In its first detailed outlook for the year, the German group forecast that 2007 EBIT would rise to 7 billion euros excluding the impact from selling Chrysler, a deal announced on Monday that breaks up a failed transatlantic car merger sealed in 1998.
Analysts polled by Reuters had on average expected EBIT of 1.545 billion euros in the three months to end-March. It was reporting under IFRS accounting standards for the first time.
The results drove home just why DaimlerChrysler announced on Monday it was in effect paying private equity group Cerberus Capital Management to take Chrysler off its hands after nine years of roller-coaster results at Chrysler.
Mercedes Car Group -- which includes the premium Mercedes-Benz, luxury Maybach and Smart minicar brands -- swung to a better-than-expected EBIT of 792 million euros.
Mercedes reiterated its forecast of generating an operating margin of at least 7% this year, up from just 6.6% in the quarter, which Mercedes had signalled would be weak.
Chrysler Group's loss in the quarter was twice as bad as expected, after restructuring costs of 914 million.
Chrysler, which is in the process of cutting 13,000 jobs, expects a 2007 EBIT loss of 1.6 billion euros even though its car sales will rise, especially outside North America, it said.
Overall, group net profit advanced 152% to 1.97 billion euros, helped by a gain from selling shares in aerospace group EADS.
Boosted by a global boom in freight transport by road, its market-leading truck group had operating profit of 528 million euros, up by a quarter and ahead of market expectations.
The group, set to be called Daimler once the Chrysler sale goes through later this year, said the forecast for 7 billion euros in 2007 EBIT included a gain of 1.6 billion from selling EADS shares.
It will also book charges of 1.0 billion for reorganizing Chrysler and 600 million for cutting white-collar jobs.
DaimlerChrysler stock, which has outperformed the car sector index by more than 8% this year, was near session highs and up 3.7% to 63.98 euros while the DJ Stoxx European car sector index rose 0.8%.