March 4 (Bloomberg) -- MAN AG, the third-largest European truckmaker, said 2003 profit grew 36 percent after selling its unprofitable SMS industrial equipment division and completing a reorganization. The company plans to raise the dividend.

Net income rose to 192 million euros ($234 million), or 1.25 euros a share, from 141 million euros, or 91 cents, excluding SMS, Munich-based MAN said in an e-mailed statement. Profit beat the 161 million-euro median net income forecast of analysts surveyed by Bloomberg News. Sales fell 2 percent to 13.5 billion euros.

MAN has reorganized its commercial-vehicles unit by cutting jobs and costs after struggling with three years of declining demand in its main European market. The company is winning back market share from Fiat SpA's Iveco truck division. MAN's bus unit returned to profit a year ahead of schedule.

``The results were very good, especially considering profit came in well over the forecast MAN gave at the beginning of last year'' of unchanged earnings, said Manfred Jakob, an analyst at SEB in Frankfurt who has a ``buy'' rating on the stock.

The German company booked a 50 million-euro gain from the sale of SMS. Including SMS's operations through September and the gain from the disposal, profit rose 60 percent to 235 million, or 1.54 euros, from 147 million euros, or 92 cents, in 2002. The company reiterated it expects earnings to increase this year.

Dividend

Pretax profit for the group rose 23 percent to 261 million euros. Earnings before interest and tax gained 13 percent to 443 million. The company plans to raise the dividend to 75 cents from 60 cents.

``The dividend increase was especially positive because it wasn't expected,'' Patrick Hummel, an analyst at Landesbank Baden- Wuerttemberg with a ``hold'' rating on MAN, said. ``The reported results were really positive.''

MAN shares rose as much as 66 cents, or 2.2 percent, to 30.34 euros, the highest intraday price in almost two years, and were up 1.6 percent at 30.15 euros as of 9:20 a.m. The stock has gained 25 percent this year, making it the DAX index's best performer.

Pretax profit surged more than nine times at the truckmaking division to 121 million euros and quadrupled at the industrial holding business to 40 million euros. The turbo-machines unit posted a 5 percent increase in pretax profit to 23 million euros, while profit at the financial services operations grew by more than a half to 26 million euros.

Printing-Press Loss

MAN's printing-press business had a pretax loss of 37 million euros against a year-earlier profit of 10 million euros amid a slump in advertising. Pretax earnings at the diesel engine unit declined 35 percent to 44 million euros.

``The loss at the printing press business was not as big as expected and that's been done through cost cutting and restructuring,'' said Landesbank Baden-Wuerttemberg's Hummel.

The truck division was helped by the busmaking operations, which posted earnings before interest and tax of 5 million euros last year compared with a loss of 72 million euros a year earlier.

``As there are now signs of a slight economic recovery in Western Europe, we are starting the current financial year on an optimistic note and expect to achieve a further strong increase in earnings'' at the truck division, MAN said.

To contact the reporter on this story: Jeremy Van Loon in Frankfurt jvanloon@bloomberg.net.

Last Updated: March 4, 2004 03:24 EST