Chrysler profit down 65% on product launches
Chrysler Group’s quarterly profit fell 65% as it absorbed the costs of new-vehicle launches, the company said yesterday.
The No 3 US automaker also reaffirmed its financial forecasts for 2013, including net income of about $2.2bn.
“We remain on track to achieve our business targets, even as the first-quarter results were affected by an aggressive product launch schedule,” said Sergio Marchionne, chief executive officer of Chrysler as well as of its parent, Fiat.
Net income in the first quarter fell to $166mn from $473mn a year before.
Net revenue fell 6% to $15.4bn in the quarter.
Chrysler also said it still expects 2013 net revenue of $72bn to $75bn, boosted by a strong second half. It also said it sees free cash flow of more than or equal to $1bn.
Marchionne in January warned that Chrysler’s first-quarter earnings would be weaker than the previous year because of the expense of product launches and the fact that the Jeep Liberty SUV was no longer being produced.
The Liberty’s successor, the Jeep Cherokee, was not sold in the first quarter.
Marchionne said earlier this month that there was a 50% chance that the Fiat buyout of Chrysler would be completed by June 2014.
If Fiat, which now owns 58.5% of Chrysler, buys and then merges with Chrysler, it would create the world’s seventh-largest automaker.
As it has in recent quarters, Chrysler’s profit was expected to keep its parent Fiat from losing money in the first quarter as the European auto market outlook remains bleak.
Volkswagen
First-quarter profit at Volkswagen’s core brand almost halved, Europe’s biggest carmaker said yesterday, as manufacturers battled the region’s protracted slump in demand with ever deeper discounts.
Operating profit at the VW brand, which accounts for over half the German group’s €46.6bn ($60.7bn) sales, plunged to €590mn, VW said, giving details on a drop in quarterly group earnings announced last week.
The VW brand’s profit margin tumbled to 2.4% from 4.1% in the first three months of 2012.
“The current environment is definitely a tough challenge for the entire industry,” chief executive Martin Winterkorn said in a statement.
VW-brand deliveries, including VW’s all-time best-selling Golf hatchback, fell in March for the first time in over three years.
Still, the company said last week it would stand by targets announced on March 14 to match the 2012 record operating profit of 11.5bn euros and to push sales and deliveries to new record levels.
Wolfsburg-based VW is pinning its hopes for growing sales volumes on about 60 new models this year including facelifts and overhauls as well as the new Golf, launched in November.
One VW dealer told Reuters the multi-brand group has been pushing sales of models like the Golf or the Tiguan compact SUV since February with retail sales incentives of as much as €1,800 per vehicle under a special discount programme slated to run through June 30.
Depending on VW’s budget, the programme could be extended by another 3 months, the dealer said, declining to be identified as the sales policy is confidential.
“The VW group is not completely immune to the intense competition and the impact this is having on business,” CEO Winterkorn said.
Underlying profit at the Audi luxury brand declined 7.3% to €1.31bn, VW said.
The loss at Spanish division Seat widened to €46mn from €29mn a year earlier, underscoring the need for action as VW plans to swap the brand’s CEO on May 1.
TNT Express
Dutch post and courier company TNT Express yesterday posted a tenfold jump in net profit for the first quarter, but results were primarily driven by compensation for a failed takeover deal with US parcel giant UPS.
Net profit totalled €144mn ($188mn) as opposed to €15mn the same time last year, even though sales fell by 4.5% to €1.67bn.
TNT Express said profits were boosted when rival United Parcel Service paid a €200mn termination fee after it pulled out of a mega deal in January.
Both UPS, the bidder and TNT Express, the target, worked hard to get the €5.16bn takeover past European Union authorities, but UPS withdrew when it became clear that anti-trust officials were set on blocking it.
Brussels officially pipped the deal on January 30 saying it would have restricted competition when it came to the express delivery of small packages in 15 EU member states.
UPS then paid TNT Express the €200mn fee agreed upon by the two groups in advance, should the deal fail.
TNT Express in March announced it was shedding 4,000 jobs over the next three years as it restructured after the UPS bid’s crash.
“We reiterate our view that trading conditions in 2013 will continue to be challenging, especially in Europe,” TNT Express chief executive Bernard Bot said in the statement.
He said the impact of the group’s extensive restructuring programme — including a new management structure and sales of its operations in China and Brazil, should become visible towards the second half of the year.
UPS and TNT Express are major players in the sector for delivery of packages and are two of four firms with a comprehensive air and road delivery network on the continent.
Others present in Europe are DHL, owned by Deutsche Post, and FedEx, a US-based company.
TNT Express operates in more than 200 countries and maintains a leading role in the road freight network in Europe. It currently employs some 77,000 people.
Erste Group
Austria’s Erste Group, a major lender in central and eastern Europe, said yesterday that first-quarter net profit fell 49.1% to a “solid” €176.2mn ($230.4mn).
With the year-earlier period boosted by one-off effects, this was a “solid result against the backdrop of limited economic growth and continuously declining interest rates,” chief executive Andreas Treichl said.
“Erste Group expects a slight improvement in economic performance for Central and Eastern Europe in the second half of 2013,” the bank said, forecasting a “stable” operating result for the year.
Net interest income slipped 7.2% to €1.2bn, mostly because of “subdued” credit demand, low interest rates and the continuing impact of the reduction of non-core assets.
Provisioning for bad loans however fell 30.7% to €402.2mn, while pretax income was down 38.1% at €301.4mn.
Erste has around 17mn customers in eight countries.
Aker Solutions
Aker Solutions, Norway’s flagship oil services firm, has warned of lower-than-expected results across most of its divisions due to cost overruns and project delays, sending its shares down more than 20%.
Aker Solutions had worked to rebuild investors’ confidence after it was hit with cost overruns and delays at its operations in Brazil two years ago, appointing Oeyvind Eriksen as chief executive to lead a reorganisation.
The shares had doubled in value since slumping as low as 51.10 crowns in 2011, but the group is now launching a further reorganisation including the appointment of new heads for problematic divisions and additional executives to focus on projects in Norway, its core market.
The company said core profit (EBITDA) would fall to 868mn crowns ($148.4mn) from 1.0bn a year ago, undershooting an average forecast of 1.13bn, according to Thomson Reuters Starmine.
Revenue is expected to rise to 11.1bn from 9.8bn crowns a year ago, but falling short of an average analyst expectation for 11.6bn. “This is a serious profit warning, both in terms of size and the fact that it is spread out (over several divisions),” said Haakon Amundsen, an analyst at ABG Sundal Collier.
First-quarter results were hit by cost overruns at a major North Sea project — the building of a new platform at the Ekofisk oilfield — as well as losses of 117mn crowns at two divisions.