Daimler plans €2 bn in cost cuts after profits drop

German automaker Daimler, which cut its full-year forecasts after a difficult third quarter, is planning to save 2.0 billion euros ($2.6 billion) in costs by 2014, its finance chief said on Thursday. In order to safeguard the profitability of its Mercedes-Benz Cars division -- which groups together its Mercedes-Benz and Smart brands -- Daimler has drawn up a new cost-cutting programme with the aim of overtaking rivals BMW and Audi as the leading top-of-the-range carmaker by 2020. "We're aiming to achieve a 2.0-billion-euro improvement in costs by 2014," finance chief Bodo Uebber told a telephone news conference. At the same time, Daimler would extend its model range, with 10 new models planned by 2015, Uebber continued. Late Wednesday, Daimler revised downwards its 2012 operating profit target after posting an annualised 11-percent drop in third quarter net profit. The Stuttgart-based luxury automaker said in a statement that net profit for the three months from July through September had fallen to 1.21 billion euros and that it now expected to earn an underlying or operating profit of around eight billion euros this year. It had previously forecast a level of around 8.8 billion euros. Analysts surveyed by Dow Jones Newswires had expected a drop of 12 percent. "Because of the challenges linked to economic developments, Daimler will not reach last year's EBIT (earnings before interest and taxes) but results will nevertheless be good," Daimler chief Dieter Zetsche said in the statement. The group revised its forecast downward because of the worsening market situation and increased competition, it added. In the auto sector, Daimler aims at earnings before interest and taxes (EBIT) of 4.4 billion euros. "Under market conditions which have definitely become more difficult, Daimler achieved a good result in the third quarter," Zetsche said. In the third quarter, group sales rose eight percent to 28.6 billion euros, while EBIT shrank two percent to 1.9 billion.