MAN CEO Discusses Q3 2010 Results – Earnings Call Transcript
MAN SE (
)
Q3 2010 Earnings Call Transcript
October 28, 2010 9:00 am ET
Executives
Georg Pachta-Reyhofen – CEO
Frank Lutz – CFO
Silke Glitza-Stamberger – Head, IR
Analysts
Fredric Stahl – UBS
Alexander Haissl – Cheuvreux
Jochen Gehrke – Deutsche Bank
Nico Dil – J.P. Morgan
Yann Benhamou – Exane
Alexis Albert – Nomura
Ben Maslen – Merrill Lynch
Chris Youl – MainFirst Bank
Roddy Bridge – Societe Generale
Frank Biller – LBBW
Michael Punzet – DZ Bank
José Asumendi – RBS
Hermann Reith – BHF-Bank
Presentation
Operator
Compare to:
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Manpower Inc. Q3 2008 Earnings Call Transcript
Good afternoon, ladies and gentlemen and welcome to MAN SE conference call regarding the q3 results 2010. Today's representatives of MAN are Dr. Georg Pachta-Reyhofen, CEO; Frank Lutz, CFO; and Silke Glitza-Stamberger, Head of Investor Relations. At this time, all participants are placed in a listen-only mode. The floor will be open for questions following the short introduction of MAN CEO, Dr. Georg Pachta-Reyhofen.
Let me now hand the floor over to Dr. Pachta-Reyhofen.
Georg Pachta-Reyhofen
Yes. Hello and welcome, ladies and gentlemen, to our conference call of MAN Group. I assume that you have got the report, the Q3 report and that you have read the figures, and I think the best is immediately to start with the questions.
So, please when – if you start with the questions, we are now open.
Question-and-Answer Session
Operator
(Operator instructions) The first question comes from Fredric Stahl of UBS.
Fredric Stahl – UBS
Yes, good afternoon, gentlemen. I would like to ask a question about your profit – of the profitability in the Commercial Vehicles business, I mean, trucks in particular. Is there any reason to believe that your operating leverage will change in the Q4, when I think your production levels take another step up because, well, at least from where I see it, comparing to your other peers in Europe you are still not showing the same type of leverage on the revenue increases. So I was wondering if you could provide a bit more color of how – what that looks like going into the fourth quarter of the year.
Frank Lutz
Fredric, it's Frank speaking. We have communicated in the past and you can see that also very clearly in the third quarter that we are approximately a quarter behind our competitors, given that we saw our weakest quarters in terms of order intake in Q3 and Q4 last year where most of the others already recovered. And you can now see that in our – in the production capacity utilization, you can see that in revenues coming back, et cetera.
We expect the positive trend that we have seen starting with Q2 continuing to Q3. Also, we could expect this trend to continue in Q4, i.e. we will have better production capacity utilization and therefore, operating leverage should be increasing quarter-over-quarter.
Fredric Stahl – UBS
Very good. And then if I can follow up on turbo and diesel, you are flagging slightly lower capacity utilization in the fourth quarter compared to the third quarter. Can you maybe comment on what it looks like going into 2011, how well covered are you in – during the year?
Frank Lutz
Yes, you are right. This is also a reflection of the cyclicality of the power engineering business where we have longer cycles and have a relatively weak order intake going into 2009 that is now turning into revenues during the next year. As we indicated before, next year will be our weakest year in terms of revenues in the power engineering business. Nevertheless, clear statement also, we expect this business to be double digit in terms of profitability. What it will mean is that we will have some capacity underutilization to our 2011 and that will also mean that we'll use short-term work where it's justified.
Fredric Stahl – UBS
Excellent. Thank you very much.
Operator
The next question comes from Alexander Haissl from Cheuvreux.
Alexander Haissl – Cheuvreux
Good afternoon. It's Alexander Haissl from Cheuvreux speaking. I have few questions on the Truck business, can you just provide more color on the individual regions if Russia, Eastern Europe is picking up and if we can expect better operating result if these higher orders turn into revenues in the coming quarters?
The other point is in terms of pricing, can you just confirm that prices are still stable, that there is no pressure in Europe on prices? And also, can you give us an indication on the used vehicle prices, what's going on there? And lastly, also on the marine business, can you give us some indication of the after-market business, if you see any pickup there? Thank you.
Georg Pachta-Reyhofen
Yes, concerning the growth in the different areas and you can see that in all European areas, we see upturn, in all of them. In Germany, we sold roughly 56% more. In Eastern Europe, it's even more; it's 170% for example. Middle East is coming back with more than 100% plus. So, we see an increase everywhere. In Europe, East, West, North and South and therefore we are convinced that also next year will be a good year for the trucks business; for order intake as well as turnover, because there is only a lead time of three months in between those two factors.
Frank Lutz
In terms of prices, the prices for new vehicles are stable. We have seen the decrease in 2009, but the price level is now stable. And on the used vehicle prices, we can already see that prices are recovering and increasing. Again, this is also due to the fact that pretty much everybody is virtually sold out on used vehicles.
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