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GM reaffirms Europe loss of up to $200 million

DETROIT, July 22 (Reuters) - The head of General Motors Corp.'s European operations reaffirmed on Tuesday that the unit will lose up to $200 million this year, but will turn a profit in 2004.

In January, GM set a target for Europe to post results ranging from break-even to a loss of about $200 million, compared with a loss of $549 million in 2002.

"The intent is to stay within this window for 2003," Mike Burns, the president of GM Europe, told reporters during a press briefing. "Our goal is to cross over into profitability in '04," he added.

GM Europe lost $68 million in the first half of this year, and Burns suggested that losses would be steeper in the second half.

"The second half of the year is always weaker in Europe," he said, due to the vacations many Europeans take in late summer.

In addition, GM Europe has failed to meet its stretch target for cutting material costs, and the strong Swedish kroner has hurt results for GM's Saab unit, he said.

Just as in the United States, incentives are putting pressure on prices in Europe, to the tune of about one percent a year, he said.

GM's ongoing turnaround in Europe stands in contrast to Ford Motor Co.'s European operations, which lost $525 million before taxes in the second quarter. Ford started its restructuring of its European operations before GM did, and had recently been profitable.

Ford blamed its heavy losses in Europe to pricing pressures, lower sales volumes and dealer stock reductions.