The MAN Group in Q1/2008
Solid start in anniversary year
- Q1/2008 operating profit: up 43 percent from €318 million a year ago to €455 million
- Q1 sales increase of 16 percent to €3.8 billion
- ROS progressing to 11.9 percent (up from 9.6)
- Restructuring of Buses division continued
- Order intake again growing from a high base by 8 percent to €5.2 billion
- Prospects: For all of 2008 we expect order intake to stay strong, sales up by a good 10 percent, and an ROS matching Q1 (11.9 percent)
The MAN Group set out in its anniversary year 2008 with appreciable gains in order intake, sales, and earnings. Q1/2008 order intake again topped the year-earlier record by 8 percent to reach €5.2 billion. Sales rose even more sharply by 16 percent to €3.8 billion while the operating profit leaped 43 percent to €455 million. As a consequence, ROS improved in the first quarter by 2.3 percentage points from 9.6 to 11.9 percent.
"The figures show that we have launched into the year very dynamically.
Demand for our products is still very high and we have again boosted vigorously our operating profit compared with Q1/2007," commented CEO Håkan Samuelsson in his address at today's AGM of MAN AG in Munich.
Prompted by the very good Q1 performance, Håkan Samuelsson looked to brighter prospects for 2008 at the AGM, expecting an order intake at a high level. "In conjunction with the record order backlog, which once more swelled in the first quarter, we will again be working at the limits of our capacity and achieve sales growth of a good 10 percent, especially within regions outside of Western Europe. There will be a repeated advance in operating profit and our returns will match the high level of the first quarter," added Samuelsson. According to him, the anniversary year 2008 hence had all it takes to become the best-ever period in MAN's 250-year history.
Samuelsson described 2007 as "the best-ever year in the long history of the MAN Group, a period of strong growth and full utilization of our production capacities. Over the past five years we have achieved a compound annual average growth rate of 11 percent. Our overriding goal is still to achieve a balance between growth and profitability and secure a sustainable value enhancement for the Group."
With the attained high level of profitability and cost flexibility combined with the Group's focused structure, Samuelsson sees the average return benchmarks as erosion-protected lower limits.
Much improved Q1 profitability throughout the business areas All the manufacturing areas reported much improved earnings during the first three months. Commercial Vehicles lifted its operating profit thanks to high capacity utilization and ongoing cost-cutting programs from €201 million to €280 million, its ROS jumping from 9 to 11 percent. Trucks reported an ROS of 12.3 percent (up from 9.9) including as much as 13.5 percent by the heavy trucks. Buses earned a slight profit of €2 million. The Buses division continued reorganization efforts including its complete integration with Trucks and the restructuring of tourist coach production at Neoplan.
Thanks to higher prices and very high production volumes Diesel Engines appreciably raised its operating profit to €84 million (up from €57 million)to achieve the highest ROS among the business areas, up 2.3 percentage points to 14.8 percent. Very high capacity utilization, too, propelled operating profit at Turbo Machinery by 56 percent to €28 million (up from €18 million), this area's ROS surging from 8.2 to 11 percent. The operating profit at Industrial Services matched the year-earlier level and amounted to €32 million, its ROS was unchanged at a high 9.1 percent.
Order intake: buoyant demand for marine diesels Q1 order intake climbed 8 percent to €5.2 billion, with demand for large marine diesels continuing undiminished. With orders up 44 percent to €904 million, the very high Q1/2007 intake was significantly topped. New business at Commercial Vehicles stayed at the €3.5 billion acme of Q1/2007. Turbo Machinery showed another gain and won new contracts worth €368 million (up 4 percent). Order influx at Industrial Services jumped 23 percent to €293 million.
Whereas orders from abroad mounted 17 percent to €4.0 billion, demand in Germany slipped 15 percent to €1.2 billion. Commercial Vehicles likewise expanded internationally, with orders from abroad rising 8 percent to €2.6 billion.
Sales growth especially abroad Q1 sales advanced 16 percent to €3.8 billion, chiefly driven by strong international commercial vehicle and diesel engine business. The MAN Group's international sales jumped 20 percent to €2.9 billion; domestically, they mounted 5 percent to €895 million. Order backlog soared to a new record of €15.9 billion, up 8 percent from the 2008 opening volume of €14.8 billion.
Higher headcount At March 31, 2008, the MAN Group had a workforce of 56,196 (including temporary employees). Versus the 55,086 at December 31, 2007, this is a rise of 1,110. The main reasons: higher workloads at all the manufacturing areas.
Inside Germany, the MAN Group employed 32,219 persons at March 31, 2008 (up from 31,611 at Dec. 31, 2007). Abroad, the workforce totaled 23,977 (up from 23,475 at Dec. 31, 2007). Hence 43 percent of the workforce is employed outside Germany.
CO2 reduction initiative At the AGM, CEO Håkan Samuelsson announced an initiative by MAN to reduce CO2 emissions. He cited the following action areas and their savings potentials:
- Engineering developments on trucks: improvements in particular to driveline and aerodynamics for fuel and CO2 savings over the coming years of around 10 percent.
- Longer truck combinations with a larger load volume for another 20 percent savings.
- Urban buses with competitive hybrid drive scheduled to go into series production in 2010: fuel and CO2 savings of up to 25 percent.
Large-bore diesel engines: through the development of electronic control on large-bore diesels, MAN has significantly raised engine speed flexibility to make it easier for ships to travel more slowly without efficiency losses. A slight reduction in sailing speed could sink consumption and emissions by up to 40 percent. Moreover, all MAN engines even now will run on biofuel.
- MAN Turbo is developing and building compressors for CO2 separation and underground storage in coal-fired power plants with 90 percent savings potential.
- MAN Turbo supplies core components (compressors and reactors) for making second-generation biofuels with potential CO2 reductions of 90 percent.
- MAN Industrial Services markets solar-thermal power and refrigeration systems, as well as biofuel plants.
- MAN subsidiary RENK develops and builds efficient gear units for wind turbine plants.
- For all MAN plants energy conservation goals are defined.
"We are confident that with the aid of engineering, innovation and, of course, changes in attitude, CO2 emissions can be reduced. We are willing to do our part," emphasized Samuelsson.
The MAN Group is one of Europe's foremost industrial players in the sector of Transport-Related Engineering, with sales in 2007 of some €15.5 billion. As a supplier of trucks, buses, diesel engines, turbo machinery and industrial services, MAN employs a workforce of around 55,000 worldwide. The MAN business areas hold leading positions in their markets. MAN AG, Munich, is listed in the DAX (German Stock Index) which comprises the thirty leading stock corporations in Germany.
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