Traton Group sales decline by 20 percent in first quarter of 2020

The Traton Group recorded declines in sales, deliveries and earnings in the first three months of 2020 due to the expected market decline in Europe and the first influences of the global corona pandemic, and is now preparing to restart the economy in a very challenging environment. Sales of the three brands: MAN, Scania and Volkswagen Caminhões e Ônibus (Latin America) shrank in the first three months by 20 percent to 46,000 (57,200) vehicles. The 21% drop in trucks to 42,000 (53,000) vehicles was more pronounced than the 4% drop in bus sales to around 4,000 (4,200) vehicles.

“The effects of the coronavirus pandemic have hit the entire economy hard, including the Traton Group. In Europe, short-term investment incentives are needed to modernize the truck fleets in an environmentally friendly manner in order to overcome the crisis in this system-critical sector,” said Andreas Renschler, Traton CEO and member of the Board of Management of Volkswagen AG .

The turnover of the Traton Group shrunk from January to March compared to the same period last year by 11% to 5.7 (6.4) billion euros. The operating result fell by two-thirds back and stood at 161 (490) million euros. The operating return fell to 2.8%, after 7.6% in the first three months of the previous year. The order intake fell to 54,200 orders by 16%. At 1.18, the book-to-bill ratio, i.e. the ratio of incoming orders to sales, was above the level of the first three months of 2019 (1.13).

The decline in sales of the three brands Scania, MAN and Volkswagen Caminhões e Ônibus was most pronounced in Europe (EU27 + 3) with a minus of 30 percent. In South America, sales rose 4 percent, driven by Brazil. The increasing spread of the coronavirus made sales even more difficult in the first three months and led to plant closings in global production network from mid-March. Since the end of April, the brands of the TRATON GROUP have gradually started up their plants again.

The Traton Group has responded to the corona crisis with extensive measures. In addition to setting up emergency plans and temporary production stops, this particularly includes securing the company’s liquidity. “The impact of the corona pandemic requires a new prioritization of our investments and research and development projects. Our focus is currently clearly on securing liquidity. We are also preparing for a significant drop in sales and earnings in the second quarter. All key figures will be negatively impacted,” said Christian Schulz, CFO of the Traton Group.

The Traton Group at a glance

In the Industrial Business segment, sales fell by 12% to €5.6 (6.3) billion. The main reason for this was the declining new vehicle business as a result of the market slump. The operating result was €135m (457m). The measures taken in connection with the corona pandemic – in particular the worldwide closings of production sites from the second half of March – had a negative impact on the operating result in the reporting period. The decrease was also caused by the lower volume, higher depreciation and additional costs in connection with the introduction of the new truck generation at MAN Truck & Bus.

The Financial Services segment generated sales of €216 (203) million and an operating profit of €26 (33) million. The portfolio growth had a positive impact on earnings, but lower margins, higher operating costs and value adjustments on receivables had a negative impact on earnings.

An overview of the operational units

Scania Vehicles & Services recorded a 23% drop in unit sales to 18,200 (23,600) vehicles. The turnover fell by 11% to €3 (3.4) billion. The operating result was €256m (370m). The operating return reached 8.6 (11)%.

MAN Truck & Bus achieved sales of 18,200 (25,000) vehicles, a decrease of 27%. The sales decreased by 13% to €2.3 (2.6) billion. The operating result was minus €78m (122m). This corresponds to an operating return of -3.4 (4.7)%.

Volkswagen Caminhões e Ônibus kept sales constant at 9,900 (9,800) vehicles. The sales declined due to exchange rate effects by 8% to €383 (416) million. The operating result was €12 (8) million. The operating return rose to 3.1 (2.0)%.

Further business development

At the moment it is not foreseeable when a new forecast for the current financial year can be guaranteed. The impact of the corona pandemic on customer demand, supply chains and production cannot currently be reliably assessed. TRATON expects a drastic drop in sales in the current quarter, which will have a negative impact on all key figures.

At the same time, the corona crisis led to a substantial standstill in production, an interruption in supply chains and a collapse in demand. “If a Europe-wide fleet modernization program is now quickly launched, the 12-year-old fleet of trucks over 6 tons in total weight can be replaced on Europe’s roads with more economical models. That would not only benefit the jobs in the forwarding and commercial vehicle industry, but also the environmental goals of the European Union,” said TRATON CEO Renschler.

Author: Nabeel K

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