German commercial vehicles maker Maschinenfabrik Augsburg-Nürnberg or MAN SE (MAGOF, MAGOY) said Tuesday that it expects total 2013 return on sales to be "significantly below" the 2012 figure, while revenue for the year will remain at the previous year's level.
According to MAN, contractual risks in connection with a large order of MAN Diesel & Turbo SE for the construction of turn-key diesel power plants led to an additional need for provisions for the second quarter of 2013 in the amount of 146 million euros.
Further, the company noted that in the current fiscal year, there has been a significant downturn in the after-sales business of the diesel and turbo unit that was more than anticipated. The company expects that the situation in the after-sales business of the unit will "remain tense in the next years" and noted that the original profit expectations will not be met in the mid-term.
According to MAN, the continuing difficult economic situation in the shipping industry, the European sovereign debt crisis and the poor economic situation, in particular in the important sales region of the Middle East, negatively impacted the after-sales business of MAN Diesel & Turbo SE.
In addition, MAN said that substantial tax risks have arisen for the assessment periods 2004 through 2006 in the course of an external tax audit with a company that formerly was part of the consolidated tax group.
MAN said these factors will result in a cumulative reduction of the enterprise value of the company by about 50 million euros, which was determined in accordance with the discounted earnings method.
However, the company noted that the reduction in its enterprise value will not change the terms of the proposed offer by German auto giant Volkswagen AG (VOW.BE, VLKAY,VKW.L) to buy MAN SE shares from minority shareholders for 80.89 euros per share. The offer is part of Volkswagen's efforts to gain full control of MAN.
In early February, MAN reported fiscal 2012 operating profit of 964 million euros, down from 1.48 billion euros reported a year ago. The results reflected a fall in the commercial vehicles business area. Revenues for the year declined 4 percent to 15.77 billion euros, as demand fell sharply in the European and Brazilian commercial vehicles markets, which are the company's key markets.
While reporting its financial results for the first quarter in late April, MAN SE forecast fiscal 2013 revenue on the same level as last year and a significant decline in operating profit.
On Frankfurt's XETRA, MAN SE shares are trading at 84.48, down 1.02 euros or 1.19 percent on a volume of 375,123 shares.
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