Fiscal 2010: MAN continues international growth course
- Order intake €15.1 billion (previous year: €9.9 billion), revenue €14.7 billion (€12.0 billion)
- Operating profit €1.035 billion (€504 million)
- Return on sales (ROS) 7.1% (4.2%)
- Proposed dividend: increase to €2.00 (€0.25) per share
- Outlook for 2011: revenue growth of between 7% and 10%, ROS to grow by at least one percentage point
- Further growth with focus on BRIC countries
- New plant in Russia planned
- Record profit and expansion in capacity at MAN Latin America
- Talks about close cooperation with Scania AB
The MAN Group has started fiscal 2011 in a strong position. “MAN regained its strength in 2010. Profit in the operating business doubled. 2010 saw us record our success, thereby signaling our expertise and competitive strength,” said Dr. Georg Pachta-Reyhofen, CEO of MAN SE, at today’s Annual Press Conference in Munich. Together with an operating profit of €1.035 billion, return on sales rose year-on-year from 4.2 percent to 7.1 percent. The Commercial Vehicles business area posted an opera-ting profit of €528 million and an ROS of 5.0 percent (0.7 percent). The Power Engineering business area generated an operating profit of €491 million with MAN Diesel & Turbo and Renk while its return on sales remained in the double-digit range at 11.8 percent. The MAN Group is very upbeat about fiscal 2011: “Following a good first few months, we expect revenue growth of between 7 and 10 percent for 2011 as well as an increase in ROS by at least one percentage point,” explained Frank H. Lutz, CFO of MAN SE.
Business performance in 2010 was dominated by the global economic upturn overall. The MAN Group’s order intake soared 53 percent to €15.1 billion, returning to its pre-crisis level. The market recovery was visible both within and outside Germany. In the Commercial Vehicles business area (which is made up of MAN Truck & Bus and MAN Latin America), growing demand in the European commercial vehicles business and the ongoing boom in the BRIC countries pushed orders up significantly by 68 percent to €11.2 billion.
MAN responded by gradually reducing short-time working in Germany and Austria over the course of fiscal 2010, fully discontinuing it by the end of the year. This means that the commercial vehicles business successfully left behind the financial and economic crisis and is well positioned for future challenges with a strengthened workforce as a result of the training measures implemented during the period of short-time working.
Order intake in the Power Engineering business area (which comprises MAN Diesel & Turbo and Renk) also recorded a sharp increase (+24 percent) in 2010 at €4.0 billion. This was primarily driven by the positive development in the Engines & Marine Systems strategic business unit (+37 percent) and at Renk (+79 percent).
The MAN Group’s revenue climbed 22 percent to €14.7 billion, due in particular to the recovery in the Commercial Vehicles business. With revenue of €10.6 billion for the year, Commercial Vehicles saw its revenue rise 36 percent. Unit sales of commercial vehicles rose at the same time from 82,600 to 126,300. Revenue in the Power Engineering business area remained on a level with the previous year, at €4.2 billion (€4.3 billion).
Remarkable ROS figures and profits were proof of the positive performance in all areas. Together with an operating profit of €528 million, return on sales in the Commercial Vehicles business area rose from 0.7 percent to 5.0 percent. This was primarily helped by the record profit in Latin America, where MAN’s operating profit grew faster than revenue. Its profit reached €370 million (€142 million), which corresponds to a return on sales of 11.8 percent. At 11.8 percent, the Power Engineering business area generated a double-digit ROS for the fifth year in a row.
In order to enable shareholders to participate in the Company’s success by distributing an appropriate share of its profits, the Executive and Supervisory Boards will propose a substantially higher dividend of €2.00 (€0.25) per share to the Annual General Meeting.
The MAN Group’s focus on commercial vehicles and power engineering proved to be a successful strategy in 2010. MAN significantly strengthened its presence in international growth regions, concentrating on the BRIC countries. In 2011, capacity in Brazil is to be raised from around 72,000 to 82,000 vehicles and an additional 400 people are to be hired. MAN trucks are to roll off the production line for the first time in Russia starting in 2012. MAN is the largest importer of heavy trucks and buses in Russia.
The strategic partnership with Sinotruk in China is being implemented at a high speed: MAN will be launching a new heavy truck series for emerging economies and growth markets together with its Chinese partner in 2011. MAN already sells one in two of its trucks and an even greater proportion of buses in one of the BRIC countries today. It is still the leader for trucks in Brazil, where it has a 29 percent slice of the market. Brazil also holds additional growth potential for the Power Engineering business area, in which MAN is very well represented in China and India, due to its fast-growing oil and gas industry.
The MAN Group expects the economic recovery to continue in 2011. The Commercial Vehicles business area is aiming for revenue growth of between 10 and 15 percent. Revenue in the Power Engineering business area can be expected to remain at the previous year’s level due to the slower recovery of the relevant markets, although return on sales is still set to be in the solid double-digit range. This means that the MAN Group is currently expected to see its revenue increase by between 7 and 10 percent and its return on sales rise by at least one percentage point. In the long term, both business areas will likely profit disproportionately from the strong growth in the emerging economies of the BRIC countries accompanied by an increasing demand for transportation and energy.
MAN is still focusing systematically on its strategy of internationalization and growth by cooperating with strong partners in order to leverage the potential offered by globalization and technological change. “We will not be taking this job on alone. Instead, we will be combining our know-how with our partners in order to be in a more powerful position together. MAN and Scania are the right partners for the challenges that new technologies, like hybrid technology, bring. That is why we are in talks with Scania about various ways of cooperating closely through to a combination. We will ensure that the interests of MAN, its shareholders and the 48,000 employees are fully represented,” said Pachta-Reyhofen at the Annual Press Conference.
MAN is still open to quickly resolving the ownership matter at Ferrostaal with majority owner IPIC. “This is in the interests of all parties involved, especially Ferrostaal and its employees, but an agreement will not be at any price,” continued Pachta-Reyhofen.