Andreas Renschler, the CEO of TRATON and member of the Board of Management of Volkswagen AG, said: “Based on the strong development of unit sales and the good performance of the Group, we confirm our targets for 2019. At the same time, we are intensively preparing for a much more difficult environment in 2020”.
Overview of TRATON GROUP’s business activity
The Industrial Business segment generated sales revenue of €19.5 (€17.8) billion and operating profit of €1,377 (€980) million. The positive earnings development resulted from increased volumes and an improved product mix. Improved efficiency due to the elimination of bottlenecks in the supplier process and the end of parallel production at Scania also had a positive impact. Business was held back by inflation-related cost increases, higher depreciation and amortization, and expenses in connection with production preparations for the new truck and bus generations at MAN Truck & Bus.
The Financial Services segment generated operating profit of €105 (€102) million and sales revenue of €635 (€573) million. A larger net portfolio and currency effects positively impacted operating profit, while lower margins and higher operating expenses were offsetting factors.
Overview of the operating units
MAN Truck & Bus generated unit sales of 76,500 (72,000) vehicles, an increase of 6%. Continued sharp growth of the MAN TGE van series contributed to this performance. Sales revenue rose by 4% to €8.0 (€7.6) billion. Operating profit was up 6% year on year at €284 (€269) million, yielding an operating return on sales of 3.6 (3.5)%. The positive effects of the increase in sales revenue were partly offset by an unfavorable product mix and a difficult market environment. Higher expenses for preparing the rollout of the new truck and bus generations also played a role here. The Indian market exit reduced operating profit by €115 million in the prior-year period.
Scania Vehicles & Services increased unit sales by 9% to 74,700 (68,600) vehicles. Sales revenue rose by 12% to €10.4 (€9.3) billion. Operating profit advanced by 36% to €1.2 (€0.9) billion in the reporting period. The operating return on sales climbed to 11.6 (9.5)%, with the increase in sales revenue, an improved market mix and currency effects positively impacting earnings. The successful rollout of the new Scania truck generation in Latin America and Asia meant that the previous parallel production of old and new series was ended entirely.
Volkswagen Caminhões e Ônibus increased unit sales by 15% to 31,600 (27,400) vehicles, while sales revenue rose to €1.3 (€1.0) billion. Volkswagen Caminhões e Ônibus generated operating profit of €30 (€18) million. This figure includes a gain of €13 million from the reversal of restructuring provision. The operating return on sales climbed to 2.2 (1.7)%. The increase in sales revenue was partly offset by currency effects and inflation-related cost increases, such as for the costs of materials, as well as higher depreciation and amortization.
Significantly less favorable market environment in Europe
TRATON GROUP confirms the targets for 2019, but expects a much more difficult market environment especially in Europe in 2020. The operating units are currently preparing for this.