FRANKFURT, Germany – Chrysler LLC lost an estimated $510 million in the first quarter as the U.S. economy weakened and consumers rejected its trucks and sport utility vehicles in favor of smaller cars.
The automaker has not officially reported earnings since last August, when the private-equity firm Cerberus Capital Management LP bought an 80.1 percent stake in the automaker from Daimler AG. But Daimler's earnings, released Thursday, give a hint at Chrysler's financial situation.
Daimler delays reporting Chrysler's financial results for three months, so the latest results indicate Chrysler's first-quarter performance.
In the April-June period, Stuttgart-based Daimler's net profit fell 25 percent to 1.4 billion euros ($2.2 billion) compared with 1.8 billion euros in the same quarter a year ago. Daimler said the sharp drop in second-quarter profit was mainly a result of charges related to its remaining 19.9 percent stake in Chrysler.
Daimler said the negative charges related to its Chrysler stake totaled 373 million euros ($587.1 million) in the quarter. That would mean Auburn Hills, Mich.-based Chrysler Holding LLC, which includes both the automaker and Chrysler Financial, lost $2.9 billion for the first quarter.
But both Daimler and Chrysler said differences in U.S. and international accounting standards make the European calculations higher. As a result, Chrysler said Daimler's share of its net loss was 65 million euros ($102.1 million). That would mean Chrysler lost $510 million in the quarter.
Among other differences, U.S. Generally Accepted Accounting Principles and International Financial Reporting Standards calculate one-time items such as restructuring charges differently. Daimler, which makes Mercedes-Benz, Smart and Maybach cars, said the charges at Chrysler included 93 million euros ($146 million) in restructuring and further charges of 17 million euros ($26.7 million) because of the decline in residual values of Chrysler vehicles.
Daimler said the June 30 book value of its Chrysler stake was 171 million euros ($268.5 million), down from 916 million euros ($1.44 billion) at the end of 2007.
Analysts expressed concern about continuing deterioration at Chrysler, which is heavily dependent on the slumping U.S. market and has a truck-heavy vehicle lineup that consumers have shunned because of high gas prices.
“In June of this year Chrysler has drawn Daimler's $1.5 billion credit line which suggests to us that the U.S. car manufacturer has severe liquidity problems and is possibly at the brink of Chapter 11,” Fairesearch analyst Hans-Peter Wodniok wrote in a research note.
Wodniok rates Daimler at “Hold” with a target of 41.07 euros ($64.07).
In Frankfurt trading, Daimler shares fell nearly 10 percent to 38.47 euros ($60.02).
AP Auto Writer Dee-Ann Durbin in Detroit contributed to this report.
