DaimlerChrysler posted a 19% drop in quarterly profits on Tuesday, falling short of market expectations, but stuck to its outlook for the full year, Reuters reported.

DaimlerChrysler, which is battling to return its US Chrysler unit to long term profits, posted a third quarter operating profit of €1.25 billion ($US1.46 billion), the report said.

A Reuters poll of 30 analysts had put the average estimate for third-quarter operating profit at €1.41 billion.

Reuters said Chrysler returned to profit in the third quarter after a steep second-quarter loss and the company said it was still striving for a small operating profit at the division for the full year, although "significant risks" remained - many analysts believe that forecast is optimistic.

The news agency noted that Chrysler, along with General Motors and Ford, is suffering from a profit-eroding US price war, overcapacity and low productivity levels compared with Japanese rivals, which is hampering a return to sustainable profits.

DaimlerChrysler as whole, whose brands include Mercedes, Jeep and Freightliner, aims to post a full-year operating profit of about €5 billion, down from €5.8 billion in 2002, Reuters said.

The company also said it wrote down the value of its stake in aerospace group EADS by about €2billion, a previously flagged move which pushed the group to a net loss for the third quarter, Reuters added.

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