FRANKFURT, Germany (AP) -- Car maker Daimler AG said Thursday its second-quarter profit slipped mainly on charges related to Daimler's interest in Chrysler LLC, and blamed its reduced full-year earnings outlook on a slowing global economy and higher production costs.

The company said profit in the April through June period fell 25 percent to 1.4 billion euros ($2.2 billion) compared to 1.8 billion euros in the same quarter a year ago. The company posted a 6 percent increase in sales to 25.4 billion euros ($40 billion) from 24 billion euros in the year-ago quarter.

Daimler said the lower figure resulted in part from costs of 373 million euros ($587.1 million), including restructuring expenses and cheaper values for Chrysler cars, related to its 19.9 percent stake in Chrysler Holding LLC.

Daimler sold 80.1 percent of Chrysler to Cerberus Capital Management LP in August 2007. Chrysler now is a privately held company and is no longer required to report its earnings.

Looking ahead, the Stuttgart-based maker of Mercedes-Benz, Smart and Maybach cars said it continues to assume that its divisions will be able to achieve their unit sales targets for full year 2008, but lowered its earnings outlook.

On the basis of the divisions' projections, Daimler said it expected to post earnings before interest and taxes from ongoing operations of more than 7 billion euros (nearly $11 billion) in 2008, excluding costs related to Chrysler.

That outlook is lower than its previous estimate that pretax profit would be "significantly" more than the 7.7 billion euros it posted in 2007.

Daimler blamed the revision on the rising cost of raw materials, such as oil and steel, along with the stronger euro and a slowing global economy.

The company said it expects total revenue for the year to be slightly higher than the 99.4 billion euros it achieved in 2007.

Despite the lowered outlook, CEO Dieter Zetsche said the company did show improvements in sales.

"Strong unit sales and further efficiency improvements in all of our divisions led to very good results in a difficult environment," he said in a statement.

"We have prepared the group well for this situation and fulfill all the requirements to rank among the best in our industry also in more difficult times," he said.

Daimler said it expects unit sales to rise for the year at both Mercedes-Benz cars and trucks divisions. In the second quarter, Daimler said it sold 566,500 cars and commercial vehicles worldwide, surpassing the figure for the prior year's period by 10 percent.

The global cost for gasoline appeared to pay off for the company though as its Smart division posted the biggest increase in car sales with a 24 percent increase, or nearly 40,000 vehicles.

The Mercedes-Benz brand sold 9 percent more cars, or 312,000 vehicles. Mercedes-Benz cars total group sales were up 11 percent.

Daimler's trucks division sold nearly 123,000 units in the second quarter, a 10 percent increase, which Daimler credited to positive sales developments in Europe, Latin America and some other markets.

"Severe problems at Chrysler and weakening Mercedes brand sales in Europe are concerning us," Fairesearch analyst Hans-Peter Wodniok wrote in a research note.

"In addition to deteriorating demand and product mix in both North America and Europe, the group might also start suffering from write-downs on its financing receivables."

Wodniok said that rival BMW AG had written down their receivables in the first quarter.

"We do not see any reason why Daimler is in a more comfortable situation," he said.