Daimler posts $1.7B loss in Q1 as sales plunge

Daimler, the maker of Mercedes-Benz cars, said Tuesday that it had posted a second consecutive quarterly loss as sales plunged and it warned that the outlook for the rest of the year remained poor.

The company, based in Stuttgart, reported a net loss of €1.3 billion, or $1.7 billion, in the first three months of 2009, “mainly a result of the significant decrease in demand for automobiles and the resulting drop in unit sales.” Analysts surveyed by Reuters had expected, on average, a loss of about €950 million. Daimler posted a loss of €1.5 billion in the fourth quarter of 2008.

Daimler said revenue had fallen 22 percent to €18.7 billion. It sold 332,300 cars and commercial vehicles worldwide, down 34 percent from a year earlier.

The company said that it appeared that sales of Mercedes-Benz cars appeared to be bottoming out but that truck sales continued to fall.

Daimler shares, which had lost 2.6 percent this year, fell 29 centimes, or 1percent, €26.76 in Frankfurt, giving the company a market value of about €28 billion.

On Monday, Daimler announced a deal to divest its remaining 19.9 percent stake in Chrysler, ending an ordeal that began with a stunning 1998 merger but went sour.

Daimler said it would pay $600 million into American automaker’s pension plan over three years and would forgive loans it made to Chrysler when it sold 80.1 percent of the company to the private equity firm Cerberus Capital Management in 2007.

Daimler said that it had already written off the loans it was forgiving but that unloading Chrysler would reduce its earnings by $700 million in the second quarter.

Adam Jonas, an analyst who covers the European auto sector at Morgan Stanley in London, said that Daimler’s final disposition of the Chrysler stake came slightly more cheaply than he had expected but that the main value was not something quantifiable. Rather, he said, “the finality of it could help Daimler,” for example, by management “not having to mention the name Chrysler in a conference call.”

In 1998, when Daimler paid $36 billion to unite with Chrysler, executives of the German automaker said they were creating a “merger of equals,” but the deal was seen in Detroit as a takeover of Chrysler.

The promised synergy between the companies never developed, and Daimler actually paid Cerberus to take a majority stake nine years later.

In its earnings announcement Tuesday, Daimler said its Mercedes-Benz cars have “an up-to-date and competitive product range,” and the company expressed optimism about product introductions in China and Brazil. Still, Daimler said it could not avoid the impact of the economic and financial crises in developed markets.

The company said that it expected its total unit sales “to decrease significantly” this year from the 2.1 million vehicles it sold last year and that as a result revenue would decline “significantly” below last year’s €95.9 billion. And while operating profit should gradually improve as the year goes on, “earnings in the second quarter are expected to be significantly negative once again.”

The auto sector remains in a deep funk. Mr. Jonas estimated that worldwide passenger car sales will fall 12 percent this year in volume terms, after a 6 percent decline in 2008.

Daimler said in March that it would sell about €1.95 billion worth of new shares of stock to Abu Dhabi, making the emirate its largest shareholder.

Honda Motor said Tuesday that it posted a loss of $1.9 billion in its latest financial quarter but eked out a net profit for the year that ended in March, Hiroko Tabuchi reported from Tokyo.

Like other carmakers, Honda has been squeezed by the global economic slowdown. But its lineup of lower-cost cars, a robust motorcycle business and aggressive cost-cutting have helped Honda fare relatively better amid recent difficulties.

Honda swung to a net loss of ¥186.1 billion in the January-to-March quarter from a profit of ¥25.43 billion a year earlier. For the year that ended on March 31, Honda booked a profit of ¥137 billion, down 77 percent from the previous year but beating forecasts.