German truckmaker Traton posts profit rise on higher prices

By Louis van Boxel-Woolf and Eva Orsolya Papp

(Reuters) – German truckmaker Traton, majority-owned by Volkswagen (ETR:), on Friday posted a 7% rise in first-half operating profit buoyed by higher prices, even as demand remained lacklustre in Europe.

Operating profit rose to 2.1 billion euros ($2.3 billion) on sales revenue up 2% to 23.4 billion euros, while unit sales fell 5%.

Traton’s operating margin rose to 9.1% from 8.6% a year earlier.

South America, where Traton made a quarter of its truck sales last year by volume, was a bright spot.

The operating margin at Traton’s Volkswagen Truck & Bus brand, which operates there, rose the most of all Traton’s brands, to 11.8% from 9.3%.

Improved “unit price realisation” in Brazil was behind the rise, Traton said.

Truckmakers are raising prices in an attempt to boost margins as demand slows after pent-up pandemic demand waned.

Price rises at peer Volvo AB (OTC:) helped it beat second-quarter operating margin and profit expectations last week.

Europe, which made up about 40% of Traton’s truck sales last year by volume, is likely to weigh on the firm for the coming quarters, Traton said.

Order intake by volume fell 28% in the first half of the year compared to the first half of 2023, but rose 36% in North America and 48% in South America.

Competitor Daimler (OTC:) Truck last week said its guidance for the year was “under review” following a weak performance at its European business.

Traton confirmed its guidance for the year, which includes an adjusted operating margin of between 8% and 9%.

CEO Christian Levin said on an earnings call that the firm’s results showed that its “strategic ambition of reaching 9% in 2024 is definitely well within reach” ($1 = 0.9211 euros)