MAN SE Third-Quarter Profit Rises 1% on Cost Reductions

MAN SE (MAN), Europe’s third-largest maker of commercial vehicles, said third-quarter earnings rose 1 percent as the company reduced spending and delivered more trucks in Latin America.

Operating profit increased to 189 million euros ($261 million) from 187 million euros a year earlier, the Munich-based division of carmaker Volkswagen AG (VOW) said today in a statement. Revenue declined 6 percent to 3.66 billion euros.

MAN, which Wolfsburg, Germany-based Volkswagen controls with 75 percent of the voting rights, scaled back production in the first half of 2013 as freight carriers held off making purchases amid recessions in Europe. Measures to protect earnings included reducing work shifts, cutting costs and streamlining procurement.

“The economic environment remains difficult,” Chief Executive Officer Georg Pachta-Reyhofen said in the statement. “Although the recession in the euro zone appears to have been overcome, the global economic recovery is still slow.”

Truck orders surged 88 percent to 24,271 vehicles in markets excluding Latin America and jumped 20 percent to 15,488 units in the region. Demand in Europe was pushed by so-called pre-buying of cheaper vehicles before stricter emissions regulations limit sales to models with newer, more expensive pollution-control technology.

Spending Decline

MAN’s third-quarter cost of goods sold fell 7.9 percent to 2.86 billion euros. The company had a net loss of 221 million euros versus year-earlier net income of 58 million euros because of a one-time tax charge triggered by the integration into Volkswagen.

The truckmaker reiterated that it expects full-year revenue at last year’s level, with a “very pronounced” decline in operating profit.

Nine-month industrywide registrations in Europe of trucks heavier than 16 metric tons fell 6.1 percent to 156,786 vehicles, the ACEA regional carmaker lobby said today in a statement. The decline was buffered by an 8.3 percent gain in September as customers bought models in advance of tighter European Union emissions rules taking effect in 2014.

Daimler AG, the world’s biggest truckmaker, and VW’s Swedish commercial-vehicle unit Scania (SCVB) said a week ago that orders in Europe were helped by pre-buying.

VW’s Role

Volkswagen, Europe’s biggest carmaker, has held a voting stake of just over 75 percent since June 2012, and in mid-2013 bid 80.89 euros a share for the remaining outstanding stock, 3.9 percent lower than the market price at the time. Investors who don’t accept the cash deal are being offered an annual dividend of 3.07 euros per share.

VW faces 162 lawsuits in Munich Regional Court from MAN SE minority shareholders who want the carmaker to pay more, Stefanie Ruhwinkel, a court spokeswoman, said yesterday. The first two cases over the offer price were filed in August. Hearings are unlikely to take place until next year, she said.

Shareholders accused MAN at the annual general meeting in June of working to keep the truckmaker’s valuation low to avoid a higher mandatory offer by parent VW.

Boosting efficiency at MAN is vital for VW’s strategy of pushing cooperation between the German truckmaker and the car producer’s Scania AB commercial-vehicle division in Sweden.

Volkswagen rearranged its truck operations’ management in 2012 after a six-year effort to get MAN and Soedertaelje-based Scania to work together. Leif Oestling was promoted from his post as chief executive officer of Scania to join VW’s management board to help forge the alliance.

To contact the reporter on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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