Traton – subgroup with many brands
Traton is a Volkswagen subsidiary. This in turn includes a number of truck brands such as Scania and MAN. Now there is also Navistar from the USA.
(Photo: Reuters)
Düsseldorf The business of the VW truck subsidiary Traton is developing better again, but the company has still not reached profitability. For the rest of the year, the truck division does not want to commit itself whether it will end up in the black.
As the company announced on Tuesday, the uncertainties due to the corona pandemic are simply still too great and do not allow a clear earnings estimate. Traton is the holding company for truck brands such as MAN and Scania.
At Volkswagen’s commercial vehicle holding, MAN’s losses largely eroded the profits of its Swedish sister brand Scania in the first nine months. The ailing Munich truck and bus manufacturer MAN wrote an operating loss of 414 million euros due to the slump in sales during the corona pandemic.
Scania stayed in the black with an operating profit of 419 million euros. Overall, Traton comes to an operating loss of 58 million euros in the first nine months, after a profit of 1.48 billion euros in the previous year.
After the severe slump in spring, business picked up again significantly in the third quarter – accordingly, it was enough for a quarterly profit in the months of July to September. The company achieved an operating income of 162 million euros in the third quarter, around 70 percent less than a year ago. “The recovery is faster than expected,” said Traton CEO Matthias Gründler, referring to the recent positive development in an interview with journalists.
Traton’s total vehicle sales fell 29 percent to 127,700 trucks in the first nine months. At around 15.7 billion euros, sales after three quarters are around 20 percent below the figure for the same period last year. Traton will not be able to fully make up for these massive declines by the end of the year.
In terms of incoming orders, the group recorded a significant increase of 19 percent from July to September compared to the same period of the previous year – another indication of a revival in business. For the entire year up to the end of September, incoming orders are 14 percent below the previous year’s result, according to Traton CFO Christian Schulz.
“The third quarter, with its greatly improved incoming orders, gives hope that Traton will still be in the black for the year,” commented Frank Schwope, automotive analyst at NordLB in Hanover, on the nine-month results of Volkswagen’s truck division. The Traton share is listed in the SDax. After the publication of the quarterly figures, the paper reacted by noon with a plus of about two percent.
Navistar acquisition is making concrete progress
“Our most important task is to further stabilize the operative business”, explained Traton boss Gründler. The savings and restructuring measures introduced in the past few months have now had a positive effect. “We are continuing to make ourselves fit for the future,” said Gründler, who has been at the helm of Traton since the summer.
MAN in particular is facing a drastic restructuring program. The negotiations between the company and the works council are still ongoing and should be concluded by the end of the year, as Gründler added. More than 9,000 jobs could be cut. MAN currently has around 36,000 employees. No provisions have yet been made for the costs of the renovation program.
In addition, around 5,000 jobs are to be cut at Scania. According to Gründler, this restructuring is expected to be completed in the second quarter of next year. In addition, the entire Traton Group saves on material costs, investments and development.
The Traton CEO warned of possible new negative economic consequences due to the current high number of Covid infections. “We have to be very vigilant over the next few weeks,” he said. Further government investment plans for commercial vehicles could stabilize demand.
“Our high level of liquidity guarantees security,” added Gründler. As of September 30th, Traton had cash and cash equivalents of 2.2 billion euros, supplemented by further credit lines in the amount of 7.7 billion euros.
Last weekend, Traton signed a takeover agreement with its US competitor Navistar. “We have taken a big step with that,” said Gründler. The company already holds 17 percent of the shares and wants to completely take over the American competitor for the equivalent of around 3.2 billion euros. The transaction should be completed by the middle of next year. The general approval of the free Navistar shareholders has now been achieved.
With the takeover, Traton is getting closer to its goal of becoming a global truck manufacturer, said Gründler. MAN and Scania are not represented in North America. Only in Asia will the Volkswagen subsidiary still lack a significant presence in the future. Navistar is to be closely integrated into the Traton group. Gründler spoke of “significant cost reductions”, for example through joint engine development. NordLB analyst Schwope expects synergies worth billions in the long term.
More: VW supervisory board wants to give the green light for Navistar takeover on Saturday.