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DaimlerChrysler warns of £2.7 billion losses and Mitsubishi redundancies

DaimlerChrysler warned today that its restructuring plan would lead to first quarter losses of between £2.4 billion and £2.7 billion.

The company said that action was necessary to reverse declining sales and mounting losses at Chrysler and Mitsubishi Motors.

According to the Financial Times, Chrysler is expected to lose between £1.4 billion and £1.6 billion this year. It is expected to return to a modest profit in 2002. DaimlerChrysler, which has a 34% stake in Mitsubishi, also pledged to cut the workforce at the Japanese carmaker by 14 per cent - shedding about 9,500 jobs - and close an assembly plant in Japan. Mitsubishi will reduce capacity by 20 per cent and the number of vehicle platforms is expected to be more than halved from the current 24. It is expected to share more platforms in future with Chrysler.

DaimlerChrysler announced in January that six plants are to be closed at Chrysler and more than 26,000 workers will be made redundant.

At that time the company announced a 49% fall in full year operating profits to £3.4 billion, the company also warned that its profits this year would be down again. In the group's annual report, published on Monday, DaimlerChrysler chairman Jurgen Schrempp said: “The refocusing of Mitsubishi Motors is expected to negatively impact of our operating profits.

“However, as a result of these programs and increased efficiencies through the networking of our global activities, we expect the group's operating profits to improve again in 2002.”

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