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Chrysler to miss profit target
STUTTGART, Germany (CNN) -- DaimlerChrysler, the world's fifth-largest car maker, said Thursday its U.S. business would have difficulty meeting its profit target. DaimlerChrysler Chief Executive Juergen Schrempp had said Chrysler would make an operating profit before one-time items of $2 billion this year. "Given the difficult market conditions, Chrysler Group will further intensify its efforts to realize additional cost savings," he said. "However, during the last few weeks the market environment in the U.S. has become more challenging. Thus it will be difficult to achieve the operating profit target of $2 billion before restructuring expenses." The company has cut more than 26,000 jobs and closed plants to restore Chrysler, which is in the midst of a three-year turnaround plan, back to profitability. Its U.S. business has come under intense pressure to cut the price of cars and offer incentives to customers, in effort to keep pace with similar moves from Ford and General Motors. Revenue at its Chrysler unit fell 21 percent to 12.7 billion euros in the first quarter of 2003, mainly due to the euro's strength but also because of lower shipments. Chrysler's retail sales fell 8.9 percent in the period to 615,700 vehicles. DaimlerChrysler's warning came as it also reported that first-quarter operating profit rose 38 percent to 1.4 billion euros from a year ago, beating market expectations. First quarter revenues fell 8.7 percent to 33.7 billion euros, again due to the appreciation of the euro against the dollar. But the company said group revenues would fall to about 145 billion euros this year. Analysts polled by Reuters had expected a first-quarter operating profit of 1.189 billion euros, up from 1.017 billion a year ago. Adjusted net income rose to 588 million euros in the first three months of this year, from 497 million euros in the same period a year ago. DaimlerChrysler's stock fell 3.3 percent to 29.87 euros in midday Frankfurt trading Thursday.
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