Opel posts loss, sees return to black in '03

FRANKFURT, Jan 16 Reuters reported that Opel, the ailing German unit of General Motors , posted a record operating loss for 2001 on Wednesday, but said it was sticking to its target of returning to the black in 2003.

Opel said its operating loss widened to 674 million euros in 2001 from 502 million euros in 2000 due to pricing pressure resulting from cut-throat competition among carmakers at a time of global economic slowdown.

The company, which has launched a recovery programme involving 2,500 job cuts by 2003, said its cost-cutting measures would help it report a smaller loss in 2002.

``In 2003 we want to meet breakeven. That is the goal of the board and my personal goal. Together we will reach this target,'' said Chief Executive Carl-Peter Forster.

The brand Opel trades across Europe, but in the key German market its share slipped 0.3 percentage points to 11.9 percent and production was cut five percent to 389,000 units.

Forster said Germany's faltering economy had hit sales and heavy discounting particularly in the last quarter hurt margins -- the company needs to make 500 euros more for every car it sells to break even.

The company pledged to lift its market share in Germany this year and to maintain its 9.3 percent western European share despite lower unit sales.

Across Europe, unit sales fell 5.6 percent to 1.21 million vehicles, said Chief Financial Officer Walter Borst.

``NOT SATISFACTORY''

``Let me be clear, these figures are in no way satisfactory,'' he told a news conference.

Net profit came in at 87 million euros, helped by a strong performance from its Opel Bank financing arm.

Opel parent GM posted fourth quarter earnings before one-time items of $255 million, a drop of 58 percent attributed to higher marketing costs, production cuts due to the weakening U.S. economy and losses from Argentina.

Forster said Opel had GM's support and would stick to its pledge to get in the black in 2003. He said Opel made cost savings of 400 million euros in 2001, 10 percent more than its savings in 2000.

``We presented our plan to the GM board and they received it with enthusiasm. They think we are tackling the right areas and now we have to implement it,'' said Borst.

Forster, a former BMW AG board member, took over last year after American Robert Hendry resigned, having failed in his attempt to make Opel profitable.

``We have made clear that 2002 will not be an easy year for the car industry as a whole and will therefore not be simple for a firm which is restructuring,'' said Forster.

MORE CABRIOLETS

Opel has suffered in recent years from a lacklustre product line up and a failure to embrace trends among European carbuyers such as diesel engines.

The company wants to nearly halve its dealer network throughout Germany and extend its model range to produce more niche cars such as cabriolets.

Opel said new products, including the new Vectra due out later this year, will be a key part of its revitalisation.

But tough market conditions will make recovery difficult.

Most analysts expect western European new car sales to stagnate this year after a 0.6 percent rise in 2001.

In Germany, Europe's biggest car market, sales fell about one percent last year.

Borst said the company was still in talks over the possible sale or creation of a partnership for its components business.

The firm said in October all options were open in preliminary talks with two potential candidates -- Germany's ThyssenKrupp Automotive and Magna Steyr Holding, a unit of Canadian parts supplier Magna International group (Toronto:MGa.TO - news).