DaimlerChrysler Achieves $7.3 Billion Operating Profit in 2006

DaimlerChrysler Achieves $7.3 Billion Operating Profit in 2006  
Filed under:
on 02/14/2007

Source: DaimlerChrysler

DaimlerChrysler today published its preliminary Group and divisional results for the year 2006. DaimlerChrysler recorded an operating profit of $7,281 million in 2006, compared with $6,843 million in 2005. The development of the Group’s operating profit was primarily impacted by the significant decline in earnings at the Chrysler Group. This was more than offset by the substantial earnings improvement at the Mercedes Car Group and the repeated increase in earnings at the Truck Group and the Financial Services division. The contribution to earnings from the Van, Bus, Other segment was lower than in the prior year. The earnings trend was affected by special items in both years.

Net income increased by $0.5 billion to $4.3 billion (2005: $3.8 billion). Based on the reported net income, earnings per share amounted to $4.17 compared with $3.70 in 2005.

The Board of Management will propose to the Supervisory Board that a dividend of €1.50 per share should be distributed for the year 2006 (2005: €1.50). This proposal takes account not only of the development of operating profit and cash flow in 2006, but also of expectations for the coming years.

Unit Sales and Revenues

DaimlerChrysler sold a total of 4.7 million vehicles in 2006 (2005: 4.8 million), while the Group’s total revenues increased by 1 percent to $200.1 billion. Adjusted for exchange-rate effects and changes in the consolidated Group, the increase in revenues amounted to 2 percent.

The Workforce

As of December 31, 2006, DaimlerChrysler employed a workforce of 360,385 people worldwide (2005: 382,724). Of this total, 166,617 were employed in Germany (2005: 182,060) and 94,792 in the United States (2005: 97,480).

The implementation of the new management model is running according to plan. By the end of January 2007, approximately 2,000 employees worldwide had either signed voluntary severance agreements or had already left the Group. DaimlerChrysler has been working with the new structures since August 1, 2006. Important processes have been made faster and more efficient, allowing substantial efficiency gains. The total expenditure for the implementation of the program in the years 2006 through 2008 is likely to be in the region of $2.6 billion. Of this total, $519 million was incurred in the year 2006.

Investing to Safeguard Future

Worldwide, the DaimlerChrysler Group invested a total of $7.8 billion in property, plant and equipment in 2006 (2005: $8.7 billion). Capital expenditure at the Mercedes Car Group of $2.2 billion was slightly higher than in the prior year ($2.1 billion). To continue its product offensive and to make its production facilities more flexible, the Chrysler Group invested $3.8 billion in property, plant and equipment (2005: $4.1 billion). The Truck Group invested $1,197 million in 2006, mainly related to new technologies, powertrains and safety concepts (2005: $1,275 million).

Expenditure for research and development totaled $7.0 billion in 2006 (2005: $7.5 billion). The most important projects at the Mercedes Car Group were the new generation of the E-Class, the new version of the CL-Class, and preparations for the model change for the C-Class in 2007. The Chrysler Group’s focus was on the development of the new minivan generation as well as on hybrid vehicles. The Truck Group’s major projects included the successor models for the Mercedes-Benz Actros and Axor, for the Freightliner Premium Class and for the Mitsubishi Fuso Super Great. Additional key areas of R&D activities at DaimlerChrysler were the further development of powertrain technologies, alternative propulsion systems such as hybrid drive and fuel cells, and electronic systems for the improvement of vehicle safety.

During the planning period of 2007 through 2009, DaimlerChrysler will presumably invest a total of $23.1 billion in property, plant and equipment and $21.4 billion in research and development activities. This adds up to total of investment in safeguarding the future of $44.5 billion.

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