By Giulio Piovaccari
MILAN (Reuters) -Iveco Group said on Thursday it would accelerate plans to cut costs and improve efficiency as it reported a 12.6% decline in its third-quarter operating profit due to a decline in heavy duty truck and bus volumes in Europe.
Shares in the company were up 6.7% by 1015 GMT, among the best performers in Italy’s blue-chip basket, as the market welcomed the move by new Chief Executive Olof Persson.
The Italian manufacturer said that from next year it would accelerate its cost-cutting and efficiency programme and reprioritise certain investments, to reduce its total operational spending without affecting product plans.
The aim is “to further improve our agility to react promptly to our cyclical industry and to lower our profitability breakeven point,” Persson, who took the job in July, said in a statement.
In the July-September period, adjusted earnings before interest and tax (EBIT) from industrial activities amounted to 167 million euros ($179 million).
Pricing power and cost management only partially offset the volume decline, Iveco said, with the result coming slightly below a 173 million euro analyst consensus provided by the company.
Persson said Iveco intensified the launch of its 2024 model year truck line-up during the third quarter, with positive initial feedback from customers, while phasing-out products launched in 2022.
“We now have a very competitive truck product portfolio,” the CEO said.
“Our expectation is that Model Year 2024 truck and van deliveries will continue to gain momentum in the last months of this year and into 2025, maintaining a strong pricing discipline”.
Iveco’s industrial activities generated 286 million euros in negative free cash flow in the third quarter, improving from a 342 million euro cash burn a year earlier.
The group, controlled by Exor, Italy’s Agnelli family investment company, also confirmed its previously provided full-year forecasts, including adjusted EBIT from industrial activities of between 790 million euros and 840 million euros.
($1 = 0.9307 euros)
(Reporting by Giulio PiovaccariEditing by David Goodman and Keith Weir)
