German Car Zone

FRANKFURT (Reuters) - DaimlerChrysler's premium Mercedes Car Group division expects to generate a record operating profit of over 4.1 billion euros ($4.82 billion) in 2007 and a margin of 7.3 percent, a magazine reported.

The reported numbers are in line with the division's stated goal of a operating margin -- operating profit as a percentage of sales -- of over 7 percent by 2007, more than double that of 2004. DaimlerChrysler declined to comment.

Citing updated internal planning documents reviewed by the carmaker's top management, Capital magazine said the division's unit sales were set to climb to 1.43 million cars by then from 1.22 million last year. The division includes the Mercedes-Benz, Smart and Maybach brands.

Capital released a summary of the report on Wednesday, a day ahead of the magazine's publication.

The Mercedes-Benz brand would have a 2007 margin of 7.6 percent, it added, while the Smart small car business would eke out an operating profit of 10 million euros after having lost 6 billion euros from its May 1995 start through to the end of 2006.

Smart was earmarked to post an operating loss of 1.66 billion this year and 365 million in 2006, the magazine said.

It said the latest forecasts deviate from a three-year plan approved in December 2004 in that Mercedes-Benz would sell 10 percent fewer cars in 2006 and 2007 given scaled-back forecasts, primarily for C-Class and E-Class model sales.

The new estimates assume an increase in the euro-dollar exchange rate to $1.35 from $1.20, which would hit operating profit in 2006 by 550 million euros and in 2007 by 740 million. Higher raw materials costs would hit results by 400 million a year, Capital added.

The forecasts are also based on the assumption that the division will cut 2,500 jobs, Capital reported.

Mercedes division head and designated group Chief Executive Dieter Zetsche has since announced plans to eliminate 8,500 Mercedes-Benz jobs, but this was not included in the numbers because it was unclear just how many staff would sign up for voluntary redundancy packages, the magazine said.