July 26 2024: On Friday, German truckmaker Traton, which is majority-owned by Volkswagen (ETR
), reported a 7% increase in first-half operating profit, driven by higher prices despite sluggish demand in Europe.
The company’s operating profit climbed to 2.1 billion euros ($2.3 billion), with sales revenue rising by 2% to 23.4 billion euros, even though unit sales declined by 5%.
Traton’s operating margin improved to 9.1%, up from 8.6% the previous year.
South America stood out as a strong market for Traton, contributing to a quarter of its truck sales volume last year.
The operating margin for Traton’s Volkswagen Truck & Bus brand, which operates in South America, saw the highest increase among all Traton brands, rising to 11.8% from 9.3%.
Traton attributed the increase to better “unit price realization” in Brazil.
Truckmakers are raising prices to boost margins as demand slows after the surge in orders following the pandemic.
Price increases at competitor Volvo AB (OTC
) also helped it surpass second-quarter operating margin and profit expectations last week.
Traton indicated that Europe, which accounted for about 40% of its truck sales volume last year, is expected to remain a challenge for the upcoming quarters.
Order intake by volume dropped 28% in the first half of the year compared to the same period in 2023, but saw a rise of 36% in North America and 48% in South America.
Last week, competitor Daimler (OTC
) Truck announced that it was “reviewing” its annual guidance following a weak performance in its European operations.
Traton reaffirmed its annual guidance, which includes an adjusted operating margin of between 8% and 9%. CEO Christian Levin stated during an earnings call that the company’s results indicate that its “strategic ambition of reaching 9% in 2024 is definitely well within reach.”
(Note: $1 = 0.9211 euros)
