UPDATE 1-Daimler Trucks chief warns 2013 profit target at risk
* Wolfgang Bernhard says unit needs to step up a notch
* Bernhard sticks to target for flat 2013 EBIT
* Sees improvement in truck markets in second half
(Adds more comments from Bernhard, analyst, Daimler share price)
FRANKFURT, July 2 (Reuters) - Daimler's trucks business needs to considerably improve its performance over the rest of this year in order to maintain operating profits at last year's level, the division's new chief said.
A near 70 percent first-quarter drop in the division's earnings before interest and tax (EBIT) had already forced Daimler Trucks to cut its forecast in April for a rise in profits this year, with that cut coming just six months after its last profit warning.
"We continue to expect EBIT will be of the same magnitude as last year. It's clear that if we want to achieve that we seriously need to step it up a notch in the coming quarters to compensate for the weak start," Wolfgang Bernhard told reporters at its test site in Woerth, southwest Germany, in remarks made on Monday.
Daimler Truck's reported operating profit last year fell to 1.71 billion euros from 1.88 billion in 2011, with the operating margin slipping to 5.5 percent from 6.5 percent.
"It's business as usual, the next profit warning is indicated," DZ Bank analyst Michael Punzet said in a research note on Tuesday following Bernhard's comments.
After an 18 percent increase in new orders to 212,000 trucks in the first five months of this year and a bottoming-out in western Europe, Daimler expects a slight improvement in the global truck markets in the second half.
The 52-year-old Bernhard, who took over in April after three years managing production and procurement at luxury car unit Mercedes, said he would focus efforts on implementing his predecessor's plan to raise annual profits by 1.6 billion euros ($2.1 billion) by the end of next year.
About 70 percent of this should come from cost cuts while the remainder would stem from additional revenue generated through its aftersales business with spare parts and services.
"We're not yet satisfied at the moment (with current efforts)," Bernhard said, explaining that he would look to slash production and material costs by adopting best practices from the Mercedes car business.
"Modular building blocks (in the manufacturing process) is a topic that we have to implement much more forcefully in the trucks business. There the auto industry is miles ahead - miles," the manager explained.
To do so, Bernhard aims to create the same high level of commonality in the mechanics and electronics of its truck chassis and driver cabins that Daimler Trucks already has achieved in its drivetrains, where the use of shared parts among engines or transmissions can reach 80 to 90 percent.
When asked whether he might increase the size of the overall programme, he said: "We won't raise the 1.6 billion-euro bar higher."
However, Bernhard said for next year it was still uncertain as to whether the markets would return to the levels necessary to achieve an 8 percent operating profit margin.
Shares in Daimler were trading 0.6 percent higher at 47.02 at 0902 GMT, slightly outperforming slight gains in the European auto sector index. ($1=0.7671 euros)
(Editing by Greg Mahlich)