At first I thought someone had slipped something in my lunchtime julep. So I rubbed my eyes, took a look, and it was still there. Right on top of the earnings release. A car company that's increasing operating profit? Usually I'd be much less charitable toward any company that led with the good news, only to bury the bad (a drop in net earnings) further down the page.
I'm inclined to be nice toward DaimlerChrysler
Moreover, the firm did it the old-fashioned way, by selling a load of products and not losing money on them, hoping to gain it back via financing. That's just the kind of crazy idea that's floated Honda
Could it be that good products are to blame for the company's good showing?
Let's check the tape. At Chrysler, sales were strong across the board, increasing 9% in units, matching the uptick in total revenue, which was $46 billion. Despite keeping up with the Joneses by offering "employee pricing" in the U.S. and Canada, all the automotive divisions were able to post operating profits, even operating profit growth, with the strongest gains at the commercial group, followed by Mercedes and Chrysler.
True, the bottom line of $0.89 per share was a dip from last year's $1.13, and, yes, there are some heavy restructuring charges coming as the firm settles the score with 8,500 soon-to-be-downsized Mercedes employees for a price of $1.1 billion. But even so, investors have cause for applause. Apparently it is possible to make the car business work. Let's hope the rest of the carmakers tucked between the Atlantic and the Pacific manage to figure it out before it's too late.
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