MAN SE (MAN), Europe’s third-biggest truckmaker, will take charges of 146 million euros ($191 million) in the second quarter as extra costs for projects at the power-plant construction division hurt group earnings.
The diesel and turbo unit, which makes ship engines and industrial turbines in addition to developing electricity plants, is also experiencing a “significant downturn” at its servicing business in an economic environment will “remain tense in the next years,” MAN said today in a statement.
MAN cut its earnings forecast for 2013 in April after a drop in the European truck market and charges on the power-plant projects led to a first-quarter loss. The Munich-based manufacturer predicted at the time that provisions for the projects would amount to about 140 million euros. MAN hasn’t identified which contracts are involved.
The power-plant unit’s performance and potential tax costs from a disposal following an audit of accounts from 2004 through 2006 will lead to the group’s return on sales falling “significantly” this year, MAN said today. The company forecast in April a “significant” drop in 2013 operating profit and a return on sales “well below” the 2012 figure.
MAN dropped as much as 2.1 percent to 83.73 euros, the lowest intraday price since April 22, and was trading down 0.8 percent at 12:32 p.m. in Frankfurt. That pared the stock’s gain this year to 5.1 percent, valuing MAN at 12.5 billion euros.
The truckmaker, controlled by car producer Volkswagen AG (VOW), is holding its annual shareholders meeting on June 6, when investors will be voting on a domination agreement that will define earnings-distribution and industrial-strategy ties between the manufacturers.
The power-plant unit’s provision and reduced earnings forecast, combined with the tax risk uncovered in the audit, have reduced MAN’s enterprise value by about 50 million euros, the truckmaker said today. That won’t change the terms of the proposed offer from VW to the remaining shareholders to buy the rest of the company, MAN said.
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