DaimlerChrysler‘s trucks business will make an operating profit this year despite a sharp US market contraction, division head Andreas Renschler told reporters on Friday.
“Earnings before interest and tax will be positive, even in the United States,” he told Reuters, although he acknowledged the business would not be able to match the record EUR2.02bn ($US2.65bn) in operating profit it made in 2006.
He reportedly said his division would hit its target of generating an 11% pre-tax return on net assets this year.
Reuters noted that the US market for heavy trucks is expected to drop as much as 40% this year as fleet operators scale back purchases they made before tough new emissions standards came into force but Renschler told the news agency the group’s US arm Freightliner is set to post its third-best results ever this year after the boom years of 2005 and 2006, though it will cut up to 4,000 jobs there to help absorb the slow-down.
He reportedly 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 told Reuters the inflow of new orders for commercial vehicles in Europe and the high volume of road transport made him optimistic.
Renschler also said DaimlerChrysler expects Chinese officials to approve by year’s end its plans for a stake in Chinese truck maker Beiqi Foton Motor.
DaimlerChrysler agreed in November to pay around $104 million for a 24% stake as a way to expand in the world’s fastest-growing major market, Reuters said.
Renchsler told the news agency that from 2008 the group’s trucks business aimed to generate an average return on sales of 7% in the notoriously cyclical business – the margin was a record 6.3% in 2006.
He also told Reuters that profitability could rise by increasing the cooperation among its Freightliner, Mercedes-Benz and Fuso truck businesses.