Oct 24, 2002 By David Mchugh Ap Business Writer 3 min read

FRANKFURT, Germany (AP) – U.S.-German automaker DaimlerChrysler said Wednesday its profit dropped 22 percent in the third quarter from the same period last year but its operating earnings managed to beat analysts’ expectations despite tough market conditions. Net profit at the world’s fifth-largest auto maker was 780 million euros ($764 million) in the July-September period, down from 1 billion euros a year ago. A bigger tax bill weighed on the bottom line.

Revenue rose 1 percent to 36.3 billion euros ($35.9 million) from 36.0 billion euros a year earlier.

Adjusted operating profit rose to 1.7 billion euros ($1.67 billion), beating the 1.2 billion euro ($1.18 billion) consensus of 31 analysts surveyed by Dow Jones Newswires, and more than doubling last year’s figure of 666 million euros.

The adjusted operating profit figure excludes one-time restructuring expenses, as well as financial items such as interest and taxes. Analysts say it enables them to focus on the well-being of the company’s core business.

In this case, operating profit excludes 1.12 billion euros ($1.10 billion) in third-quarter tax expenses, compared to a 638 billion tax credit in the year earlier period.

“The figures were, once again, significantly better than expected,” said auto analyst Georg Stuerzer at HVB bank in Munich. “This was related to several factors, such as a better result from the commercial vehicles division and financial services.”

Commercial vehicles, which includes European Mercedes-Benz truck and Portland, Ore.-based Freightliner, showed improved operating earnings of 143 million euros ($141 million), up from 18 million euros the year before. Earnings for the company’s financial services division rose to 283 million euros ($280 million) from 140 million euros a year ago.

The company has carried out layoffs and cost-cutting at the Freightliner division, which makes trucks, buses and fire engines.

A turnaround program at Chrysler helped the U.S. arm contribute 325 million euros ($321 million) in operating profits – in contrast to a loss of 267 million euros ($264 million) in the same quarter a year earlier, though it was substantially down from the 777 million-euro profit reported in the second quarter. “The significant improvement in earnings was achieved despite the challenging environment,” the company said in a statement. Chrysler’s U.S. competitors GM and Ford have forced it to compete with them on costly sales incentives, such as no-interest financing, that the companies have used to support sales amid in a sluggish economy. The company’s third-quarter profit contrasts with losses posted by U.S.-based competitors Ford and General Motors Corp., though their losses were mostly due to one-time expenses.

The company’s stock fell 3.26 percent on the news, trading at 37.44 euros ($36.70) in afternoon trading in Frankfurt. Analyst Stuerzer attributed that to investors selling to lock in gains after several days of increases in the stock price.

“I think that’s profit-taking, because the stock has had a good run in the past few days,” Stuerzer said.

Nine-month net earnings was 4.55 billion euros in contrast to a loss of 623 million in the first nine months of 2001.

DaimlerChrysler is headquartered in Stuttgart, Germany, and Auburn Hills, Mich.