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Daimler shares skid
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July 29, 1999: 12:40 p.m. ET
Carmaker's earnings disappoint; investors spooked by competition fears
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LONDON (CNNfn) - Shares of German-American carmaker DaimlerChrysler slumped almost 8 percent in Frankfurt Thursday as second-quarter earnings came up short and investors were spooked by fears over the future impact of tougher competition.
DaimlerChrylser -- formed last year by the merger of the two vehicle makers -- reported adjusted operating profit of 2.55 billion euros ($2.63 billion), a 7 percent increase. However, net profit per share was 1.48 euros, or $1.57, down from a pro forma level of 1.59 euros, or $1.69 in the year-earlier period.
Although DaimlerChrysler executives predicted revenue growth to continue in the second half, analysts said they were concerned about sluggish operating profit margin increases in the Mercedes car and traditional North American Chrysler brands. The automaker cautioned that it is likely to encounter stiffer competition in the global auto industry.
"I think the DaimlerChrysler numbers are a disappointment," Sanford Bernstein analyst Gary Lepidus said. "The most glaring question would seem to be in Mercedes car. Operating margins were flat year over year."
DaimlerChrysler was the biggest casualty of a downbeat session for German stocks, and closed at 74 euros in Frankfurt, down from 80 euros.
Revenue in the quarter rose 10 percent to 37.3 billion euros from 33.9 billion euros in the comparable period a year earlier. First-half revenue grew at nearly the same rate, to 72.3 billion euros.
First-half net income at the world's fifth largest carmaker rose almost 11 percent to 3.12 billion euros.
Operating profit over the same period climbed 11 percent to 5.3 billion euros, propelled by robust growth in the company's Aerospace division and booming sales in its Mercedes S-Class and M-Class sport utility vehicles.
Mercedes-Benz passenger car sales climbed 17 percent in the first half to 9.57 billion euros. U.S. passenger car brands -- including Chrysler, Plymouth, Jeep and Dodge -- increased their revenue 10 percent in the quarter to 16.26 billion euros.
--from staff and wire reports
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DaimlerChrysler
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