MAN SE Aims to Match 2009 Operating Profit, Plans Dividend

http://www.fxfxfx.com 2010-02-15 21:26:24
MAN SE, Europe’s third-biggest truckmaker, said it’s aiming to keep operating profit in 2010 at the same level as last year as Latin American business expands and the company cuts spending on labor.

MAN will pay a dividend of 25 cents a share after operating profit in 2009 totaled 504 million euros ($686 million), Chief Financial Officer Frank Lutz said today at a news conference in Munich. Sales will be stable, helped by growth in heavy-vehicle and power-plant equipment deliveries in Brazil, Lutz said.

Shrinking truck markets, a writedown on the value of MAN’s stake in Swedish competitor Scania AB and fines related to a bribery probe in Germany led to the company’s first full-year net loss since at least 1989. Chief Executive Officer Georg Pachta-Reyhofen said MAN plans on keeping costs and operating profit unchanged in 2010, with the truck division at least breaking even.

“We tend to see the positive” in today’s earnings report after orders increased and as MAN’s main operations met or exceeded estimates, Tim Schuldt, an analyst at Equinet in Frankfurt with a “buy” recommendation on MAN, said today in a research report.

MAN rose as much as 1.12 euros, or 2.2 percent, to 51.19 euros and was up 1.2 percent as of 12:27 p.m. in Frankfurt trading. The stock has declined 7 percent this year. The dividend for 2008 earnings was 2 euros a share. The proposed payout for 2009 will be voted on at MAN’s annual shareholders meeting on April 1.

Full-Year Loss

The net loss in 2009 was 270 million euros, or 1.84 euros a basic share, compared with net income of 1.23 billion euros, or 8.39 euros, in 2008, Munich-based MAN said today in its annual report. Sales fell 20 percent to 12 billion euros.

The fourth-quarter loss, MAN’s first quarterly deficit since 2003, was 472 million euros including minority interests compared with profit of 177 million euros a year earlier as sales fell 18 percent to 3.26 billion euros.

Earnings before interest and taxes and excluding one-time gains or costs dropped 71 percent last year. Fourth-quarter operating profit fell 65 percent from a year earlier to 126 million euros. Group orders in the quarter rose 35 percent to 2.64 billion euros, holding back the full-year decline in new business to 30 percent.

The company aims for at least 500 million euros in free cash flow this year, Lutz said. Free cash flow in 2009 was a negative 1.12 billion euros following acquisitions.

Brazilian Operations

MAN bought Volkswagen AG’s Brazilian truckmaking division, the country’s biggest commercial-vehicle manufacturer, for 1.2 billion euros in March. Volkswagen is MAN’s largest shareholder with a 29.9 percent stake. MAN said on Feb. 8 that its diesel- engine unit won a 300 million-euro contract to supply Brazil’s Grupo Bertin with generating equipment for six power plants.

Industry sales in Europe of trucks exceeding 16 tons fell 48 percent last year to 164,645 vehicles, according to European Automobile Manufacturers Association figures. The market’s recovery will be “very slow,” and sales won’t return to pre- recession levels soon, Pachta-Reyhofen told journalists.

The company will reduce its workforce by not replacing people who leave, while truck-division employees will work shorter hours for 50 days during the first half, Joerg Schwitalla, MAN’s human-resources chief, said at the news conference.

Scania Cost

One-time costs last year included 382 million euros, primarily attributable to the writedown in the holding in Soedertaelje, Sweden-based Scania, as well as 150.6 million euros in fines that MAN agreed to pay in December to settle an investigation into alleged payments by the truck and turbine units to potential buyers, the company said.

MAN said today that after the purchase of a call option on 2.8 percent of Scania’s voting rights at the end of 2008 that it can exercise by Jan. 5, 2011, the German manufacturer now holds access to more than 20 percent of Swedish company’s votes.

Scania said on Feb. 3 that the European market has “leveled off” following the drop last year, while industrywide Asian sales showed “some degree” of recovery. Gothenburg, Sweden-based Volvo AB, the world’s second-biggest truckmaker after Stuttgart, Germany-based Daimler AG, forecast a rebound on Feb. 15 in heavy-truck sales in 2010, saying North American industrywide deliveries will gain 20 percent to 30 percent and European sales will rise 10 percent.

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