Chrysler execs decline to explain second quarter numbers
August 30, 2007
After losing nearly $2 billion in the first three months of the year, Chrysler appeared to make about $549 million in the second quarter -- but only after excluding large noncash expenses, such as depreciation.
DaimlerChrysler AG said that Chrysler and its financial services arm, Chrysler Financial, had operating losses in the second quarter but that those losses were offset by $950 million of depreciation and amortization that was not included. Representatives for both DaimlerChrysler and Chrysler declined to clarify the Auburn Hills automaker's finances.
"We do not comment on the Chrysler Group. We've made our decisions and we have a stake of 19.9% and that's it. We look forward to common projects and other stuff," said Bodo Uebber, DaimlerChrysler's chief financial officer.
DaimlerChrysler, which is to be renamed Daimler AG, released its second-quarter financial results Wednesday.
Net income declined 14%, but the announcement of a $10-billion stock buyback plan boosted the price of the company's stock, which is widely held in Michigan. DaimlerChrysler shares rose $3.27, or 3.9%, Wednesday to close at $87.61.
Cerberus Capital Management completed its deal to acquire 80.1% of Chrysler earlier this month.
Cerberus and Chrysler President Tom LaSorda have stated several times that one of the benefits of being under private ownership is not having to publicize quarterly financial results.
Publicly traded companies, such as Ford Motor Co. and General Motors Corp., would have looked much stronger had they reported second-quarter numbers in a similar fashion to Chrysler.
Ford reported a second-quarter net income of $750 million, but that was after writing down $1.8 billion in depreciation and amortization.
GM reported a nearly $900-million profit for the same period, in which it recognized about $2.1 billion in depreciation and amortization.
Reported like Chrysler's results, Ford apparently would have earned more than $2.5 billion and GM close to $3 billion in the second quarter.
The fact that Chrysler operations continued to lose money during April, May and June may not bode well for Chrysler this year.
Spring is typically one of the best quarters for automakers, a time when plants are humming and incentives tend to be low.
George Magliano, Global Insight's director of automotive research for the Americas, cautioned not to judge Chrysler's turnaround plan by the second-quarter results: It's just too soon.
LaSorda unveiled the turnaround plan in February after the automaker lost $1.5 billion in 2006, a total restated to $680 million because of accounting changes.
"The Big Three are under tremendous pressure. The market is really struggling right now," Magliano said. "To judge anybody's turnaround plan by a quarter's results or any results right now is crazy."
On Wednesday an industry analyst asked Dieter Zetsche, DaimlerChrysler chief executive officer, if Daimler's ownership stake in Chrysler was a long-term investment.
"We have two main interests: One being a successful future for Chrysler and the other being the continuation of close cooperation wherever it makes sense. Both can be supported by this stake," Zetsche said.
"We have no intention whatsoever to divest this stake. At the same time you now can see the value of that stake relative to our overall balance sheet. This really indicates that a percentage point up or down in returns on that investment does not significantly impact our overall profitability."
Meanwhile, 300 of Chrysler's top executives went into the last day Wednesday of a two-day session in a Dearborn hotel, talking about the future as a stand-alone company.
New Chrysler CEO and Chairman Bob Nardelli, who was supposed to speak Tuesday but bowed out because he became ill, attended Wednesday, said Mike Aberlich, a Chrysler spokesman.