DaimlerChrysler Hikes Expected 3Q Loss to $1.52 Billion

Automaker DaimlerChrysler AG (DCX) lowered its 2006 operating profit forecast Friday, saying its Chrysler Group expects a $1.52 billion loss in the third quarter, more than double the amount anticipated.

The German-American automaker said the Chrysler Group will make additional production cuts in the third and fourth quarters to reduce dealer inventories.

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The Stuttgart-based company lowered its operating profit forecast for the full year to about 5 billion euros ($6.34 billion), based on an expected full-year loss for the Chrysler Group of 1 billion euros ($1.27 billion).

That includes an operating loss of 1.2 billion euros for the Chrysler Group in the third quarter, wider than the anticipated loss of up to 500 million euros ($633.75 million).

"The Chrysler Group is facing a difficult market environment in the United States with excess inventory, noncompetitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles," DaimlerChrysler said in a statement.

The parent company said it was examining several possibilities to improve the earnings situation of the Chrysler Group "as quickly, comprehensively and sustainably as possible."

It said these includes ways to boost sales and cut costs as well as making structural changes.

DaimlerChrysler shares fell 3.2 percent to 40.18 euros ($50.93) in Frankfurt trading.

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