* Cost cuts could save more than 600 mln euros by 2017 - CEO
* Stagnant truck markets place burden on 2015 - CEO
* 2014 group profit jump mainly due to non-truck operations (Adds CEO comments, background, shares)
By Andreas Cremer
MUNICH, March 11 (Reuters) - Germany’s MAN SE will expand cost cutting at its core truck division to all business areas in a bid to improve profitability, as parent Volkswagen (VW) steps up its efforts to forge a global force in trucks.
VW hired ex-Daimler executive Andreas Renschler last month to align MAN with its Swedish subsidiary Scania and create a global business to better compete with truck industry leaders Daimler and Volvo.
“It’s indisputable that one needs to create and must create a truck alliance” to boost synergies at the VW group level, MAN Chief Executive Georg Pachta-Reyhofen said at a news conference on Wednesday, after MAN posted a drop in truck-division profit.
Operating profit at the truck and bus division, which accounts for more than half of MAN’s sales, plunged 38 percent to 152 million euros ($162 million) last year on falling demand in Europe and Brazil.
MAN announced a cost-cutting programme to target savings through 2017 across the business, which also makes diesel engines and turbines.
Pachta-Reyhofen said the plan, which includes cutting material costs by improving purchasing with VW and possibly trimming production capacity, may save more than 600 million euros by 2017.
Munich-based MAN has been in talks with labour representatives on reducing capacity at truck plants in Germany and Austria as demand in key markets has been falling, company sources told Reuters last month.
“We must increase efficiency and decrease costs,” the CEO said, without being more specific.
VW, Europe’s largest automotive group, has spent billions of euros over more than a decade on expanding stakes in Scania and MAN to reap cost savings and take on rivals.
MAN said it was aiming for stable group operating profit and sales this year, with earnings from diesel engines and turbines seen offseting the impact of lower truck sales.
Demand for heavy-duty commercial vehicles in Europe fell last year while Brazil’s stalling economy and the weak real have weighed on the market in a country where MAN is the top-seller.
“Persistently high competitive pressures in the currently stagnating markets will be a burden also in 2015,” Pachta-Reyhofen said.
Still, MAN posted a 24 percent jump in overall profit to 384 million euros last year, thanks to non-truck operations.
MAN said deliveries and operating profit at its truck division may fall slightly this year, while earnings at the power engineering unit may slightly improve.
At 1340 GMT, its shares were down 0.2 percent at 95.61 euros.
$1 = 0.9384 euros Editing by David Clarke and Mark Potter