German automaker Daimler AG (DAI) on Thursday reported a profit for the third quarter compared to a loss last year. However, the company said its results were adversely affected by the worsening banking crisis and the resulting global consumer uncertainty. The producer of premium passenger cars lowered the full-year outlook and temporarily suspended its share buyback program. The company also cautioned that forecasts are connected with a high degree of uncertainty, given the financial turmoil.
Net profit for the third quarter was €213 million or €0.21 per share, compared to a net loss of €1.5 billion or €1.47 per share in the prior-year quarter. The net loss of the prior-year quarter included special effects from the Chrysler transaction.
Stuttgart, Germany-based Daimler's revenue decreased 7% to €23.8 billion from €25.7 billion in the same quarter of last year. Adjusted for exchange-rate effects and changes in the consolidated group, revenue decreased by 5%.
Daimler's earnings before interest and taxes, or EBIT, for the quarter fell sharply to €648 million from €1.9 billion in the preceding year quarter, hurt by lower earnings at the Mercedes-Benz Cars division. In addition, special items reduced earnings by a total of €765 million.
During the quarter, Daimler sold 522,500 passenger cars and commercial vehicles worldwide, down from 537,000 units sold last year.
Mercedes-Benz Cars' sales fell 6% to 315,800 vehicles, and revenue declined to €11.6 billion from €14.1 billion a year ago. Daimler Trucks sold 122,700 vehicles, representing 4% growth over last year, and revenue increased to €7.3 billion from €7.0 billion.
Daimler Financial Services division expanded its worldwide contract volume by 11% to €63.9 billion in the third quarter, which helped the unit to post higher year-over-year earnings.
Despite difficult market conditions, Mercedes-Benz Vans increased its third-quarter unit sales by 1% to 73,200 vehicles. Daimler Buses sold 10,800 buses and chassis, up 15% from last year, boosted by strong European sales.
Further, Daimler said it will temporarily suspend the further execution of its share buyback program. As a result, the company might not reach its initial target to buy back 10% of the outstanding shares.
Among recent developments, last week, Daimler Trucks North America, or DTNA, revealed plans to discontinue its Sterling Trucks product line and said the production plants in Canada and North America will be shut down in 2009 and 2010, respectively. The restructuring program, for which the cost is estimated at $600 million, includes reducing workforce by 3,500 positions.
The company said earlier that its medium and heavy-duty truck manufacturing plant in St. Thomas, Ontario will cease production in March 2009, parallel to the expiration of the company's current agreement with the Canadian Auto Workers members employed there. On the other hand, its truck manufacturing plant in Portland, Oregon will terminate production in June 2010, when current labor contracts expire.
Last month, Daimler confirmed that it was in talks with Cerberus Capital Management LP, the majority holder of Chrysler LLC, regarding the sale of its remaining 19.9% stake in Chrysler LLC.
For the nine-month period, Daimler reported net income of €2.9 billion or €2.94 per share, compared to €2.3 billion or €2.13 per share in the previous year period.
Revenue for the year-to-date period was €72.6 billion, down from €72.9 billion in the preceding year period.
Going forward, for the full year 2008, the company now expects a slight decrease in total revenue from €99.4 billion recorded in 2007. Previously, the company expected total revenue for the full year to be slightly higher than that of 2007.
Daimler said it currently expects to post EBIT from ongoing operations of more than €6 billion in 2008, down from prior outlook of more than €7 billion.
Mercedes-Benz Cars expects unit sales to be similar to the prior-year level. Daimler Trucks and Mercedes-Benz Vans expect to exceed last year sales. Growth in unit sales will be partially offset by higher raw material costs and the weak US economy, the company said. Daimler Buses expects to post record unit sales once again this year.
However, in view of the current turmoil of financial and automotive markets, Daimler cautioned that forecasts are connected with a high degree of uncertainty.
Daimler stock is currently trading at $29.76, down 24 cents on a volume of 1.31 million shares. The stock has been moving in a range of $27.80 - $111.65 for the past 52 weeks, with a three-month average volume of about 978,18 thousand shares.
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