Q2 mixed results for MAN FS and PACCAR
FS

aLeading truck captives MAN and PACCAR have posted better
than expected Q2 results in a tough economic climate.

German industrial group MAN posted a 39 per cent rise in second
quarter operating profit, while its Financial Services division
posted a rise in its current asset base from €2.1bn last year to
€2.3bn in Q2 2008. For the same period, non-current assets shrank
from €770m to €714m euros.

Assets leased out also declined from €727m in 2007 to €657m this
year.

Chief executive Hakan Samuelsson said the group’s exposure to a
dynamic Russian truck market and booming infrastructure demand from
countries rich in oil, gas and raw materials helped MAN cope with
an increasingly hostile economic climate for industrials.

New industrial infrastructure orders rose eight per cent to
€5.11bn, solely attributable to a large power plant order in
Venezuela. While new orders fell 23 per cent to 20,838 trucks in
the quarter, an improved mix helped cushion the blow to just a six
per cent drop in value to €2.4bn, mainly due to Russian customers
ordering high-priced long haulers.

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While demand for large bore diesel engines, turbines and
compressors remains extremely strong, MAN said customers were
delaying purchases due to higher costs for diesel fuel and German
truck tolls, as well as banks tightening up their lending
practices.

In response, MAN was forced to offer truck customers an
additional €500m in leasing deals in the first half, a rise of
nearly 40 per cent. “We help where we can, but we do not want to
change our risk structure,” finance chief Karlheinz Hornung
said.

MAN kept to its 2008 operating profit margin forecast of just
under 12 per cent amid a good 10 per cent gain in sales.

Meanwhile, PACCAR reported Q2 net income of $313.5m and
financial services income of $58.7m on assets of $11.1bn.

PACCAR Financial Services (PFS) has a portfolio of 169,000
trucks and trailers, with total assets of $11.1bn. PACCAR Leasing,
the full-service truck leasing company in North America with a
fleet of over 32,000 vehicles, is included in the segment. Second
quarter pre-tax income of $58.7m compares to the $68.9m earned in
second quarter 2007, while revenues were $330.5m compared to
$286.8m in the same quarter last year.

Finance margins improved due to portfolio growth, but profit was
reduced due to an increase in the provision for credit losses due
to higher repossessions in the US and Canada. Credit losses
increased in the second quarter of 2008 to $23m versus $15.3m in
the first quarter of 2008.

However, PACCAR benefited from balanced global diversification,
with over 65 per cent of revenues originating outside the US, and
“continued solid performance from the company’s aftermarket parts
and financial services businesses”, reported Mark C Pigott,
chairman and CEO.