Italy’s Iveco ups 2023 guidance but still burns cash in Q1

May 11 (Reuters) – Italian truck and bus maker Iveco Group (IVG.MI) on Thursday raised its 2023 revenue and earnings forecast after posting a 63% jump in first-quarter operating profit, but burned more cash in the period, sending its shares down.

The manufacturer said its adjusted earnings before interest and tax (EBIT) from industrial activities would come in between 510-550 million euros this year, up from a previous forecast of between 460-500 million euros.

In the January to March period, Iveco’s adjusted EBIT from industrial activities stood at 134 million euros ($148 million), topping a company-provided 119-million-euro analysts’ consensus.

Free cash flow from industrial activities was a negative 593 million euros in the quarter, 427 million euros more than in the same period last year.

Shares in Iveco, which makes commercial vehicles also under the Astra and Heuliez brands, were down 3.9% as of 0844 GMT, the worst performance on Italy’s Milan bourse blue chip index (.FTMIB).

“As in prior first quarters, our operations absorbed cash, having been more acutely impacted by the ongoing supply chain disruptions and component shortages,” Chief Executive Gerrit Marx said in a statement.

“But we will fully recover during the year”, he added.

Equita’s analyst Martino De Ambroggi said in a note Iveco’s results were better than expected, but nevertheless showed how supply chain issues and parts shortages were persisting.

The group, which also builds defence vehicles, said profitability improved across its businesses in the first quarter, including in heavy-duty trucks, while order intake was above pre-pandemic levels.

Iveco was spun-off from farming and construction machine maker CNH Industrial (CNHI.MI) and separately listed at the start of 2022.

($1 = 0.9084 euros)

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