June 8, 2016 / 12:43 PM / in 2 years

Daimler Trucks to cut more jobs in Brazil

* Daimler eyes shorter assembly times, smaller portfolio

* 2,000 jobs in Brazil will be cut

* More job losses seen in U.S., Mexico if demand keeps falling

* Trucks’ profit margin will slip below 2015’s 7.3 pct

STUTTGART, Germany, June 8 (Reuters) - Daimler’s truck division is to cut a further 2,000 jobs in Brazil on top of the 1,240 cuts in the United States and Mexico which it announced on Tuesday, as it seeks to cope with weak markets in the region.

Daimler Trucks Chief Executive Wolfgang Bernhard told an investors conference near Stuttgart the 2,000 jobs will be axed in Brazil at a cost of about 100 million euros ($114 million) in severance payments, raising the number of jobs it has cut in Latin America’s biggest economy to almost 5,000 since last year.

He also said he would not rule out further layoffs in the United States should the truck market there shrink by more than the expected 15 percent this year.

Daimler Trucks currently employs 13,700 workers in the United States and about 11,500 in Brazil, a spokeswoman said.

Daimler last month warned that sales and profits at the trucks division would fall significantly in 2016 due to weaker demand in the United States and Brazil.

However, Bernhard denied that his company needed to take more drastic action.

“We don’t need an additional programme, we can react swiftly and flexibly to changing market conditions,” Bernhard said, citing steps to shorten truck assembly times and to reduce its portfolio of heavy-duty vehicles.

“If we want to remain competitive, we must build more vehicles with fewer people,” said Stefan Buchner, the truck division’s regional chief for Europe and Latin America.

Daimler Trucks accounted for about a fifth of the group’s earnings before interest and tax and about a quarter of total sales last year.

The North American heavy-duty trucks market has cooled after a plunge in oil prices and metals-related businesses put a dampener on industrial activity and haulage volumes, prompting rivals like Volvo to warn investors about a downturn.

The division’s operating profit margin will slip below last year’s 7.3 percent, Bernhard said, which was already below the division’s 8 percent target.

By comparison, Volkswagen’s main trucks division MAN last year reported a profit margin of just 0.7 percent although its currently separate Swedish subsidiary Scania’s profitability approached 10 percent.

“We are a long way from a corporate crisis, this will be a great year in an environment that is not favourable,” Bernhard said. ($1 = 0.8797 euros) (Reporting by Ilona Wissenbach; Writing by Andreas Cremer; Editing by Greg Mahlich)

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