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Tuesday, 23 October, 2001, 12:40 GMT 13:40 UK
DaimlerChrysler cheers markets
DaimlerChrysler chairman Juergen Schrempp,
Chairman Juergen Schrempp was having a good day
In a rare note of earnings cheer, German-American car and trucks maker DaimlerChrysler has released better than expected profits for the third quarter of 2001.

"The operating income numbers, the adjusted number, appears to be ahead of consensus; a positive surprise," Schroder Salomon Smith Barney car industry analyst John Lawson.

Sales fell only slightly, to 36bn euros (22.5bn; $32.1bn) from 37.1bn euros a year earlier, as the company sold about one million cars worldwide during July, August and September.

But adjusted operating profits rose 23% to 666m euros, well above even the most optimistic predictions.

Analysts had predicted widely different operating profit figures, ranging from just 130m euros to 540m euros, with the average prediction at 338m euros.

Chrysler's troubles

In the US, the Chrysler division of the company suffered a 28% fall in sales in September as the terrorist attacks caused an abrupt halt to many people's decision to buy a car.

Chrysler, which had already been offering discounts for some of its older models, set out to match discounts offered by its two main rivals, Ford and General Motors, in the wake of the attacks.

Analysts fear this could hurt the company's earnings badly over the next few months.

DaimlerChrysler is pushing ahead with a restructuring program that aims to bring its Chrysler division back into the black by 2003.

Rising stock

Following the announcement, DaimlerChrysler shares extended earlier gains, rising 7% before noon in Europe.

The company's shares had already risen sharply during morning trading in Frankfurt on the back of a statement from the car and trucks maker that its profits for the year is about to meet earlier forecasts.

DaimlerChrysler's headquarter
DaimlerChrysler stuck to its earlier profit targets
DaimlerChrysler shares rose 3.5% ahead of the results release, and then rose further, trading about 7% higher in the early afternoon.

Market expectations were raised by a statement during, in which the company said it would not downgrade its 2001 profit targets, although it said uncertainty following the attacks on 11 September could still hit its performance.

"It seems that the figures will be better than the market had expected, so we are seeing a lot of buyers here," said HVB Group's head of proprietary investment in Europe, Reinhard Vennekold ahead of the release.

"The market is already pricing in better-than-expected results. This is the reason why we're seeing big demand."

Within target range

Full year adjusted operating profits is expected to come in at around 1.2bn euros, the lower end of a range that stretches up to 1.7bn.

"Importantly, they seem to have decided to stay with this operating profit target for 2001, which most analysts had consigned to the dustbin immediately after the events of [11 September]," said Mr Lawson.

"It would be quite an achievement if they still manage to produce a number within that range."

See also:

12 Oct 01 | Business
DaimlerChrysler cuts truck jobs
20 Jul 01 | Business
DaimlerChrysler beats expectations
10 Oct 01 | Business
Daimler challenges record EU fine
16 Sep 01 | Business
US motor industry suffers shortages
25 Apr 01 | Business
DaimlerChrysler falls into the red
26 Feb 01 | Business
DaimlerChrysler axes Mitsubishi jobs
23 Feb 01 | Business
DaimlerChrysler to restructure
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