DaimlerChrysler presented earlier this week the report on the first quarter of 2007, but this time in accordance with International Financial Reporting Standards (IFRS). As reflected in their income statement, the pre-tax performance measure operating profit, which was previously used to discuss the profitability of the Group and its divisions, has now been replaced by earnings before interest and taxes (EBIT). And the previous net income, which was used to report after-tax earnings, is now net profit.
Because of these changes, the internal financial management and the external reporting were met even more closely. Expenses, sales, and savings that were before accounted for in the Van, Bus, and Other segment or under eliminations have been allocated to the related divisions. Eventually, this process leads to divisions' earnings effects which were shown before at the Group level.
From $1,579 million last year, DaimlerChrysler increased its EBIT to $2,730 million in the first quarter this year. The restructuring expenses related to the implementation of the $1,222 million Chrysler Group's Recovery and Transformation Plan reduced their earnings. Troubled suppliers were provided an additional charge of $160 million and so as the implementation of the new management model worth $72 million from the financial support. However, the $2,090 million income was attained in connection with DaimlerChrysler's equity interest in EADS and partially by the repayment of the $152 million expenses from the Power8 restructuring program at EADS.
Improved results of the operations at the Mercedes Car Group and the Truck Group greatly contributed to the increase in earnings at the Chrysler Group.
As to the aspect of efficiency-improving programs, there were defined measures to improve further the using up of facilities for production. In effect, depreciation of property, plant and equipment has been reduced. This step made an unquestionable impact on the Group's EBIT that amounted to $285 million. So to break this down, $202 million is regarded as Mercedes Car Group's EBIT, $32 million at the Truck Group and $51 million is considered at Van, Bus, and others.
From last year's $1,045 million net profit, DaimlerChrysler reached more than 50 percent increase this year. Net profit for the first quarter of 2007 amounted to $2,637 million. The manufacturer reached $2.53 earnings per share; another more than 50 percent increase from last year's $1.03.
The company sold 1.1 million vehicles around the world during the first quarter of 2007. Putting this in terms of revenues, this amounts to $47.3 billion. DaimlerChrysler experienced a 6 percent decline in revenues from last year's $50.1 billion.
What lies ahead for DaimlerChrysler?
DaimlerChrysler anticipates future growth in the global industry. The manufacturer expects that for the whole year of 2007, demand for vehicles in North America and Western Europe will be even weaker than in 2006. But in Asia, Eastern Europe and Latin America, the company looks for more demand for commercial vehicles and passenger cars. In the field of commercial-vehicles business, the company expects a huge decline in the demand for trucks in North America and Japan; but to attain good revenues, markets in Western Europe should remain stable.
For the entire year of 2007, DaimlerChrysler looks forward to reach EBIT of $9.4 billion as compared to last years' $7.4 billion. Essential factors that affect this year's earnings are the gain of $2.1 billion that was realized on the transfer of interest in EADS; and charges of $1.3 billion that resulted from the implementation of the Recovery and Transformation Plan at the Chrysler Group and of $0.8 billion from the new management model.
These anticipated earnings somehow tell the present status of DaimlerChrysler.
About DaimlerChrysler
A German car corporation, DaimlerChrysler is the fifth largest car manufacturer in the world. It produces cars and trucks under different brands such as Chrysler, Dodge, Jeep, Mercedes-Benz, Smart, Maybach, Mopar and GEM. It is also a manufacturer of many famous and top of the line auto parts such as .
