Car giant DaimlerChrysler has unveiled another set of strong results, buoyed by a surge in profits at its once ailing US unit, Chrysler.

Feeble performance at Chrysler, which was aggravated by the effects of the 11 September attacks, dragged the group into the red at the end of last year.

But Chrysler turned the corner in the first three months of the year, and has now helped push DaimlerChrysler into a 1.1bn euro (�705m; $1.1bn) profit for the second quarter, up by more than one-third year on year.

The result, which exceeded analysts' expectations, encouraged DaimlerChrysler to boost its full-year profit forecast to 4.05bn euros, three times its operating profit last year.

"This is way above people's expectations and is going to be seen positively by the market in the short-term," said UBS Warburg analyst Xavier Gunner.

Shares in DaimlerChrysler jumped more than 2% in the minutes following the announcement.

Trouble ahead?

Mr Gunner also warned, however, that the third quarter would probably prove tougher.

DaimlerChrysler itself warned that the economic outlook was uncertain and that its second quarter results could not be relied upon to last all year.

The firm is still cautious on the overall outlook

"The signals that we are receiving from our main markets still show a growing uncertainty as far as political and economic developments are concerned," the firm said.

Nonetheless, it found much of which to boast.

The company pointed out that its second-quarter profit was based wholly on its core business of making cars, and did not include any of the effects of spinning off businesses or making money in purely financial transactions.

DaimlerChrysler's 2.6bn euro profit in the first quarter was largely the result of the sale of services subsidiary Debis Systemhaus, and was less than 500m euros on an unadjusted basis.

From red to black

It is the turnaround at Chrysler that has captured most attention.

The unit saw operating profit increase to 777m euros from a loss of 148m in the same period of last year.

Aside from introducing the sort of sales incentives that all US car makers have brought in since 11 September, Chrysler has also rolled out a series of successful new models.

An increasing focus on design - not a Chrysler strength until recently - has enabled it to win market share from Detroit competitors, notably General Motors.

Restructuring, cost savings and efficiency improvements should help Chrysler report "a positive result" for the year as a whole, DaimlerChrysler said.

It warned, however, that its rehabilitation was far from complete, and has earmarked another 374m euros for further restructuring measures.

First among equals

DaimlerChrysler's results come at a difficult time for the car business.

Slowing consumer spending on both sides of the Atlantic has hit some firms hard, and a few - notably General Motors and Italy's Fiat - are in serious trouble.

Chrysler has invested in its model range

As Chrysler's troubles attest, DaimlerChrysler has not been immune, but its shares have risen by more than 50% since 11 September.

By focusing largely on the smarter end of the range, DaimlerChrysler, like German rivals BMW and Porsche, is seen as better able to weather a general economic downturn.

In an effort to cash in on the top end of the market, the company recently relaunched the Maybach, a super-luxury saloon that will retail at 360,000 euros before tax.

Over the past year, most large car makers have slashed spending, along with tens of thousands of jobs and dozens of factories, in an effort to slim down and focus on the few growth markets.