BERLIN – DaimlerChrysler AG cut its 2006 operating profit forecast Friday, saying it now expects a $1.52 billion third-quarter loss at Chrysler – more than twice the amount anticipated. Shares in the company fell more than 5 percent.
The German-American automaker lowered its operating profit forecast for 2006 to approximately $6.34 billion, based on an expected full-year loss for the U.S.-based Chrysler Group of $1.27 billion.
Chrysler had previously said it anticipated a third-quarter operating loss of up to $633.75 million. DaimlerChrysler also said Friday that Chrysler will make production cuts to reduce dealer inventories.
“The Chrysler Group is facing a difficult market environment in the United States with excess inventory, noncompetitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles,” the company said in a statement.
DaimlerChrysler shares tumbled 5.6 percent to close at $49.66 in Frankfurt.
Given the troubles facing Ford and General Motors Corp., DaimlerChrysler’s announcement didn’t come as a surprise, said Stephen B. Cheetham, an analyst at Sanford C. Bernstein in London.
“Chrysler’s sales (down 10 percent from a year ago) and market share (down by 1 percentage point year-to-date) have both been trending down as the products responsible for the company’s earnings recovery in 2004 have started to age,” he said.