MAN SE sees bleak year after 2009 net loss

(chinatrucks.com, Feb.25, 2010)German industrial group MAN SE (MANG.DE) warned it was unlikely to generate growth in sales or earnings this year as a deterioration in revenue from ship engines would wipe out improvements at its truck business.

MAN slashed its dividend after swinging to a wider than expected 2009 net loss on Monday, hit by a halving of truck sales and 656 million euros ($893.1 million) in charges including a writedown on its stake in Swedish peer Scania (SCVb.ST) and hefty fines to settle a bribery probe.

The global economic crisis plunged the global truck industry into its worst crisis in years, severely punishing MAN and its rivals like Volvo (VOLVb.ST). [ID:nLDE614063] [ID:nLDE6120K0]

"2010 will not be a year of recovery in the classical sense but a stabilisation can be expected," new CEO Georg Pachta-Reyhofen said.

Shares that have languished near August lows were flat at 50.09 euros by 1601 GMT and analysts said they saw little reason to buy the stock apart from ongoing speculation of a takeover by large shareholder Volkswagen (VOWG_p.DE).

VW owns 30 percent of MAN and 71 percent of Scania votes. It believes a three-way truck alliance could yield as much as 1 billion euros in savings for the three companies.

MAN expects at least to break even in its core European truck unit MAN Nutzfahrzeuge this year, while results would improve at its highly profitable Brazilian truck business.

"We expect to see again very good earnings at MAN Latin America," Pachta said.

ON LOOKOUT FOR RUSSIAN PARTNER

MAN's truck division is focusing on growth in the so-called BRIC markets. After signing deals in Brazil, India and China, MAN now aims to complete its foreign expansion by looking for help to produce locally in Russia.

"Tariff barriers will likely mean we need to have a factory hall somewhere where we can assemble trucks, and we are on the lookout for partners," Pachta told Reuters.

Pachta, who took over from Hakan Samuelsson last year after a bridery scandal, will first have to contend with a profit decline at MAN's Power Engineering division which would completely offset the gains at Commercial Vehicles this year.

MAN Diesel's four-stroke engine business will suffer this year from a thinner order backlog. Its diesel business competes with Finland's Wartsila (WRT1V.HE) to supply shipyards with marine engines and power plants with stationary generator sets.

Last year, MAN swung to a net loss of 258 million euros from a 1.2 billion net profit in 2008 -- far below the average estimate of a 158 million loss in a Reuters poll of 13 analysts.

Reducing the value of its 17.4 percent Scania voting stake by a quarter to 9 euros per share as of the end of December cost it 380 million in book losses, while MAN coughed up an additional 150 million to end a prosecutors' probe into suspected bribery.

MAN proposed a dividend of 0.25 euros per share, down from 2.00 euros last year and half the median 0.50 euros in the poll.

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