A lack of lorry drivers has Britain in a tizzy. Truckmaker Traton also struggles to find people to sit in its cab. On Wednesday the Munich-based business announced the departure of Matthias Gründler, who was chief executive for little more than a year. Finance chief Christian Schulz will also leave.
That follows the July 2020 departure of previous boss Andreas Renschler. His abrupt departure reportedly followed a power struggle with Herbert Diess, chief executive of Volkswagen, which owns 89.7 per cent of the company.
On Thursday Diess welcomed Scania brand chief Christian Levin, now in the driving seat. The management reshuffle, which simplifies a complex structure, would help with the implementation of Traton’s strategy, he claimed.
Scale and joint approaches are indeed needed, as the company electrifies its truck business, restructures its struggling German MAN subsidiary and expands its global footprint with its recent acquisition of Illinois-based Navistar. VW’s Diess insisted the group would get the necessary leg room to implement its strategy. But the frequent changes of personnel at the top will give investors pause.
The outgoing management may have felt they lacked room for manoeuvre. They wanted to raise capital, suggests Jefferies’ Himanshu Agarwal. That would have lightened the debt burden following the Navistar acquisition, valued at €7bn of debt and equity. Moody’s calculated that the deal would push the debt-to-adjusted ebitda ratio to about 3 times in 2021, declining towards two times in 2022.
It would also have increased the free-float. Its small size partly explains the low appeal to investors. A weak share price performance since a 2019 listing has pushed down the enterprise to ebitda ratio by 43 per cent to just under 5 times. Rival Volvo’s multiple is two-thirds higher.
Traton’s profitability is recovering after suffering in 2020, though a semiconductor shortage will hit third-quarter sales. Long term, achieving its margin targets will depend on how well it integrates Navistar and its other brands. It has had longstanding problems in overcoming rivalries and improving co-operation between its MAN and Scania businesses. The investment case for Traton depends on better driving this time around.
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