Daimler posts $1.51B loss in second-quarter

July 29, 2009 7:43:03 AM PDT
Germany's Daimler AG said Wednesday that it lost euro1.06 billion ($1.51 billion) in the second quarter as the recession hurt car and truck sales and the company took charges related to its stake in Chrysler. But the company saw signs of a turnaround and its shares rose. The loss in the April-June period compared with a profit of nearly euro1.3 billion a year earlier. Analysts surveyed by Thomson Reuters had expected a net loss of euro1.5 billion.

Despite the third quarterly loss in a row, the company predicted a "gradual improvement" in its operating profit in the coming months. The news helped push Daimler shares up 5.3 percent to euro31.67 in Frankfurt trading.

Sales fell 25 percent to euro19.6 billion in the quarter compared with euro26 billion last year, below the euro20 billion that analysts had forecast, a stark reminder of the bleak landscape that car makers worldwide face amid the economic crisis. The company's truck business, the world's largest by sales, saw unit sales fall 60 percent.

Stuttgart-based Daimler, whose brands include Mercedes-Benz, Maybach and Smart, said sales across all of its units, including luxury cars, vans, trucks and buses slid 31 percent in second quarter compared to last year with just 391,500 sold worldwide.

Looking ahead to the end of 2009, the automaker said that total sales were likely to "decrease significantly" from last year when it sold 2.1 million vehicles.

Despite that, Chief Executive Dieter Zetsche told a conference call of analysts and reporters that "sales are stabilizing on the low level and there are signs of a ... turnaround."

Bernstein Research analyst Max Warburton, in a research note, said Daimler's results suggest it could be profitable again by the fourth quarter, which, "should reassure investors that we are past the trough for Daimler and the sector."

Other factors that weighed on profits included its relinquishing a 19.9 percent equity stake in Chrysler Group LLC effective June 3.

Daimler will take euro387 million in expenses related to the stake during the second quarter. Chrysler restructured in bankruptcy court and emerged in an alliance with Italy's Fiat SpA.

However, Daimler said the effects were partially offset by a transfer of charges in stock in aerospace concern EADS NV which saw it gain euro35 million.

Daimler's trucks unit saw its second-quarter revenue fell to euro4.2 billion from euro7.4 billion a year ago. The truck business pretax loss was euro508 million compared with a profit of euro608 million last year, with factors including the restructuring of the North American truck business.

The truck division's unit sales decreased by almost 60 percent to 54,100 units for the quarter, but Daimler said its market share increased in nearly all its major markets.

Daimler is the world's biggest truckmaker by sales with brands including Mercedes, Freightliner and Fuso.

The Mercedes-Benz Cars division saw unit sales fall 19 percent to 287,200 cars for the quarter compared with 354,000 last year. However, Daimler said the second quarter's deliveries improved by 24 percent over the first quarter, indicating the sales skid may have bottomed out.

That put second quarter revenues for the cars division at euro10.6 billion compared with near euro13 billion in the year-ago quarter, an 18 percent decline.

The company said the cars division's pretax loss was euro340 million compared with a profit of euro1.2 billion a year earlier.

From January to June, the company lost euro2.3 billion compared with a profit of euro2.7 billion last year while sales slipped 23 percent to euro38.3 billion compared with euro50 billion in the first six months of 2008.

Daimler said however, that its efforts to cut costs and optimize operations showed positive effects during the April-June period and first six months.

Daimler enacted shorter work schedules for some of its production to respond to the lower demand during the first half of the year, for example. Some of those programs have been scaled back, while some remain in place.


Frey reported from Frankfurt.


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