DaimlerChrysler beats target
FRANKFURT, Germany (Reuters) -- DaimlerChrysler on Wednesday beat its operating profit targets for last year and held its dividend steady, nurturing some confidence in the German company's prospects.
The world's fifth biggest car maker, battling to revive its U.S. Chrysler division even after a three-year overhaul, said 2003 operating profit excluding one-off items came to 5.1 billion euros ($6.4 billion), exceeding its target of about five billion euros but down from 5.8 billion euros in 2002.
DaimlerChrysler shares pared their losses after the results and at 1729 GMT were down 0.4 percent, in line with the European auto index.
"There is no more pressure and a further rebound can be expected," said one German fund manager.
Investors said it was difficult to read too much into the results because a divisional breakdown comes only on February 19.
"The number we should focus on, the clean operating profit, was higher than the market's expectations, and we think that was driven by either Chrysler or the trucks unit," said Adam Collins, an auto analyst at Commerzbank in London.
He noted the positive surprise appeared to have been concentrated in the fourth quarter, which inspired some confidence going forward.
Traders also said the decision to leave the dividend unchanged at 1.50 euros per share showed a degree of optimism.
The company is striving to make a success of its global strategy, which has in the last six years involved the merger of Germany's Daimler-Benz with the U.S.'s Chrysler and the purchase of stakes in Korea's Hyundai and Japan's Mitsubishi Motors.
Hopes of an improving U.S. market have pushed its shares higher this year, and the stock is trading close to a 15-month high, raising speculation that the company's biggest shareholder, Deutsche Bank, may soon sell its 12 percent stake.
Unadjusted operating profit fell to 5.7 billion euros from 6.8 billion euros in 2002, even after a one billion euro boost from the sale of the MTU Aero engines business. The figure came in lower than market forecasts partly due to 469 million euros in one-off costs for restructuring Chrysler.
"That charge was much higher than anticipated and makes you ask why it was needed," said Sal Oppenheim analyst Michael Raab, who said he doubted Chrysler's performance had outstripped expectations by much.
Chrysler remains the key to the company's share performance, and few analysts have been willing to bet the unit met its target of a small operating profit for 2003.
After a three-year turnaround plan, including 26,000 job cuts and sharp cost reductions, Chrysler is still being hurt by a U.S. price war and fierce competition from Japanese rivals. Chrysler is pinning its recovery hopes on new products and is launching nine models this year and 25 in the next three years, but some analysts think sales incentives will continue to erode the bottom line.
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