MAN reports weak European growth

Frankfurt, Germany:  Truck and bus maker MAN posted weaker than expected third-quarter operating profit and warned that a weaker European economy had left a mark on its business.

Truck manufacturers are bracing for lower demand in a highly cyclical sector seen as a barometer for the economy.

MAN said in a statement today: “In the medium term, we shall have to cope with a certain level of uncertainty and with a decline in growth rates.”

It confirmed its 2011 outlook and said it was prepared to weather any economic weakness.

Volvo, the world’s second largest truck maker after Daimler sounded a warning on global truck markets last week, saying growth was slowing in the emerging regions that have boosted truck makers’ sales since the previous slowdown, such as China and Brazil.

Swedish truck maker Scania said last month it had seen slowing demand in southern Europe and the Middle East and would make further production cuts if economic uncertainty led to lower orders.

MAN’s operating profit eased by 1% to €321m ($439m) in the three months through September, missing the €347m average analyst estimate in a Reuters poll.

“Although the European commercial vehicles market was unable in the third quarter to match the performance seen in the prior two quarters, we expect fourth-quarter revenue and operating profit to exceed the figures for the third quarter,” MAN said.

The Latin American truck business that which generated almost a third of quarterly operating profit will continue to make a steady contribution to earnings despite slowing economic growth in Brazil, it said.

MAN bought its business in Brazil from Volkswagen in 2009 to tap into emerging market growth. Brazil’s economy grew 7.5 percent last year, the fastest in 24 years and one of the most robust rates among major economies.

For this year, economists forecast an economic growth rate of almost 3.3% in Latin America’s biggest economy, much slower than last year, but still faster than mature markets such as the United States and the European Union.


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