Despite European orders, Brazil truck sales decline pulls MAN profit down with it
The first three months of the 2015 fiscal year have been impacted by deteriorating sales in Brazil for MAN, with the truck maker recording a first-quarter earnings fall of 50 per cent.
Order intakes in Latin America almost halved from €570 million to €290 million during the first quarter in 2015 compared to last year, with the division’s largest economy affected by Brazilian government austerity measures and regulations that limited customers to less favourable state-subsidised financing terms.
While European markets increased orders, the MAN Group’s operating profit fell €34 million to €34 million.
The growth in Europe came from Germany and Northern European countries and provided MAN Truck and Bus a 12 per cent increase in order intakes to reach €2.5 billion.
It was tough period for the company, according to MAN SE CEO Georg Pachta-Reyhofen, with issues in Eastern Europe around the conflict in Ukraine and in Latin America with Brazil.
“There are no signs of a recovery yet in Brazil and the situation there remains strained — with direct consequences for our business activities in South America,” Pachta-Reyhofen says.
“Our financial figures for the first quarter reflect these developments.”
Germany’s 25 per cent growth on 2014 is in stark contrast to the four per cent decline in international orders and meant the proportion of MAN Group’s orders outside its home country dropped from 80 per cent to 75 per cent.
The company did, however, see growth in China, India and the US.
Despite the poor results in the commercial vehicle business area, the Power Engineering division rose profits by €5 million and MAN Diesel & Turbo sector also saw a €6 million profit increase.
“The Power Engineering business area booked orders worth €1.0 billion, up approximately nine per cent on the prior-year period,” Pachta-Reyhofen says.
“MAN Diesel & Turbo’s orders rose by five per cent to €0.8 billion, and Renk lifted order intake to €164 million.
“This increase is attributable to two major orders at each of MAN Diesel & Turbo and Renk.”
A company statement says the group generated a loss of €15 million before tax in the three month period, a long way short of the profit before tax of €42 million in 2014.
“We are maintaining our outlook for full-year 2015; we expect the MAN Group’s sales revenue to be on a level with the previous year and that operating profit will remain stable,” Pachta-Reyhofen concludes.