German truck maker MAN reports dip in truck orders

MAN said commercial vehicle sales were slowing because of the sharp rise in diesel prices, the increase in German highway tolls for truckers, and tougher bank financing conditions.

By GEORGE FREY
The Associated Press

7/30/2008

FRANKFURT, Germany — German truck maker MAN AG said Wednesday that demand for its engines, machinery and industrial services offset a dip in truck orders caused by high fuel prices, pushing its second-quarter profit up by 1.3 percent.

The Munich-based company earned 446 million euros ($700 million) in the April-June period compared with 440 million euros in the same quarter a year ago.

Sales rose 23 percent to nearly 4.3 billion euros ($6.75 billion) in the quarter from 3.5 billion euros a year earlier, while order intake was up 8 percent to 5.1 billion euros ($8 billion) from 4.8 billion euros a year ago.

“The balanced structure of the group is having a positive effect on the MAN group,” said CEO Hakan Samuelsson in a statement.

“Demand for large-bore diesel engines, turbines and compressors remains extremely strong,” he said, adding that incoming orders in MAN’s commercial vehicles business area were “now declining after the exceptional increase in previous years.”

MAN said large-bore diesel engine orders were up 17 percent in the first half of the year to 1.8 billion euros ($2.8 billion). Turbo machinery was up slightly from the previous year at 700,000 euros ($1.1 billion), while industrial services doubled its order intake in the first half to 1.3 billion euros ($2 billion) because of increased orders.

MAN said commercial vehicle sales were slowing because of the sharp rise in diesel prices, the increase in German highway tolls for truckers, and tougher bank financing conditions.

The company said 15 percent fewer trucks in terms of units were ordered in the first half of 2008 than in the first half of the previous year, corresponding to a 3 percent decline in the order intake at commercial vehicles to 6.3 billion euros ($9.8 billion) from 6.5 billion euros a year ago.

“Overall we expect the MAN Group’s order intake to normalize for the full-year 2008. We are reiterating our net sales and return on sales forecasts,” Samuelsson said.

The company, which is celebrating its 250th anniversary this year, said it is running at full capacity and expects to see sales growth of 10 percent in 2008. In 2007, the company saw sales increase 19 percent to 15.5 billion euros ($24.18 billion at current rates) and a 17 percent increase in order intake at 19.4 billion euros ($30.26 billion at current rates).