Traton Financial Services, the financial arm of commercial vehicle manufacturer Traton Group, increased revenue in the second quarter despite declining sales revenue for the parent company and increased competition in transportation financing.
Traton Financial Services increased its revenue 13.7% year over year, as the lender grew its portfolio on the back of global expansion and a revamp of commercial offerings, Michael Jackstein, chief financial officer and chief human resources officer of Traton Group, said during today’s earnings call.
While the lender completed the rollout of its captive offerings in 14 markets, the expansion resulted in a decline in operating profit and return on equity, Jackstein said.
“As the ramp-up of the financial services network comes with higher costs, the TFS return on equity decreased to 8.4%,” he said. “Other reasons for the declining returns were higher funding and risk costs which come with a larger portfolio, as well as increased competitive pressure, especially from the banking industry.”
BY THE NUMBERS: Munich-based Traton Group reported in Q2:
- Incoming truck, bus and van orders landed at 65,292 units, up 10.7% YoY;
- Unit sales were 79,996 units, up 1.7% YoY;
- Truck sales reached 63,742 units, up 0.2% YoY;
- Bus sales finished at 8,390 units, up 5% YoY;
- MAN TGE van sales were 7,864 units, up 6.6% YoY;
- The BEV unit sales ratio ended at 0.8%, up 0.4 percentage point YoY;
- Sales revenue totaled 11.3 billion euros ($13.3 billion), down 2.5% YoY;
- Traton Financial Services’ sales revenue landed at $623.8 million, up 13.7% YoY;
- Traton Financial Services’ operating results totaled $45.7 million, down 15.2% YoY;
Bigger Picture
U.S. tariff uncertainty, a weak European market and economic challenges in Brazil are contributing to greater-than-expected customer hesitancy, which prompted Traton Group to reduce its sales revenue and unit sales outlooks to between a 10% loss and flat from between a 5% loss and 5% gain, Jackstein said.
“We lowered our outlook for the North American truck market and anticipate steeper year-over-year unit sales declines at International, so despite cost and surcharge measures, this will also impact International’s return on sales,” he said. “Despite the lower ranges, the new guidance assumes that a stronger performance in Europe will be required in the second half of the year to offset an ongoing decline in North America and Brazil.”
Due to weak order intake, elevated inventories and deteriorating relations with Mexico due to U.S. tariff actions, the North American truck market outlook is expected to decline in 2025, although there is some reason for optimism, Traton Chief Executive Christian Levin said during the earnings call.
“On a more optimistic side, an improved U.S. industrial output and pro-business policies, such as deregulation, tax reliefs could also support the market toward the end of the year,” he said.
MARKET OUTLOOK: Shares of Traton [OTCPK: TRATF] were down 2.3% from market open today to close at $37.05. The company has a market cap of $19.4 billion.
Editor’s note: All amounts have been converted to U.S. dollars.
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