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Wednesday, 23 October, 2002, 12:56 GMT 13:56 UK
Car giant warns on pension liabilities
Chrysler Crossfire
The turn-around of Chrysler has been speedy
The car giant DaimlerChrysler has warned that its pension funds are insufficient to meet its pension obligations.

Assuming the stock market glut remains unchanged, there will be a shortfall of 5.5bn euros (3.47bn; $5.37bn) by the end of the year, the world's fifth largest car maker said.

It was already known that the US-German car company's pension liabilities were greater than the funds set aside to meet them, but three months ago the shortfall was believed to be in the region of 3.5-4bn euros.

The company will decide on any fresh cash injection into the pension funds by the end of the year.

Not impressed

The news came as the car giant raised its profit target for 2002 after making much more money than expected during the July to September quarter.

"DaimlerChrysler would now expect that operating profit, excluding one-time effects, should exceed 5m euros for full-year 2002," the company said.

Analysts were unimpressed by the forecast.

"They have already come within spitting distance of that with the third quarter results," said JP Morgan analyst Himanshu Patel.

Target met

Following a profit warning in February, DaimlerChrysler has remained cautious in its predictions about the future.

Previously, the firm has forecast full year operating profits of just over 4bn euros. But by the end of September, this goal had been reached.

The company's operating profits had reached 4.66bn euros by the end of September.

Chrysler restructuring

But despite giving the figures a cool response, analysts were impressed with the car maker's recent performance when operating profits, adjusted for one-time effects, more than doubled to 1.7bn euros from 700m euros a year earlier.

Analysts had expected a more modest rise to 1.27bn euros.

The rise in profits far exceeded the car maker's 1% rise in revenues to 36.3bn euros.

This is partly because its restructuring of its US arm Chrysler, its most important revenue provider, has been faster than the firm had expected.

DaimlerChrysler shares, which have fallen 17% this year, slipped lower in early trading.


Companies

Background
See also:

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