
for general sale. These engines, which fulfill EPA07, reduce
particulate emissions by 95% compared with conventional engines,
while nitrogen-oxide emissions are halved. In January,
DaimlerChrysler and Chinese truck manufacturer Foton signed an
agreement by which DaimlerChrysler acquires a 24% equity interest
in Foton. The relevant approval from the Chinese Economics Ministry
is expected to be granted in the course of this year. The Financial
Services division reported stable business developments in the
first quarter of this year. The division's EBIT decreased by $49
million compared with the prior-year quarter to $560 million. The
reduction in earnings is partially due to currency effects, caused
especially by the weaker US dollar. Another factor is that risk
costs were higher than the exceptionally low level of the
prior-year quarter. However, this was almost offset by an increased
profit contribution of the overall portfolio, which, adjusted for
currency translation effects, expanded slightly, and by efficiency
improvements. The division's worldwide contract volume decreased by
$7 billion to $150.5 billion; adjusted for exchange-rate effects,
there was an increase of 3%. New business of $15.8 billion was 14%
below the high level attained in the prior-year quarter; adjusted
for exchange-rate effects, the decrease was 9%. Contract volume in
the Americas region (North and South America) amounted to $106.7
billion at the end of the quarter (Q1 2006: $115.8 billion).
Contract volume of $43.9 billion in the Europe, Africa &
Asia/Pacific region was 5% higher than a year earlier. In Germany,
DaimlerChrysler Bank's portfolio grew by 5% to $21.3 billion. The
Van, Bus, Other segment posted first quarter EBIT of $2,504 million
(Q1 2006: $489 million). The earnings improvement was primarily due
to gains realized in connection with the Group's equity interest in
EADS; the execution of a derivatives transaction in connection with
the transfer of a 7.5% equity interest in EADS led to a gain of
$1,019 million. There was an additional gain of $1,008 million
resulting from the issue of equity interests in a subsidiary that
holds the EADS shares. The valuation of a hedging transaction
relating to a 3% interest in EADS led to a positive effect of $63
million (Q1 2006: charges of $78 million). DaimlerChrysler's
interest in the earnings of EADS amounted to $221 million in the
first quarter; this includes expenses of $152 million incurred in
the first quarter of 2007 in connection with the Power8
restructuring program at EADS. The result of the prior-year quarter
was positively affected by $318 million from the disposed
off-highway business. The Mercedes-Benz Vans unit achieved a new
unit-sales record of 61,700 vehicles in the first quarter of 2007
(+3%). Due to strong demand for the new Sprinter, production is
running at full capacity in the Dusseldorf and Ludwigsfelde plants.
DaimlerChrysler Buses sold 8,300 buses and chassis of the
Mercedes-Benz, Setra and Orion brands in the first quarter,
surpassing the prior-year figure by 6% and thus maintaining its
worldwide market leadership. Outlook As the year progresses,
DaimlerChrysler expects growth in global automobile markets to be
lower than in the prior year (+4%), in line with overall economic
developments. In full-year 2007, demand for vehicles in North
America and Western Europe -- DaimlerChrysler's core markets -- is
likely to be slightly weaker than in 2006. In the emerging markets
of Asia, Eastern Europe and Latin America, the company anticipates
an increase in demand for passenger cars and commercial vehicles.
