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UPDATE 1-Chrysler CEO sees risks to 'small profit' target

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NEWARK, Del., Oct 9 (Reuters) - The head of DaimlerChrysler AG's Chrysler unit on Thursday said that Chrysler is still "heading for" a small profit for 2003, although he sees "significant risks" to that outlook.

Chrysler Chief Executive Dieter Zetsche stood by the forecast that the U.S. unit of the German automaker has given since it posted a surprising $1.1 billion loss for the second quarter.

"We are heading for, and striving for ... a small profit, but we see significant risks to accomplish that," Zetsche told reporters at the launch of the new Dodge Durango SUV in Newark, Delaware.

He declined to elaborate, saying the company was in a "quiet period" ahead of its third-quarter earnings results.

DaimlerChrysler shares were up 3.6 percent at $36.29 on the New York Stock Exchange on Thursday morning.

Many analysts have questioned whether Chrysler will reach its earnings target this year. Some analysts have suggested that another restructuring may be in store.

A profit-eating price war, high productivity costs compared with Asian rivals, and falling sales have all hampered Chrysler's efforts to return to long-term profits. Last month, Japan's Toyota Motor Corp. outsold Chrysler for the first time in the U.S. market.

On Wednesday, Zetsche told Reuters in an interview that Chrysler was still on track to save an additional $1 billion through cost cuts this year. Those cuts are in addition to Chrysler's restructuring, which has reduced its work force by 20 percent since 2001.

Chrysler spent more than $180 million retooling the Newark plant for the new Durango, which goes on sale in the United States next month.