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Piaggio cautious going forward

After a weak start to the year, Italian scooter maker Piaggio & Co. SpA is expected to be cautious at best when it gives an update of its three-year strategic plan May 30, Reuters reported May 28.

Like most vehicle manufacturers, Piaggio is facing a drop in sales as consumers postpone big-ticket purchases amid signs of a weakening economy.

“I don't expect any positive news flow (from Piaggio's update),” one analyst, who declined to be named, told Reuters.

When Piaggio presented its plan last year, it set a number of targets as it prepared for a big push into Asia where a boom had increased demand for scooters, motorcycles and cars.

Its targets included a compound annual growth rate in sales of nearly 7 percent, excluding a joint venture in China. This rate was expected to lead to a widening of its core profit margin to 14 percent from 12.7 percent in 2006.

After posting higher results for 2007, Piaggio has had a harder time this year as the market has slowed down. It has also had to contend with a strong euro and a rise in raw material prices.

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