Strong order intake in the Commercial Vehicles business area due to pull-forward effects in Europe
Group Interim Financial Report for Q3/2013: MAN Group improves in third quarter compared with the first six months
As expected, the third quarter of 2013 was a better period for the MAN Group than the first six months. The Company recorded significant order growth in the Commercial Vehicles business area, primarily due to pull-forward effects from the introduction of the Euro VI emission standard in Europe. However, the economic environment remains difficult. Although the recession in the euro zone appears to have been overcome, the global economic recovery is still slow.
The MAN Group’s order intake in the third quarter of 2013 was up 22% on the prior-year quarter, at €4.3 billion. This is attributable to significantly higher customer interest in commercial vehicles. MAN Truck & Bus in particular secured a large number of orders as a result of increased demand for the slightly lower-cost Euro V vehicles ahead of the introduction of the stricter Euro VI EU emission standard on January 1, 2014. Order intake at MAN Truck & Bus was therefore very high in the third quarter of 2013, rising by 50% to €2.7 billion as against €1.8 billion in the prior-year period. MAN Latin America’s orders also increased year-on-year in the third quarter of 2013, up 5% to €719 million. They were buoyed by the more favorable financing terms offered by the Brazilian Development Bank and high demand for transportation overall. The Commercial Vehicles business area’s cumulative order intake for the first nine months was up 6% on the previous year.
By contrast, the Power Engineering business area continued to be impacted by delays in awarding contracts due to ongoing economic uncertainties and difficult financing conditions. As a result, MAN Diesel & Turbo’s orders decreased by €323 million to €2.3 billion in the first three quarters. At €421 million, Renk’s order intake was up slightly on the prior-year figure. The MAN Group’s revenue declined by approximately 6% year-on-year to €3.7 billion in the third quarter. The figure for the first nine months of 2013 was down 3% at €11.2 billion. The Commercial Vehicles business area generated revenue of approximately €2.8 billion in the period from July to September 2013, while the Power Engineering business area contributed €0.9 billion to the MAN Group’s revenue.
The Group’s operating profit in the third quarter was up slightly on the previous year, at €189 million. The cumulative operating profit after the first nine months was €179 million, a significant decline compared with the prior-year figure of €660 million. The MAN Group’s return on sales in the third quarter was 5.2%, after 4.8% in the prior-year period. The cumulative figure was 1.6% compared with 5.7% in the previous year. This was primarily attributable to the Power Engineering business area. The first two quarters of 2013 were impacted in particular by the very high provisions for a major project in the Power Plants strategic business unit that has not yet been completed. The Commercial Vehicles business area recorded an operating profit of €97 million in the third quarter, on a level with the previous year. Growth at MAN Latin America was able to offset a decline at MAN Truck & Bus. The Power Engineering business area generated an operating profit of €108 million, up €4 million on the prior-year quarter.
The Group outperformed the previous quarters in the third quarter of 2013 in terms of operating profit and order intake. “However, this cannot yet be interpreted as a trend reversal. Our stance on the pull-forward effects in the European commercial vehicles business is mixed. Although this means that our current capacity utilization rates are very good and that our order books are full to bursting, we have to assume that these orders will not be repeated in later quarters. We are still not seeing any signs of market improvement in the Power Engineering business area. The merchant shipbuilding market continues to be dominated by high levels of overcapacity. Economic uncertainties and tougher financing conditions are continuing to impact our power plant and turbomachinery businesses,” said Dr. Georg Pachta-Reyhofen, Chief Executive Officer of MAN SE.
The MAN Group is confirming its outlook for fiscal 2013 and continues to expect revenue on a level with the previous year and a very pronounced decline in operating profit. The MAN Group’s return on sales will be quite substantially below the 2012 figure.