TRATON SE

Overview Key strengths Key risks Strong position as the third-largest heavy commercial vehicle manufacturer worldwide (as of end-2022, in terms of units sold), holding the No. 2 market positions in Europe and South America, and a challenger position in the U.S. market (No. 4). The recovery and resilience of the group?s relatively weak EBITDA margins depending highly on TRATON?s ability to implement a better fixed-cost absorption and introduce the common base engine across its brands, started at Scania in 2022. Highly strategic subsidiary for its parent company and 89.7% owner, Volkswagen AG (VW), to which it has close links in terms of financing, IT services, and purchasing. This underpins our rating on TRATON one notch below the VW rating, independently

...After satisfactory six-month sales results, S&P Global Ratings expects demand drivers will remain moderately supportive over 2023, while MAN's realignment and tight price management should strengthen profitability. We also expect demand to hold up well in 2023, supported by fleet aging and replacement needs, as well as catching up from 2022's lost production. We anticipate TRATON will sell 325,000-330,000 units in 2023 and 320,000-325,000 units in 2024 (compared with 305,485 in 2022). Moreover, the price mix and strong aftermarket services will support TRATON's industrial business revenue to increase to 40 billion-45 billion in 2023 and 2024 (from 39 billion in 2022) in our base-case scenario. The company, as with peers, has been relatively cautious in opening up for new orders, so first-half 2023 orders declined 24% to about 125,300 units. Nevertheless, we understand orders for 2024 are not fully opened. We forecast that S&P Global Ratings-adjusted EBITDA margin will improve sharply to...

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