MAN 3rd quarter net income falls 98 pct

By GEORGE FREY

posted: 27 DAYS 11 HOURS AGO

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FRANKFURT -German truck and bus maker MAN SE said Thursday third-quarter net profit fell 98 percent as demand for its products dropped amid the economic downturn and it took a charge for the acquisition of Volkswagen AG's Brazilian truck business.

MAN, based in Munich, said net income for the quarter fell to euro6 million ($8.8 million) in the July-September period from euro302 million in the third quarter of 2008.

The company booked euro40 million in charges during the quarter related to the euro1.3 billion acquisition in Brazil earlier this year.

Revenue fell 14 percent to euro3.1 billion from euro3.6 billion in the third quarter of 2008.

Total third quarter order intake, one measure of underlying business, fell 14 percent to euro2.7 billion from euro3 billion in the year-ago quarter.

MAN said order intake, however, rose in the third quarter over the first two quarters, mainly helped by its large diesel engine business. MAN also builds engines for marine shipping and power generation.

"Following the sharp downturn, industrial production should recover slowly over a period of several years," MAN said in its report.

MAN shares rose more than 6 percent to euro58 in Frankfurt afternoon trading.

"MAN did operationally somewhat better in the third quarter than assumed. All segments came in somewhat ahead of our estimates," M.M. Warburg analysts said in a research note.

"We stick to our hold rating for the time being and will review our price target. We currently deem MAN shares to be valued adequately around the mid euro50s."

MAN said it expected the commercial vehicles business to remain at current levels. An exception to that forecast, however, will be the company's recently acquired business in South America. MAN said the strong market trend in South America would help make MAN Latin America a stable earnings driver.

The company said the impact of the recession would be evident in its diesel engine business and turbo machinery units over the coming quarters as well.

It didn't provide a more detailed outlook, but said its efficiency measures are having a positive effect and that it was confident of long-term growth prospects.

MAN said commercial vehicles' revenue fell 38 percent for the quarter to euro1.6 billion as companies held back from expanding fleets.

The diesel engines business revenue fell 4 percent to euro611 million, partly as a result of falling world marine shipping volumes and fewer new ships coming on line.

The turbo machinery business, which includes compressors and turbines for the energy business and power generation, saw revenue fall 38 percent to euro259 million.

MAN said for the first nine months, net income fell to euro214 million from euro1.1 billion in the January-September period of 2008. Nine-month revenue fell 20 percent to euro8.8 billion from euro11 billion.

The company said investigations into alleged corruption are still ongoing, and that the risks involved with that process are currently unknown. MAN said earlier this year that prosecutors were looking into instances of alleged bribery to secure contracts within the company.

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http://www.man.eu

2009-10-29 09:23:16