In the commercial-vehicles business, DaimlerChrysler expects a
sharp decrease in demand for trucks in North America and Japan;
markets should remain stable in Western Europe, however. On the
basis of the divisions' planning, DaimlerChrysler expects overall
unit sales to increase slightly in 2007 (2006: 4.7 million
vehicles). The Mercedes Car Group assumes that its unit sales in
full-year 2007 will at least be equal to the record level of the
prior year. In order to achieve profitable growth and to create
sustained value, the division will continue to effectively
implement the CORE efficiency-improving program. The Mercedes Car
Group expects to achieve a return on sales of more than 7% in
full-year 2007. During 2007, the Chrysler Group will implement the
Recovery and Transformation Plan that was presented in February. In
addition, the Chrysler Group will continue its product offensive
with the launch of eight new and five refreshed models. Unit sales
should be higher than in the prior year despite the difficult
market conditions and the slightly lower US market volume of 17.0
million vehicles (2006: 17.1 million). The division expects a
significant increase in unit sales particularly outside the NAFTA
region. For full year 2007, the Chrysler Group expects EBIT of
minus $2.1 billion, including charges of $1.3 billion for the
Recovery and Transformation Plan. The Truck Group anticipates
significantly lower unit sales in 2007 than in the prior year. Due
to customer purchases pulled forward to 2006 in advance of new,
stricter emission regulations coming into effect this year, unit
sales are expected to significantly decrease in the United States
and Japan. As the year progresses, the division will renew and
extend its product range with the new Freightliner heavy-duty truck
Cascadia, the refreshed heavy-duty truck Mitsubishi Fuso Super
Great, the light-duty truck Mercedes-Benz Unimog U20, the
light-duty truck Sterling 360 in US Class 3, and the new Sterling
Bullet pickup truck. The Truck Group's result will be below the
2006 level, but it is expected to be well above its cost of
capital. The Financial Services division strives to achieve further
efficiency improvements this year. In addition, it will collaborate
even more closely with the dealers and brands worldwide in order to
achieve optimal sales support for the automotive divisions. The
division anticipates a slight reduction in Financial Services'
contract volume due to the effects of currency translation.
Financial Services aims to achieve a return on equity of more than
14% in 2007. The Vans unit expects the strong demand for the new
Sprinter and the very positive development of Vito/Viano sales to
lead to a significant increase in unit sales compared to the year
2006. The Buses unit anticipates lower unit sales than in the prior
year due to cyclical reductions in demand in some key markets. The
DaimlerChrysler Group's total revenues in full-year 2007 are likely
to be of the same magnitude as in 2006 ($204.4 billion).
DaimlerChrysler expects to achieve EBIT of $9.4 billion for
full-year 2007 (2006: $7.4 billion). Significant special factors
affecting earnings in 2007 are the gain of $2.1 billion realized on
the transfer of interest in EADS and charges of $1.3 billion
resulting from the implementation of the Recovery and
Transformation Plan at the Chrysler Group and of $0.8 billion from
the new management model. This earnings guidance relates to the
current structure of the Group. The effects of the future concept
for the Chrysler Group and the realignment of DaimlerChrysler AG as
published on May 14, 2007, have not yet been taken into
consideration. The special items shown in the following table
influenced EBIT in the first quarters of 2007 and 2006: Special
items affecting EBIT Amounts in millions of $ Q1 2007 Q1 2006
Mercedes Car Group Financial support for suppliers (110) -
Discontinuation of smart forfour - (1,313) Headcount reductions in
the context of CORE - (271) Chrysler Group Implementation of the
Recovery and Transformation Plan (1,222) - Financial support for
suppliers (51) (20) Changes in health care benefits - 522 Van, Bus,
Other Income/expenses relating to the transfer of interest in EADS
2,090 (78) Restructuring program at EADS (152) - Disposal of the
off-highway business - 318 Reconciliation/eliminations New
management model (72) - For the reader's convenience, the financial
information has been translated from euros into U.S. dollars at an
assumed rate of 1 Euro = $1.3374 (noon buying rate on March 30,
2007). The convenience translation does not mean that the euro
amounts actually represent the corresponding dollar amount stated
