Monday, May 21, 2007

Chrysler: Restructuring led to $1.99 billion loss

Mary Connelly
Automotive News
May 21, 2007 - 1:00 am - - In the first quarter, the Chrysler group lost $1.99 billion before interest and taxes, mainly because of restructuring charges.

The company projects restructuring charges of $1.3 billion for the year. In the first quarter, restructuring charges totaled almost all of that projected cost - $1.22 billion. The first-quarter restructuring charges relate mainly to work force reductions, the company said.

Overall, parent DaimlerChrysler posted earnings before interest and taxes of $2.76 billion (2.04 billion euros). The company said the 73 percent increase over first-quarter 2006 profits was powered by a profit rebound at the Mercedes Car Group. The group - which encompasses the premium Mercedes-Benz, luxury Maybach and Smart minicar brands - swung to better-than-expected quarterly earnings before interest and taxes of $1.07 billion.

By the numbers
Earnings before interest and taxes
  • First quarter 2007: $1.99 billion loss
  • First quarter 2006: $857 million
  • First quarter 2007: $13.69 billion
  • First quarter 2006: $16.70 billion
Source: DaimlerChrysler

At the Chrysler group, weak sales and pricing pressure contributed to the first-quarter loss, the company said. Chrysler anticipates an operating loss of $2.1 billion in 2007, which means it expects to nearly break even the rest of the year.

In April, DaimlerChrysler AG said the reporting measure of pretax operating profit would be replaced by earnings before interest and taxes, or EBIT. The first-quarter 2007 figures are reported by the EBIT measure. The comparable 2006 figures were converted by the company.

Chrysler's fleet sales increased in the first quarter and represented 35.3 percent of total U.S. sales, compared with 34.0 percent in the first quarter of 2006.

Lease transactions as a percentage of U.S. retail sales dropped 5.3 percentage points. Leases represented 20.0 percent of retail sales in the first quarter of 2007, compared with 25.3 percent in 2006.

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