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Daimler has to change down as well
Last Updated(Beijing Time):2008-07-25 14:55

Daimler AG, the world's second-largest luxury car maker, cut its forecast for earnings this year after second-quarter profit declined 25 percent.

Daimler fell as much as 7.6 percent in Frankfurt trading. Net income dropped to 1.395 billion euros (US$2.19 billion), or 1.40 a share, from 1.85 billion euros, or 1.74 euros, a year earlier, the Stuttgart-based car maker said in a DGAP statement yesterday. Six analysts surveyed by Bloomberg News had forecast profit of 1.38 billion euros.

Profit before earnings and taxes will be above 7 billion euros, compared with an earlier forecast of "well above" 7.7 billion euros because of slowing growth, rising costs for steel and energy and the dollar's decline, Daimler said.

The company, which also had a 373-million-euro charge related to its former Chrysler unit in the United States, said it will "adjust" production of the Mercedes E-class model.

Daimler sold 80.1 percent of Chrysler to New York-based buyout firm Cerberus Capital Management LP in August 2007, severing a nine-year relationship that cut Daimler's market value by US$12.6 billion. Daimler Chief Executive Officer Dieter Zetsche plans a 6-billion-euro share buyback to win over investors as the company's stock has fallen 35 percent this year.

Sales falter

Trucks sales in the US, where Daimler makes Freightliner, Sterling, and Western Star trucks, have faltered as freight companies struggle with soaring fuel prices and lower demand as the US economy slumps. Daimler's Mercedes-Benz unit has been helped by demand for Smart models as consumers look for thrifty small cars and turn away from the trucks and sports utility vehicles of US car makers.

Daimler's earnings drop follows profit gains reported yesterday by PSA Peugeot Citroen, Volkswagen AG and Fiat SpA, boosted by job cuts and demand for small cars.

Mercedes-Benz Cars has cut 9,700 factory jobs since 2005, reducing costs by 7.1 billion euros. The unit's earnings will rise this year and operating profit will reach 10 percent of sales by 2010, Daimler has predicted.

Mercedes-Benz is counting on the A and B-class models to help it achieve record sales this year and wrest back market share from Bayerische Motoren Werke AG.

Source:Shanghai Daily 
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