MUNICH - MAN AG, Europe's third-largest truckmaker, boosted second-quarter pretax profit by more than two-thirds and nudged its 2004 forecast higher on Thursday, but not nearly enough to satisfy demanding investors.
Following recent strong outlooks from competitors, the German group's caution and a warning that high oil prices posed a risk to growth drove the stock down 6 percent to 26.75 euros by 1420 GMT, according to traders.
It was the leading decliner among stocks in the DJ Stoxx European industrial index, which was down 0.9 percent.
The group that also makes printing machines and marine diesel engines beat expectations by lifting pretax profit to 106 million euros ($129.6 million) amid solid showings at its commercial vehicles business and other divisions, where it used cost cuts to amplify the impact of an economic recovery.
It forecast pretax profit should rise by more than half to "at least" 400 million euros in 2004 from 261 million in 2003. In May, it had seen earnings "in the region of 400 million provided that economic trends remain positive."
"We see this level as the lower limit that we actually would have to exceed given the satisfying development of volumes," Chief Executive Rudolf Rupprecht told a news conference.
But he added that MAN needed to cut more costs at its printing machine and diesel motor businesses and called high oil prices a threat to the group's forecast.
"It is disappointing that they did not raise their guidance, and when they say the oil price is a risk to the outlook, then some people are afraid that something is up," one dealer said.
Rupprecht told financial analysts that MAN had actually raised its 2004 earnings guidance by some 25-30 million euros but chose to be ultra-wary in expressing its targets.
"All of our evaluations are cautious. We are more optimistic than we have been, but we are still cautious," he told a conference call, citing the possibility that MAN might have to write off some goodwill on its books at the end of the year.
BLOOM OFF THE ROSE
A boom in the highly cyclical commercial vehicle market and hopes that trucks division chief Hakan Samuelsson would wring more value from the group once he becomes CEO next year had helped MAN outpace index peers by almost a fifth this year.
A robust showing from truck and bus peers such as DaimlerChrysler, Volvo and Scania had put the pressure on MAN to also deliver the goods.
But its unambitious outlook took the shine off the share.
"The numbers from MAN are very encouraging, but it did not raise its guidance," said Albrecht Denninghoff at HVB.
"It is a bit confusing that the forecast for new orders was increased, but the results forecast stayed the same. We think the company is very cautious with the outlook. We expect more."
Second-quarter sales rose 18 percent to 3.8 billion euros.
Earnings before interest and taxes (EBIT) jumped to 143 million euros from 104 million in the second quarter of 2003.