March 12, 2014 / 8:06 AM / 4 years ago

UPDATE 2-MAN plans cost cut to help to triple truck profits in medium term

* 2014 group sales to fall slightly below yr-ago level

* 2014 truck and bus sales to be flat

* CEO “cautiously optimistic” on 2014 business

* Aims to more than triple truck-division profit (Adds goal to boost truck-division profit, executive comment)

By Andreas Cremer

MUNICH, March 12 (Reuters) - Germany’s MAN SE aims to more than triple profits from its truck business in the medium term partly through cost-cuts after the group as a whole reported a sharp fall in 2013 earnings.

MAN’s truck & bus division, which accounts for half of the company’s profits, is looking to boost operating earnings to more than 800 million euros per year in the mid-term, from 228 million in 2013.

Trucks chief Anders Nielsen said this would come from cost cuts and improved resource management as a result of MAN being part of Volkswagen. He declined to be more specific on the plans.

“We need to improve profitability to fund future growth,” Nielsen said on Wednesday, ruling out job cuts. “There’s some homework for us to do.”

MAN is struggling to boost profitability at its trucks division, which is heavily dependent on volatile European markets, is grappling with high product costs and has limited ranges for lucrative premium truck markets in Latin America.

VW is trying to align MAN with Sweden’s Scania, also VW-owned, to take on Daimler, the world’s biggest truckmaker.

VW has spent billions of euros over more than a decade on expanding its stakes in MAN and Scania. Last month, VW revealed plans to buy out Scania minority shareholders for 6.7 billion euros to jump start stalled efforts to bring about the alliance.

MAN, which also makes diesel engines and turbines, said 2013 operating profit dropped to 475 million euros from 969 million a year earlier, slightly above the lowest estimate of 454 million euros in a Reuters poll of analysts.

Profit last year was reduced by 286 million euros ($396.58 million) because of provisions at the group’s power engineering division related to problems at a project to build diesel-fuelled electricity plants.

MAN expects to post a “distinctly higher” operating profit this year than in 2013. “We’re now looking ahead,” Chief Executive Georg Pachta-Reyhofen said. “I‘m cautiously optimistic for 2014.”

MAN expects 2014 deliveries to be flat after companies rushed to buy older but cheaper models in the second half of 2013 ahead of a January change in emission rules.

Group sales including gains from diesel engine and turbine sales may dip slightly below the 15.7 billion euros posted in 2013, it said.

Operating profit at the power-engineering division, which accounts for a quarter of group sales, is likely to improve sharply from last year’s 40 million euros, MAN said.

$1 = 0.7212 euros Reporting by Andreas Cremer; Editing by Mark Potter and Jane Merriman

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