DC Profits $3.4 Billion in 2005

DaimlerChrysler earned $3.4 billion in 2005 with the Chrysler Group accounting for $1.8 billion of the profit, the company announced on Thursday.

The Mercedes Benz Group posted an operating profit of $1 million in the fourth quarter, and finished the year with a $600 million loss, but DaimlerChrysler AG executives insist the group is finally moving in the right direction.

DaimlerChrysler chief executive Dieter Zetsche, who continues to double up as Mercedes’ CEO, said the Mercedes group is focused on trimming costs and improving the efficiency of its processes, even as it launches a new effort to improve customer satisfaction and continues to launch new products this year, including the new GL-Class, E-Class, and CL-Class cars and trucks.

The loss at Mercedes included charges on earnings totaling $1.3 billion in connection with the restructuring at smart and another $675 million relating to the staff-reduction program at the Mercedes-Benz car group, which was announced at the end of September 2005.

Chrysler in the black

The Chrysler Group managed to post a double-digit increase in operating profits in the fourth quarter. The $507 million operating profit in the quarter, coupled with a strong showing by DaimlerChrysler Financial Services, which more than doubled its operating profit to $411 million in the same period, helped offset the weak performance by the Mercedes-Benz Group.

DaimlerChrysler AG overall reported its net income increased by more than 83 percent to a quarterly net of $1.14 billion or $1.12 per share, from $623 million or 61 cents per share over the same period in 2004. Revenues also increased by ten percent to $49 billion.

CEO Zetsche added that, despite some setbacks and a pressing need to reorganize the Mercedes-Benz Group, he was satisfied that DaimlerChrysler had made some significant progress over the past year.

“Our earnings are still not where we want them to be,” said Zetsche, who took over from Juergen Schrempp on Jan.1. “We intend to grow profitably and to create added value over the long term — for the benefit of our customers, employees, and shareholders,” he said.

To that end, the Chrysler Group plans to launch ten new models this year, including the Aspen SUV, Jeep Compass, and Dodge Nitro, and is looking beyond theU.S. to expand its sales. Chrysler expects 2006 sales to match or exceed the 2.8 million units it sold in 2005.

“The Chrysler Group has to be more present on international markets,” Zetsche said, adding the unit is targeting Europe and China for future growth. “Our goal is to keep Chrysler on a path of profitable growth.”

During 2005, the Chrysler Group’s operating profit increased seven percent to $1.8 billion, in stark contrast to the heavy losses posted by General Motors and Ford Motor Co.’s automotive units in North America. The profits also left Chrysler as the only American-based automotive company making profit-sharing payments this year.

Bodo Uebber, DaimlerChrysler’s chief financial officer and member of the Board of Management, said that earnings were hemmed in by the high costs for raw materials like steel and oil, along with intensifying competition in Europe and “tough competitive conditions” in the U.S.

“Of course, 2006 will not be an easy year. Ongoing tough competition in car markets will be a major challenge, especially in the United States,” Uebber said. “We also anticipate a further increase in interest rates, and the prices of raw materials and oil in particular are unlikely to fall,” he said.