Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Traton SE (TRATF, Financial) reported a strong first half of 2024, with an 8.8% return on sales, indicating that their strategic ambition of reaching 9% in 2024 is well within reach.
- The company managed to grow its order intake to almost 59,000 vehicles, with particularly strong performance in Brazil and Latin America.
- Despite a 5% decrease in vehicle deliveries, sales revenue only decreased by 1%, reaching EUR11.6 billion, due to good price discipline and a favorable regional and product mix.
- Scania, a brand under Traton SE (TRATF), improved its adjusted return on sales to 14.7% in Q2, driven by strong growth in its heavy-duty truck business in Brazil and ongoing demand for its vehicle services.
- Volkswagen Truck & Bus, another brand under Traton SE (TRATF), increased its revenue by 41% year over year, benefiting from strong market tailwinds and better product positioning.
Negative Points
- Traton SE (TRATF) faced a temporary supplier issue at Navistar in the US due to a fire at a rearview mirror supplier, impacting delivery figures and resulting in a 23% decrease in deliveries.
- The company's cash flow was negatively affected by the Navistar issue, resulting in a minus of EUR374 million in the quarter.
- MAN, a brand under Traton SE (TRATF), suffered from weak demand in Germany and was affected by the new EU safety regulation, leading to a 2% decline in sales revenue.
- Navistar's sales revenue declined by 21% due to the supply chain issue, resulting in a drop in operating profit and adjusted return on sales.
- The European and North American markets are normalizing, with customers becoming more cautious, leading to a decline in unit sales in Q2.
Q & A Highlights
Q: Can you explain the impact of the temporary issues at Navistar on the gross margin and the potential pricing risks in the second half?
A: The gross margin was slightly down from EUR21.8 million to EUR21.2 million, mainly due to temporary issues at Navistar. However, we maintain strong price discipline and do not foresee significant pricing risks impacting EBIT in the second half. We are confident in our cost development and pricing power, particularly with the new driveline technologies.
Q: Regarding Navistar, how many units are affected by the supplier issue, and what is the outlook for orders and capacity?
A: Approximately 8,000 units were affected by the supplier issue. We expect to catch up on these volumes in the second half, spread across the third and fourth quarters. The order book is well-filled, and while there are longer lead times due to supply chain issues, we remain positive about Navistar's order situation.
Q: With the supply chain challenges, are there any strategic changes planned for Navistar's production system?
A: We are adapting our supply chain strategy, including moving towards dual sourcing for critical components. We are also revamping Navistar's production system with support from our European and Brazilian teams to improve transparency and efficiency throughout the supply chain.
Q: What is the outlook for the European truck market, and how does it affect MAN's performance?
A: The European market, particularly Germany, is challenging due to financial costs and market sentiment. MAN has a solid order book, but we expect some pressure on margins in the second half. We are using flexibility measures to adapt production rates to order intake.
Q: Can you provide an update on Traton's strategy in China and its significance?
A: We are building a production hub in China to expand Scania's capacity, gain a footprint in the Chinese market, and engage with the Chinese technology ecosystem. This strategy allows us to develop alongside Chinese competitors and leverage our unique production license for future growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
