Germany’s Traton Group reported a 32% drop in operating earnings for the first nine months of the year, but unit sales rose 11% thanks to the Volkswagen-owned truck holding company’s acquisition of Navistar.
Excluding Navistar, unit sales would have been down 13% year over year.
Strong demand for new trucks collided with Traton’s need to restrict order intake because of supply chain disruptions. Incoming orders from January to September fell 5% year on year at around 256,200 vehicles. Sales revenue rose 32% to 28.5 billion euros ($28.5 billion).
Navistar does not break out quarterly financial results.
Orders for 12 months out
The service business accounted for 22% of total revenue, partially due to the age of trucks kept on the road longer because of a shortage of new trucks.
“Right now, our customers are even placing orders for 12 months down the line,” Christian Levin, Traton Group CEO, said in a news release.
Restricting orders helped shield customers from continued inflation in raw materials, energy, outside components and logistics expenses from premium shipping. Traton’s book-to-bill ratio — the ratio of incoming orders to unit sales — fell to 1.2 from 1.4 in the prior-year period.
Operating results grew slightly year over year to 1.347 billion euros despite the impact of supply bottlenecks and lower capacity utilization from a six-week production stop at MAN Trucks in Europe. Traton is still booking costs from the $3.7 billion purchase of Navistar in July 2021.
Cautious outlook
Traton expressed greater caution for future quarters than rivals Volvo Group and Paccar, which both reported strong Q3 earnings earlier. Traton took a 738 million euro charge in connection with Russia’s invasion of Ukraine and losses related to the sale of business activities in Russia announced in September.
“It remains impossible to predict the effects of the continuing supply chain bottlenecks, possible energy shortages and the further course of the war in Ukraine with sufficient certainty,” said Trato CFO Annette Danielski. “Therefore, the risk remains that as these issues evolve, they may have a negative impact on business activities.”
Product sharing and electrification
Traton realized some value from technology sharing among its brands. Navistar in August launched a group-wide powertrain called S13 in the United States. Scania already uses the 13-liter engine, and MAN will bring it to market in 2024.
Traton customers ordered more than 1,600 electric trucks in the first nine months, and Levin said he heard positive comments about new battery-powered vehicles from Scania and MAN shown at the IAA Transportation event in Hannover, Germany, in September.
“And their interest will keep on growing once the development of charging infrastructure gains momentum,” Levin said.
Traton is collaborating with rivals Daimler Truck and Volvo Group on a $593 million plan to build up to 1,700 public electric charging facilities in Europe over the next five years.
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