Traton Profits Rise on Higher Prices, 'Favorable' Markets
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Profits for global truck manufacturer Traton rose in the first quarter of 2024 on momentum from favorable market conditions and higher prices, including for the International Trucks brand owned by North American subsidiary Navistar, the company said.
Munich-based Traton posted net income of about $634.1 million in the most recent quarter, compared with about $521.8 million a year earlier. Traton reports in Euros; dollar figures are based on exchange rates as of April 26.
A subsidiary of automaker Volkswagen, Traton said overall Q1 sales revenue grew by 5% to $12.62 billion in the first quarter from $11.98 billion a year earlier.
However, Traton’s truck and bus sales fell 4% year-on-year to 81,148 vehicles compared with 84,587 units in Q1 2023. Sales of trucks fell 2% to 68,772 compared with 70,208 trucks a year earlier.
Orders, meanwhile, totaled 66,400 vehicles in Q1, a 3% decrease compared with 68,500 vehicles in the year-ago period. Of that total, 53,034 were trucks, down 1% compared with 53,610 in Q1 2023, Traton said.
Lisle, Ill.-based Navistar posted Q1 sales revenue of $2.59 billion, a decrease of 11.25% from $2.93 billion the prior year. Revenue was hurt by continued supply chain constraints, the delayed ramp-up of a new school bus model and weaker vehicle services business, Traton said. Navistar’s margin was boosted by higher prices but negatively impacted by lower volumes, the company added.
“We certainly would have expected more out of this first quarter,” Traton CEO Christian Levin said. “It is a bit [of a] troublesome start of the year for Navistar. It was not what we expected.”
He noted that outside delays are still vexing the company.
Levin
“When it comes to trucks … We are still suffering with the supply chain in the U.S.” he said, pointing specifically to frame rails. “But also numerous other suppliers” are pinching operations, he said.
Still, Levin noted that there was continuous improvement in February and March, and expects Navistar’s truck operations to reach normal operations in the third and fourth quarters of 2024.
“We believe we have fixed most of these issues,” added Chief Financial Officer Michael Jackstein.
Navistar sold 19,280 vehicles in the most recent quarter, down 14.5% compared with 22,548 in the same period a year earlier. Of that total, some 18,674 were trucks, a decrease of 2.98% from 19,246 in Q1 2023.
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A large part of the overall decrease was due to a decline in bus sales, which Traton said was the result of the delayed product ramp-up.
Traton said its Q1 truck sales in the U.S. and Canada fell 6% to 15,945 from 17,032 a year earlier.
Navistar orders in Q1 totaled 17,512, up 10% compared with 15,913 a year earlier.
Traton said its truck orders in the U.S. and Canada rose 13% year-over-year in Q1 to 12,233 from 10,873 a year earlier. Navistar’s order book is full for the rest of the year at its school bus operations and for the third quarter at International.
However, the U.S. on-road freight market is “quite gloomy” for a second year in a row, said Levin, creating caution about purchases among freight haulers.
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International has a long order book for Class 8 trucks, but Navistar has not held back orders as it did in 2023, Levin said. Customers are, however, hesitating when they see the long lead times for trucks. That said, there is still interest from big fleets and leasing companies, Levin noted. “I am not too worried,” he said.
Levin cited the company’s S13 drivetrain as a bright spot. Production began in October while deliveries began in February.
“Where we start from is really being the last of the line in terms of price … We’re the [Class 8 truck maker] that could not increase value. We could not use the economy to charge more. We’re going from worst in class on driveline performance to best in class,” said Levin, adding that it offered “very good arguments to the sales force to increase pricing.”
Levin said S13 production was ramping up in Huntsville, Ala., although full capacity is unlikely to be reached before the end of the year.
