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Daimler: Goal has become harder
BERLIN, Germany (Reuters) -- German automaker DaimlerChrysler AG said on Wednesday it would strive to meet its target of raising profits this year, but said that goal had become much harder due to the difficult business climate. The world's fifth-biggest carmaker, two thirds of the way through a three-year overhaul at its U.S. Chrysler unit, nonetheless said preliminary figures for the first quarter of this year were "encouraging." DaimlerChrysler said in February it expected to raise profits this year from last year, when it posted an adjusted operating profit of 5.8 billion euros ($6.14 billion), provided economic conditions remained stable in its main markets. "It has become much more difficult to reach the targets we have set ourselves," said Chief Executive Juergen Schrempp in a statement ahead of the company's annual shareholder meeting. "Nonetheless we will make every effort to achieve them." The maker of luxury cars, trucks and buses said its forecast was based on the assumption that the war in Iraq would be concluded soon and that there would be no more factors that might have a markedly harmful effect on the world's economies relevant to DaimlerChrysler's business. Weak economic conditions and subdued consumer sentiment have dampened demand for vehicles in Daimler's most important markets of the U.S. and western Europe and most industry experts say the war against Iraq has increased uncertainty about the outlook for this year. French carmaker PSA Peugeot Citroen said on Tuesday it expected demand for cars in western Europe to fall about two percent this year, the lower end of an earlier forecast, due to the war. Pricing pressure and incentives on vehicles are also expected to dent carmakers' revenues and profits. Shares in DaimlerChrysler have fallen about four percent so far this year, outperforming the DJ Stoxx European autos index, which has lost around 12 percent. The company said Chrysler had accelerated its efforts to cut costs as it endeavoured to reach its target of a $2 billion operating profit this year. Its overhaul includes a 20 percent cut in the unit's workforce, price reductions from suppliers and greater cost savings. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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