DaimlerChrysler trucks business sees 2007 profit

By From Reuters| Feb 25 2007
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DaimlerChrysler's market-leading trucks business will make an operating profit this year despite a sharp U.S. market contraction, division head Andreas Renschler told reporters today.

"Earnings before interest and tax will be positive, even in the United States," he told reporters, although he acknowledged his business would not be able to match the record $2.65 billion (2.02 billion euros) in operating profit it made in 2006.

He said his division would hit its target of generating an 11 percent pretax return on net assets this year.

The U.S. market for heavy trucks is expected to drop as much as 40 percent this year as fleet operators scale back purchases they made before tough new emissions standards came into force.

Still, the group's U.S. arm Freightliner is set to post its third-best results ever this year after the boom years of 2005 and 2006, he said. It will cut up to 4,000 jobs there to help absorb the slowdown, he said.

He forecast the European truck market would remain stable this year, which would be better than first thought given the pull-forward effect that new emissions standards had in this region as well.

Renschler said the inflow of new orders for commercial vehicles in Europe and the high volume of road transport made him optimistic.

DaimlerChrysler expects Chinese officials to give a green light by year's end to its plans for a stake in Chinese truckmaker Beiqi Foton Motor Co., Renschler said.

DaimlerChrysler agreed in November to pay around $104 million for a 24 percent stake as a way to expand in the world's fastest-growing major market.

Renchsler said that from 2008 the group's trucks business aimed to generate an average return on sales of 7 percent in the notoriously cyclical business. The margin was a record 6.3 percent in 2006.

He said profitability could rise by increasing the cooperation among its Freightliner, Mercedes-Benz and Fuso truck businesses.

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