Daimler posts 2001 loss

February 20, 2002 Posted: 1042 GMT

LONDON (CNN) -- DaimlerChrysler, the world's third-largest car maker, posted a 2001 loss on Wednesday as it overhauled Chrysler, Freightliner and Mitsubishi.

The Stuttgart, Germany-based company made a loss of 662 million ($589 million, or 66 cents a share, compared with a profit of 7.89 billion, or 7.87 a share, a year ago. Sales dipped 0.6 percent to 152.8 billion. 

DaimlerChrysler has slashed 26,000 jobs and closed six plants as it turns around its loss-making Chrysler business in the U.S.

Chrysler has been a major headache for the automaker, which has been dragged into a price war with Ford and General Motors as an economic slowdown makes consumers reluctant to buy big ticket items. The company was forced to raise cash rebates due to similar deals from U.S. rivals.

Troubled Chrysler posted an operating loss excluding charges for restructuring of 2.18 billion, at the lower end of the company's target range of 2.2 billion to 2.6 billion. A year ago, Chrysler made a profit of 531 million.

Juergen Schrempp, the chief executive of DaimlerChrysler, reiterated Chrysler would break even in 2002, adding it had saved more money than it had originally anticipated through a cost reduction programme.

"Cost savings of $3.3 billion were achieved last year, which was more than our target," said Schrempp. DaimlerChrysler had set a target of $3.1 billion.

DaimlerChrysler said the cost of reorganizing its Chrysler business, Freightliner truck unit and Mitsubishi Motors Corp. amounted to 2.7 billion.

"Daimler Chrysler expects group operating profit for 2002 excluding one-time effects to exceed twice the 2001 level by a very significant amount," the company said. The new target is above 2.6 billion but below a 5.5 billion to 6.5 billion target it had set a year ago.

Daimler forecast group sales of 142 billion in 2002. That's lower than 2001 sales of 152 billion and Daimler said it was aiming sales to grow to just 156 billion in 2004.

"In order to break even in 2002 in the face of weaker market conditions, Chrysler Group has intensified and accelerated some aspects of the turnaround plan that was announced on February 26, 2001," said the company.

"In the year 2002, we now expect a significant decline in the market for passenger cars and light trucks in north America and a moderate weakening of demand in western Europe and Japan."