A return to profit at US car maker Chrysler has helped Germany's DaimlerChrysler post a surge in earnings for the first three months of the year.

The automotive giant unveiled a quarterly operating profit of 1bn euros (�616m; $893m) - or 3.1bn euros when adjusted for various one-off items - compared with a 600m-euro loss in the same period of 2001.

Its Chrysler unit, which has suffered badly since Daimler-Benz bought it in 1998, finally recorded a modest operating profit of 127m euros, compared with a 1.4bn-euro loss a year earlier.

The firm has drastically slashed costs over the past year, including the loss of about 38,000 staff - 10% of its workforce.

Cautious optimism

Looking ahead, the company restated its cautious view of prospects for the global car industry this year, but said that Chrysler might end 2002 with a modest profit.

DaimlerChrysler's improved profitability came despite stagnant sales, which rose by just 7% year on year to 36.9bn euros.

The 1998 merger has been a cause of considerable controversy among the firm's shareholders, some of whom argue that it was a misconceived piece of empire-building.

But perceptions that strategy is now more tightly controlled has helped boost the firm's shares, which have risen by 50% since September.