DETROIT — DaimlerChrysler'sfirst-quarter earnings more than doubled compared with last year, as a rebound in its Mercedes car group overshadowed deep losses at the Chrysler unit. [/align]On Monday, DaimlerChrysler announced it will sell the Chrysler group to a private equity firm for $7.45 billion, yet it promised to invest much of that money back into Chrysler and Chrysler Financial to help fund the current restructuring, buy back all of Chrysler's bonds, and invest in research and development. All in all, it will cost DaimlerChrysler more than $500 million to sell off Chrysler.

Yet the automaker gets a big bonus: It will no longer have Chrysler's pension and health care liabilities on its books. That allows DaimlerChrysler to essentially erase $18 billion in liabilities from its books. [/align]Chief Financial Officer Bodo Uebber said DaimlerChrysler expects earnings before interest and taxes to be about $9.4 billion. But that does not include the effect of the sale of Chrysler.
For the first quarter, the German-American automaker earned $2.67 billion, more than double what it earned a year ago and above the $1.88 billion predicted by analysts polled by Dow Jones Newswires. Chrysler lost $1.98 billion before interest and taxes, compared with a profit of $857 million a year ago. The loss was the result of $1.2 billion in restructuring charges. [/align]The company's Mercedes Car Group returned to profitability, earning $1.07 billion before interest and taxes in the quarter, compared with a nearly billion-dollar loss a year ago. The company's overall figures were helped a gain of $2.11 billion from its stake in European Aeronautic Defence & Space Co., the parent of planemaker Airbus. DaimlerChrysler sold a 7.5% stake in the company.
The company said Monday it will sell 80.1% of the money-losing Chrysler division to Cerberus, a stunning reversal of the $36 billion takeover by Daimler-Benz in 1998. The move is a huge bet for Cerberus, which has agreed to take on billions of dollars in pension and retiree health care costs at Chrysler.
Daimler will retain 19.9% of Chrysler and continue to work with it on drive systems, purchasing, sales and financial services outside North America. But it was clear that DaimlerChrysler and CEO Dieter Zetsche had lost confidence that a combined Daimler and Chrysler could be a worldwide automotive leader.

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Dusty

 

That confirms my memory that, in the not too long-ago past, Chrysler was the one making money, while Mercedes was the one loosing the money.
Funny how short peoples memories can be.