TRATON Group Warns Of Intensifying Trucking Slump Despite Higher Q3 Results

Truck maker TRATON Group SE (8TRA.DE) reported higher revenue and profit for the first nine months of the year, but warned of a tougher 2020 with an accelerating slump in orders and global economic uncertainty.

"Crises and conflicts are all over the place," TRATON CEO Andreas Renschler told reporters during a conference call on Nov. 4. He referenced the unresolved exit of Great Britain from the European Union, the simmering U.S.-China trade war and conflicts in Iran, Venezuela and Turkey.

TRATON, a holding company that includes the MAN and Scania brands and the Brazilian truck unit Volkswagen Caminhões e Ônibus, said its nine-month operating profit rose by 34% to 1.48 billion euros, or $1.65 billion. Revenue increased by 6% to 19.83 billion euros, or $22.11 billion, despite 6% fewer orders.  

"Based on the strong development of unit sales and the good performance of the group, we confirm our targets for 2019," Renschler said. "At the same time, we are intensively preparing for a much more difficult environment in 2020,"  

The situation is expected to be particularly difficult in Europe. Brexit pull-forward effects led to significant declines in Germany and in the U.K., TRATON said. Orders also fell substantially in Russia, India and Turkey. Brazil's economic recovery led to higher demand there, however.

Results By Unit

MAN Truck & Bus, led by the growth of the TGE van series, reported unit sales of 76,500 compared with 72,000 in the same nine months a year ago. Operating profit improved by 6%, resulting in an operating return on sales of 3.6% versus 3.5% a year earlier. An unfavorable product mix, a softening market and high launch expenses for the next generation of new trucks and buses impacted the unit.

Scania Vehicles & Services increased unit sales by 9% to 74,700 vehicles compared with 68,600 in the first nine months of 2018. Revenue rose by 12% and operating profit grew 36%. Operating return on sales was 11.6% compared with 9.5% a year ago. Higher sales, a better product mix and the effects of currency exchange positively impacted earnings. The rollout of new-generation Scania trucks in Latin America ended the parallel production of previous and current generation models.

Volkswagen Caminhões e Ônibus, which translates to Volkswagen Trucks and Buses in English, increased unit sales by 15% to 31,600 vehicles from 27,400 in the first nine months a year ago. Sales and operating profit both increased. Profit included a gain from reversing a restructuring provision. The operating return on sales rose to 2.2% from 1.7%, partly offset by currency exchange effects, cost of materials and higher depreciation and amortization. Volk 

Scania Expansion

Scania will begin selling its off-road mining equipment in Canada in 2020 under a memorandum of understanding with Navistar International Corp. NAV TRATON owns 16.8% of Navistar, which retained rights to sales in the U.S. and Canada. The agreement for Canadian sales of Scania trucks deepens the 2016 global alliance between TRATON and Navistar. 

Image Sourced from Pixabay

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