TRATON SE, the parent company of the former Volkswagen Truck & Bus Group, reported higher revenue, net earnings and operating profit for the first half of 2019.
But it said new truck orders declined 6 percent between January and June. The newly public company is watching to see whether production cuts will be needed in the second half.
TRATON Group, which includes the Scania, MAN and Volkswagen Caminhões e Ônibus brands, increased operating profit by €212 million compared with the prior-year period to exceed €1 billion. One Euro is equal to $1.11.
First-half sales of €13.5 billion were 7 percent above the €12.6 billion reported in the first six months of 2018. When adjusted for the €348 million sale of Volkswagen Gebrauchtfahrzeughandels und Service GmbH (VGSG), on January 1, sales were up 10 percent.
TRATON Group sold 123,336 vehicles worldwide in the first six months of the year with Germany and Brazil leading the way. New orders in the first half dropped 6 percent to 120,491, driven by softer activity in the European Union plus Russia, India and Turkey. Bus orders were lower in Mexico, Iran and Saudi Arabia.
“Our IPO demonstrates that we are executing on our goals,” Andreas Renschler, TRATON Group CEO, said in a statement. “Looking forward, we are now running full steam ahead with implementing our Global Champion Strategy and leveraging additional synergies in the entire Group.”
TRATON’s “Global Champion Strategy” involves challenging fellow German truck maker Daimler AG and Sweden’s Volvo AB. To do that, it needs a greater presence in North America, where both competitors have significant share. TRATON owns 16.8 percent of Navistar International but Renschler said recently TRATON is satisfied with collaborating at that level.
Following TRATON’s initial public offering on June 28, investors speculated the group would move to acquire controlling interest of Navistar. The Lisle, Illinois-based truck maker was not mentioned by name in TRATON’s financial report. However, TRATON expressed concern about failing to grow its presence in North America and Asia.
“If the Group fails to successfully expand beyond its EU28+2 and South American core markets, its ability to maintain profitable scale may be jeopardized,” TRATON said.
TRATON also loans money for dealer and retail financing, leasing and insurance products. Financial services had an operating profit of €70 million compared with €65 million in the first half of 2018. Sales revenue of €419 million compared with €380 million a year ago. The net portfolio of loans grew and was positively impacted by currency exchange. Lower margins and higher operating expenses offset some of the gains.
“Looking ahead to the rest of the year, despite continued worsening economic indicators, we remain confident and reaffirm our targets set for the year,” said Christian Schulz, TRATON chief financial officer. TRATON expects full-year operating profits in the 6.5 to 7.5 percent range.