Competitive market pushes MAN into restructure


MAN SE is undergoing a group-wide efficiency program amid a tough sales period in South America

Competitive market pushes MAN into restructure
MAN SE's group-wide efficiency program hurts profits.

 

Commercial vehicle manufacturer MAN is undergoing a group-wide efficiency program to address its current cost structures and rectify predicted revenue declines.

While MAN Truck & Bus recorded a nine per cent increase in orders for the first half of 2015 and company sales revenue remained steady, order intakes in the commercial vehicle business area declined three per cent in 2014 on the back of MAN Latin America’s 50 per cent order intake and unit sales deterioration.

The €170 million ($254 million) cost of the restructure and intake numbers pulled the MAN Group’s operating profit down to €15 million ($22.5 million) in the first half of 2015, in stark contrast to the €222 million ($333 million) figure last year.

"It is of course no easy task to initiate fundamental and cost-intensive measures to safeguard future growth in economically difficult times," MAN SE CEO Georg Pachta-Reyhofen says.

"However, we are convinced that we have to act here and now to get MAN in shape for the future."

The commercial vehicle business area produced an operating loss of €74 million ($111 million) in the six month period, a €224 million ($336 million) drop on the positive results of  2014, unaided by MAN Truck & Bus’ operating loss of €49 million (AU$73.5 million).

However, the European division would have posted a 53 per cent operating profit increase or €121 million ($181.5 million) during the period, if the restructure was excluded.

Operating profits were achieved in three of the company’s divisions, with the Power Engineering business raising €135 million ($202.5 million), the MAN Diesel & Turbo contributing €93 million ($139.5 million) and Renk €43 million ($64.5 million).  

The group’s executive board believe the situation will not return strongly throughout 2015, predicting a negative return on sales in the commercial vehicle area and a single-digit operating return on sales in the Power Engineering business.

"This means a slight year-on-year decline in the MAN Group’s sales revenue," it says.

"Operating profit will be significantly impacted primarily by restructuring expenses. The operating return on sales will more than halve year-on-year."

 

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