Third quarter profits at MAN trucks division were down significantly when compared to 2011 levels. Blaming the drop on the economic environment arising from the sovereign debt crisis, Georg Pachta-Reyhofen, MAN’s Chief Executive Officer outlined the eight percent fall in revenue, but a larger drop in the third quarter operating profit from EU219m last year down to just EU96m in 2012.
Equally concerning are the order intake figures, which give us an indication of future performance. Orders are down by 8% for the year, but a whopping 20% for the third quarter, indicating a worsening situation ahead.
It is very unlike Volkswagen to buy into a sector whose performance subsequently drops dramatically. VW are majority owners of both MAN and Scania, having initially sold their Brazilian truck business to MAN back in 2009.
VW finally acquired a majority stake in MAN back in July 2011, just as the market was picking up again, now both MAN and Scania performances are in reverse. Scania’s third quarter profits are down by 37%, but the company has a better-looking order book for Q3 – down by 10% against 2011. Unlike MAN, Scania’s order book in Q3 is stronger than it has been for the year (-14%).
The question must be how long can operators keep hold of ageing trucks before they have to renew them? VW, MAN and Scania hope this will be sooner rather than later.