DaimlerChrysler earnings drop due to Smart costs

28th April 2005, Comments 0 comments

28 April 2005, STUTTGART - German-American automotive group DaimlerChrysler reported on Thursday that its first quarter net income fell 30 percent, with operating results plunging almost 60 percent, amid the costs of revamping the Smart car unit and recalling Mercedes cars for repairs.

28 April 2005

STUTTGART - German-American automotive group DaimlerChrysler reported on Thursday that its first quarter net income fell 30 percent, with operating results plunging almost 60 percent, amid the costs of revamping the Smart car unit and recalling Mercedes cars for repairs.

The company said its operating profit came to EUR 628 million, 58 percent below the EUR 1.5 billion in the first quarter of 2004.

Net income, at EUR 288 million, was down some 30 percent from the EUR 412 million in the first quarter of last year.

The company said the Mercedes Car Group posted a first-quarter operating loss of EUR 954 million, a figure including the EUR 800 million costs of revamping the tiny Smart car.

The lower earnings at the world's fifth-largest automotive group came on sales of EUR 31.7 billion, down from EUR 32.4 billion a year earlier, the company reported.

The earnings and sales downturns come amid quality problems at Mercedes, with the company having to make expensive recalls, on top of the costs of restructuring the Smart unit.

At the same time, operating profits at the Chrysler division in the US state of Michigan weighed in 17 percent lower at EUR 252 million in what was the seventh straight quarterly profit. Chrysler sales came to EUR 10.7 billion, down 11 percent from the first quarter of 2004.

Earlier on Thursday, DaimlerChrysler announced it had decided to build its new sports utility car at the company's plant in the northern German city of Bremen.

The announcement ended weeks of speculation about which site would be chosen for the small 'Sport Utility Tourer', and came after the company wrested major concessions from workers aimed at cutting costs by EUR 100 million.

Other plants which had reportedly been under consideration were the Juiz de Fora site in Brazil and Ludwigsfelde in eastern Germany.

The SUT will compete in the same category as BMW's compact sports utility vehicle, the X3.

DPA

Subject: German news

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