DaimlerChrysler, the US-German car giant, has admitted to making a loss last year, and is warning that it will fall short of its profit target for 2002.

And for the first time since the transatlantic merger took place in 1998, the dividend has been cut to 1 euro a share from 2.35 last year, around two-thirds of what investors were expecting.

All the Big Three US carmakers have now reported a sharply poorer performance for 2001 than they delivered the previous year, as they were hurt by the slumping economy, particularly in the US.

Intense competition and sliding demand for trucks also hurt the sector.

Hard times

Sales of motor vehicles in the US did pick up sharply at the end of the year despite the gloom following 11 September.

But this year is unlikely to carry on the trend, since observers say the extra sales stemmed from special offers and zero-interest finance deals which are now being withdrawn.

For DaimlerChrysler, the poor performance has pushed it into a net loss of 662m euros (�406m; $589m) for 2001, down from a 7.9bn euro profit the year before.

Adjusted for one-off costs, including the massive restructuring of the underperforming Chrysler section which has occupied management minds all year, the company managed a slim 730m euro profit - still well below the 3.5bn euros earned in 2000 on the same basis.

Sales were also down, but only slightly, at 28.6bn euros from 28.8bn in 2000.

The poor figures triggered a sharp fall in DaimlerChrysler shares, which by 1650 GMT were down 2.05 euros or 4.6% at 42.70 euros.

Gloom ahead

Next year, the one-off costs are likely to continue, with plans for 5,000-6,000 job cuts in Germany. 30,000 have already been let go in the US.

And the financial pain will not let up.

As analysts and sector watchers have expected for weeks, the company said the current year's profits would not be anywhere near the 5.5bn-6.5bn euros it had been predicting.

DaimlerChrysler would not put a number to its revised expectations.

But it said that its 1.3bn euro operating profit this year would be more than doubled.