By Giulio Piovaccari
MILAN (Reuters) -Truck maker Iveco Group said on Wednesday pricing power would offset higher raw material and energy costs as it raised its forecasts for this year’s revenues, operating profit and cash generation.
The Italian manufacturer said that its consolidated adjusted earnings before interest and tax (EBIT) would come in at between 420-440 million euros ($423-$443 million) this year, versus a previous estimate of between 400-420 million euros.
Net revenues of industrial activities are now seen up between 5-6% this year, compared to a previous forecasts of between 3-4%, said the group, which was spun-off from former parent CNH Industrial and separately listed at the start of 2022.
Iveco said its decision to raise forecasts followed “solid” results it had booked so far in 2022 and the “better availability of semiconductors for the remaining part of the year”.
Its shares rose as much as 5.1% at opening, among the best performers in Italy’s blue-chip index. By 0900 GMT they were up 4.3% at 6.15 euros, having debuted on the Milan bourse in January at 11.26 euros.
The company will start delivering its first fully-electric trucks next year and has also presented a prototype of a hydrogen fuel-cell van in partnership with Hyundai Motor.
COST PRESSURES
Chief Executive Gerrit Marx said improved chip supply would reduced disruption to production.
“Better availability of semiconductors will allow us to start normalising our weeks of production in the truck segments,” Marx said in slides prepared for an earnings presentation to analysts.
“Order books remain solid,” he added.
The group however cautioned that the supply chain was still under pressure, although now more predictable, while energy and inflation costs were challenging and were expected to affect both the company and its supply chain.
Iveco also upped a forecast for its full-year net cash for industrial activities.
In the third quarter Iveco’s adjusted EBIT of industrial activities rose to 64 million euros from a proforma 33 million euro result a year earlier, broadly in line with a market consensus of 62 million euros provided by Intesa Sanpaolo.
The result was positively impacted by net pricing, for 206 million euros, and volume mix, for 46 million euros, which more than offset the 152 million euro burden from higher production costs.
($1 = 0.9940 euros)
(Reporting by Giulio Piovaccari, editing by Louise Heavens and Keith Weir)