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MAN Achieves Solid Operating Profit Despite Commercial Vehicles Slump - The MAN Group closed fiscal 2012 with an operating profit of just under €1 billion despite the slump in the commercial vehicles business - MAN.eu
MAN Achieves Solid Operating Profit Despite Commercial Vehicles Slump

 

PRZOOM - /newswire/ - Copenhagen, Denmark, 2013/02/08 - The MAN Group closed fiscal 2012 with an operating profit of just under €1 billion despite the slump in the commercial vehicles business - MAN.eu.

   
 
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• Revenue €15.8 billion A moderate 4% drop in revenue following the prior-year record;
• Order intake €15.9 billion Order intake down 7%;
• Operating profit €964 million Operating profit just under one billion;
• Return on sales (ROS) 6.1% Return on sales slightly below target range;
• Proposed dividend: €1.00 (€2.30) per share;
• Total of 134,245 vehicles sold (155,520)

Outlook for 2013: drop in revenue for Commercial Vehicles and Power Engineering
The MAN Group closed fiscal 2012 with an operating profit of just under €1 billion despite the slump in the commercial vehicles business. The commercial vehicle and mechanical engineering player achieved an operating profit of €964 million, but was unable to match its very good prior-year result of €1,483 million. This performance was determined above all by the clear decline in the Commercial Vehicles business area, which posted a fall in operating profit to €454 million. By contrast, Power Engineering’s operating profit remained stable at €503 million and thus made a valuable contribution to the Group result. Revenue only dropped moderately to €15.8 billion, even though demand fell sharply in the European and Brazilian commercial vehicles markets, which are key markets for MAN. As a result, revenue is only 4% below the record amount earned in the previous year. Return on sales was 6.1%, just under the target range.

“Despite the difficult conditions, we achieved an operating profit of almost €1 billion,” said Dr. Georg Pachta-Reyhofen, Chief Executive Officer of MAN SE. Among other factors, the European sovereign debt crisis and the introduction of the Euro V emission standard in Brazil created noticeable uncertainty in MAN’s key markets. Consequently, customers tightened their purse-strings and competition heightened. This is reflected in MAN Group’s order intake, which amounted to €15.9 billion in fiscal 2012, down 7% on the prior-year level.

MAN Commercial Vehicles
The commercial vehicles sector was hit by the economic downturn in 2012. Orders fell at MAN Truck & Bus, too, by 4% to €9.2 billion. At MAN Latin America, orders even declined by 20% to €2.9 billion. MAN Truck & Bus’s revenue of €8.8 billion was slightly down year-on-year (€9.0 billion). Operating profit sank to €225 million (€565 million). The weakness in the European commercial vehicles business had a particularly pronounced impact here. MAN Truck & Bus was able to partially compensate for this with positive effects outside Europe. Nonetheless, the resulting change in country and product mix weighed on the average margin.

At MAN Latin America, revenue and operating profit were also influenced by the economic climate. In addition to the introduction of the Euro V emission standard in Brazil, which resulted in many orders being brought forward to 2011, terms of financing deteriorated for many customers. Revenue amounted to €2.9 billion (€3.6 billion) and operating profit came in at €229 million (€400 million) thanks to intensive cost management and adjustments to production. This corresponds to a return on sales of 8.0%.

In total, MAN delivered 134,245 vehicles to its customers in 2012.

Power Engineering
At €4.0 billion, order intake in the Power Engineering business area was close to its prior-year level of €4.1 billion. MAN Diesel & Turbo accounted for most orders (€3.5 billion), while Renk increased its order intake by 15% to €525 million. MAN Diesel & Turbo’s revenue was slightly higher year-on-year at €3.8 billion. By contrast, operating profit sank by 5% to €437. This trend was due partly to overcapacity in the merchant fleet and the resulting weak market for marine engines. Nonetheless, other business units, such as After Sales and Turbomachinery, performed well. Return on sales remained high at 11.6%.

The fiscal year at Renk was very pleasing. Revenue and operating profit soared upward as well as the order intake. Revenue climbed to €476 million (€389 million) and operating profit was €66 million (€53 million). This corresponds to a return on sales of 13.8%. Sophisticated transmissions solutions for maritime applications contributed in particular to the strong business figures.

Thus, the MAN Group’s industrial business significantly offset the impact of the commercial vehicles slump on the overall result.

Outlook
MAN expects the commercial vehicles business to decline in Europe in 2013, especially in the first half-year. On the other hand, the Executive Board anticipates a further increase in sales in the key market of Brazil. Revenue in the Commercial Vehicles business area will likely be slightly below the level of the previous year, but the return on sales will remain stable. Following a fairly weak order intake in fiscal 2012, revenue and return on sales in the Power Engineering business area will fall. As a result, the MAN Group will see a slight decline in revenue and a disproportionately large drop in operating profit in 2013. This prediction is based on the assumption that the European sovereign debt crisis will not escalate further and the economic stimulus measures in the emerging economies will take effect.

In both the commercial vehicles and industrial engineering businesses, MAN has a broad, innovative product portfolio, which is tailored precisely to customers’ needs. At the 2012 IAA Commercial Vehicles Show, it showcased its new TG family, which does not consume any more fuel than its extremely efficient Euro V range, despite using sophisticated Euro VI technology. MAN is also a technology leader in the Power Engineering business area. Its new products, such as the gas engines and turbines unveiled in 2012, are among the most efficient in their class today.

Measures to increase earnings
Despite the generally difficult economic conditions, the Executive Board of MAN SE is not satisfied with the results of the fiscal year and has therefore initiated appropriate improvement measures. The focus will be on cutting costs and boosting efficiency in production, as well as in administration, sales, and development. Moreover, increasing production flexibility will allow MAN to adapt to lower sales volumes. It is critically reviewing planned capital expenditure and if necessary it will extend investments over longer periods of time. MAN also sees potential in the reorganization of the procurement area, in particular by bundling procurement into a central purchasing function. “Although we cannot influence the macroeconomic factors described above, we will take all of the steps necessary to keep MAN on the right course, even when times are difficult,” said Pachta-Reyhofen.

MAN is a reliable employer

Despite the weak economy, MAN once again proved to be a reliable employer in fiscal 2012:
As of December 31, 2012, the MAN Group employed a staff of 54,283 worldwide (including subcontracted employees). The number of employees thus rose by 1,741, including 1,250 new employees due to initial consolidation, such as staff from the former joint venture in India. The number of subcontracted employees sank from 2,364 to 1,802, mainly as a result of capacity adjustments. Moreover, MAN continues to promote high-quality training. In fall 2012, 800 young people started their careers at MAN. Worldwide, the MAN Group employed around 3,300 trainees as of December 31, 2012.

 
 
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MAN Achieves Solid Operating Profit Despite Commercial Vehicles Slump

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Contact: Press Office - MAN.eu 
+49 89 36098-111 presse[.]man.eu
 
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