MAN Sees Tough 2013 as Truck Orders Slump on Euro Crisis
The decline in third-quarter business was stronger than seasonal patterns, Chief Financial Officer Frank Lutz said today at an analyst meeting in Nuremberg. Stefan Straub, a spokesman for the Munich-based company, confirmed the comments.
MAN reaffirmed its 2012 earnings forecast, which was lowered in July as weaker demand in Brazil added to woes in Europe. The German truckmaker said at the time that it expects its profit margin to decline to about 6 percent of sales, compared with a previous target of 8.5 percent. Operating profit in the second quarter tumbled 50 percent to 218 million euros ($283 million), as Europe’s debt crisis sapped truck demand.
“MAN’s focus on Europe and South America is difficult,” said Juergen Pieper, an analyst at Bankhaus Metzler in Frankfurt. “The European truck market will certainly drop more and sales in South America are only gradually improving,” making a clear “sell case” for the stock.
MAN shares dropped as much as 2.72 euros, or 3.5 percent, to 74.85 euros and traded 1.8 percent lower as of 12:34 p.m. in Frankfurt. The stock has advanced 9 percent this year, valuing the truckmaker at 11.2 billion euros.
Deliveries of heavy-duty vehicles are forecast to fall 4 percent in western Europe this year, according to the German industry association VDA. MAN is in the process of integrating its truck operations with Sweden’s Scania, also controlled by VW, in an attempt to cut costs.
European heavy truck sales declined 9.1 percent in August to 14,436 vehicles, according to data from industry group ACEA. Eight-month deliveries dropped 6.3 percent to 148,531 trucks.
Truckmakers have cut production in response to the slowdown. Daimler AG (DAI), Europe’s biggest commercial-vehicle maker, plans to halt production at its truck factory in Woerth, Germany, for four days in October. Scania has let contracts lapse for most of its 1,400 temporary workers in Europe as demand has weakened.
MAN announced a hiring freeze to counter flagging truck sales in Europe when it reported second-quarter results in July. The company in late August said it may eliminate additional temporary staff and cut production shifts after demand for heavy vehicles declined this summer.
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