or could be converted into dollars at the assumed rate. This
document contains forward-looking statements that reflect our
current views about future events, including, among others, the
pendency and consummation of the transaction with Cerberus Capital
Management, L.P. regarding Chrysler Group. The words "anticipate,"
"assume," "believe," "estimate," "expect," "intend," "may," "plan,"
"project," "should" and similar expressions are used to identify
forward-looking statements. These statements are subject to many
risks and uncertainties, including an economic downturn or slow
economic growth, especially in Europe or North America; changes in
currency exchange rates and interest rates; introduction of
competing products and possible lack of acceptance of our products
or services; competitive pressures which may limit our ability to
reduce sales incentives and raise prices; price increases in fuel,
raw materials, and precious metals; disruption of production or
delivery of new vehicles due to shortages of materials, labor
strikes, or supplier insolvencies; a decline in resale prices of
used vehicles; our ability to close the transaction with Cerberus
Capital Management, L.P., regarding Chrysler Group; the ability of
the Chrysler Group to implement successfully its Recovery and
Transformation Plan; the business outlook for our Truck Group,
which may experience a significant decline in demand as a result of
accelerated purchases in 2006 made in advance of the effectiveness
of new emission regulations; effective implementation of cost
reduction and efficiency optimization programs, including our new
management model; the business outlook of our equity investee EADS,
including the financial effects of delays in and potentially lower
volume of future aircraft deliveries; changes in laws, regulations
and government policies, particularly those relating to vehicle
emissions, fuel economy and safety, the resolution of pending
governmental investigations and the outcome of pending or
threatened future legal proceedings; and other risks and
uncertainties, some of which we describe under the heading "Risk
Report" in DaimlerChrysler's most recent Annual Report and under
the headings "Risk Factors" and "Legal Proceedings" in
DaimlerChrysler's most recent Annual Report on Form 20-F filed with
the Securities and Exchange Commission. If any of these risks and
uncertainties materialize, or if the assumptions underlying any of
our forward-looking statements prove incorrect, then our actual
results may be materially different from those we express or imply
by such statements. We do not intend or assume any obligation to
update these forward-looking statements. Any forward-looking
statement speaks only as of the date on which it is made. Further
information from DaimlerChrysler is available on the internet at:
http://www.media.daimlerchrysler.com/ Figures for the 1st Quarter
2007 (in US-$) All values, including the 2006 figures, are
converted from euro figures with the exchange rate of 1 Euro = US-$
1.3374 (based on the noon buying rate on March 30, 2007).
DaimlerChrysler Group Q1 Q1 2007 2006 Revenues, in millions of $
47,294 50,078 EBIT (Earnings Before Interest and Taxes), in
millions of $ 2,730 1,579 Net Profit, in millions of $ 2,637 1,045
per Share, in $ 2.53 1.03 Employees (March 31) 356,749 368,853 EBIT
by divisions Q1 Q1 in millions of $ 2007 2006 Mercedes Car Group
1,059 (983) Chrysler Group (1,986) 857 Truck Group 706 564
Financial Services 560 609 Van, Bus, Other 2,504 489 Revenues by
divisions Q1 Q1 in millions of $ 2007 2006 Mercedes Car Group
16,142 15,965 Chrysler Group 13,691 16,707 Truck Group 9,750 9,845
Financial Services 5,561 5,232 Van, Bus, Other 3,854 4,218 Unit
Sales by divisions and operating units Q1 Q1 2007 2006
DaimlerChrysler Group 1) 1,098,700 1,153,200 Mercedes Car Group
271,100 281,500 Chrysler Group 642,200 695,400 Truck Group 119,200
119,300 Vans 61,700 59,700 Buses 8,300 7,800 1) Due to eliminations
(Sprinter vans sold under the Freightliner and Dodge brand), the
sum of the divisions does not add up to the Group total. Effective
January 1, 2007, Mitsubishi L200 pickup and Mitsubishi Pajero
vehicles manufactured in South Africa are included at Mercedes Car
Group; for prior periods, these vehicles were included only at
Group level. http://www.newscom.com/cgi-bin/prnh/20020212/DCXLOGO
http://photoarchive.ap.org/ DATASOURCE: DaimlerChrysler CONTACT:
Thomas Froehlich, +49-711-17-41361, or Han Tjan, +1-212-909-9063,
both of DaimlerChrysler Web site: http://www.daimlerchrysler.com/
http://www.media.daimlerchrysler.com/
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