But analysts and markets had expected the EUR1.53 billion (US$2.18 billion) loss, related to impairment charges and a writedown of some deferred tax assets as part of the sale of its stake in Chrysler, and were cheered by the otherwise solid performance the now German-only company delivered, noting that sales were up in its key markets in the U.S. and Europe.
Daimler shares rose nearly 5.4 percent to EUR78.30 (US$111.42) in Frankfurt trading after the results were released.
The loss compared with a profit of EUR868 million a year earlier. But excluding the charges related to Chrysler, the company said it would have posted a profit of EUR1.1 billion (US$1.57 billion).
Stephen Cheetham, senior research analyst for European autos at Sanford C. Bernstein in London, called the results "stronger than expected" and noted that the company's "earnings trajectory at Mercedes will continue strong well into 2008 due to sales momentum from the new C-class as well as continued cost reduction."
Daimler said in a statement that the entire transaction has so far cost it EUR2.6 billion (US$3.7 billion) in the third quarter, slightly less than the EUR3 billion (US$4.27 billion) it had anticipated.
Daimler sold 80.1 percent of Chrysler to private equity firm Cerberus Capital Management LLC for US$7.4 billion, ending a nearly nine-year merger. Daimler-Benz and Chrysler Corp. linked up in a 1998 US$36 billion deal described as a "marriage made in heaven" by then-CEO Juergen Schrempp, but up-and-down earnings and repeated cost-cutting soured many investors on the effort to create a global auto giant.
Daimler's pretax figures, or earnings before interest and taxes, were EUR1.9 billion (US$2.7 billion) in the third quarter, up 4 percent from the EUR1.8 billion it posted last year. Looking ahead, Daimler said it expects to post a pretax profit of at least EUR8.5 billion (US$12.1 billion) for 2007.
Stuttgart-based Daimler, which changed its name from DaimlerChrysler last month, said its sales rose 6 percent in the July-September period to Ђ25.6 billion (US$36.43 billion) from EUR24.2 billion a year earlier with demand for its C-Class and S-Class models.
Its Mercedes-Benz Cars group, which includes its luxury Mercedes-brand sedans along with the tiny Smart fortwo, posted a pretax profit of EUR1.3 billion (US$1.85 billion) in the quarter, up 57 percent from EUR850 million a year earlier, as sales rose by 12 percent to EUR14 billion (US$19.92 billion) from EUR12.6 billion last year.
But that was offset by a 15 percent drop in pretax profit at the Daimler Trucks unit, which fell to EUR480 million (US$683 million) from EUR565 million in 2006 - a sign that higher fuel prices are limiting major purchases of new trucks.
The company also said that new U.S. regulations that require cleaner engines hampered sales, as the company, and others, had to bring improved but more expensive engine technology to market to meet such regulations. That helped push sales there down by 51 percent.
The division was also hurt by the fact its two biggest markets - the U.S. and Japan - have their sales in dollars and yen which are then exchanged back into euros. The euro has been rising steadily against both currencies in recent months.
But Cheetham said that the "negative impact of lower sales in North America was more than offset by higher sales in Europe and Latin America (up a combined 12 percent) and by cost-cutting measures."
Looking ahead, the company said it expects to sell a total of 2.1 million vehicles in 2007.
Sales fell 12 percent to EUR7 billion (US$9.96 billion) from EUR7.96 billion in July-September 2006.
For the first nine months of the year, Daimler earned EUR2.29 billion (US$3.26 billion), down from Ђ3.8 billion a year earlier, on sales of EUR72.9 billion (US$103.74 billion), up slightly from EUR72.2 billion in the first nine months of 2006.