MUNICH (Reuters) - Germany's MAN AG posted quarterly profits at the upper end of expectations on Wednesday and said it wanted the trucks business that put the shine on the results to take a leading role in consolidation in the sector.
The industrial group, which builds the world's most powerful diesel engine as well as trucks, industrial equipment and rocket components, said second-quarter pre-tax profit fell 30 percent to 55 million euros ($62 million), a shallower fall than some analysts had feared.
Chief Executive Rudolf Rupprecht said the group agreed with Volkswagen that co-operation with Swedish truckmaker Scania would be desirable, but said it would want to be the main player in any tie-up.
Rupprecht told a news conference that a range of options for consolidation in the trucks sector were still being discussed, but said he agreed with VW Chief Executive Bernd Pischetsrieder that a three-way cooperation would make sense.
"I do not want to contradict Bernd Pischetsrieder that a co-operation would be desirable," Rupprecht told a news conference. "All possible combinations are being discussed."
Pischetrieder said last month that it would make a lot of sense for Scania and MAN to work together, adding that VW was more than willing to be "helpful" if it could. Scania on Wednesday declined to comment on what it called speculation.
Rupprecht said the parties involved would not necessarily need to buy stakes in each other if the same benefits could be achieved without doing so.
Industry and banking sources have said Volkswagen could be interested in buying MAN's trucks business, which is Europe's third biggest, and has held preliminary talks with the company, although no firm negotiations were underway.
But Rupprecht repeated that both MAN and its main shareholder saw trucks as a core business, and would not be prepared to sell. His finance chief said management had concluded that a break-up of the firm by a financial investor was in any case unlikely to work.
"We have analyzed how that could work and come to the conclusion that it probably would not work for various reasons," finance chief Ferdinand Graf von Ballestrem said. He declined to give more details.
TRUCKS ON THE UP
The trucks unit, which accounts for about 40 percent of sales, saw pre-tax profit rise to 38 million euros from breakeven a year earlier as restructuring paid off, keeping the group on track to beat last year's 219 million euro result.
"In view of the successful turnaround currently underway in the commercial vehicles division and our expectations relating to new orders and sales, we envisage an overall improvement in pre-tax earnings for 2003," the company said in a statement.
"The figures were in line with our expectations. The important trucks unit was somewhat better than expected, but the industrial equipment business somewhat worse," said Georg Stuerzer, an analyst at HVB, which rates the stock "outperform."
MAN had been expected to post a pre-tax profit of 48 million euros according to the average in a Reuters poll of 16 analysts, with forecasts ranging from nine to 57 million euros.
MAN noted strong order intake at the trucks business in July and said it anticipated a significant upturn in demand group-wide in the second half of the year, building up to a sharp rise in profits in 2004.
Volvo and Scania both beat market expectations with their second-quarter earnings late last month, but gave a mixed outlook for the market.
Volvo, the world's second-biggest truck maker, said market conditions were starting to stabilize, while Scania, the world's most profitable, said it was cautious on the rest of the year.