Italy's Iveco Group raises 2023 forecasts but burns cash in Q3

By Giulio Piovaccari

MILAN (Reuters) -Italian truck and bus maker Iveco Group on Wednesday raised its 2023 guidance for the third time this year but said it burnt cash in the third quarter despite a strong operating-profit result, hitting its shares.

The manufacturer said its adjusted earnings before interest and tax (EBIT) from industrial activities would come in between 770-800 million euros ($814-845 million) this year, up from a previous forecast of 650-700 million euros.

Free cash flow from industrial activities, however, was a negative 375 million euros in the July-September period.

Iveco shares were down 8% at 0920 GMT, the worst performing in Italy's blue chip index.

A Milan-based trader said the cash burn was weighing on the shares as investors had already discounted the full-year guidance improvement.

CEO Gerrit Marx said in a statement Iveco slowed the pace of new vehicle deliveries to its dealer network due to longer, capacity-related lead-times at several bodybuilders in Europe.

"This led to a somewhat high level of finished inventory - and cash absorption at group level - which we will deplete over the course of fourth quarter 2023 and first quarter 2024," he said.

Iveco confirmed its forecast for overall net cash availability from its industrial activities of around 2 billion euros at the end of 2023, after booking 725 million euros in the first nine months of the year.

This implies cash generation of well over one billion euros in the final quarter, much higher than 690 million euros in the same period of 2022.

In the third quarter, Iveco's adjusted EBIT from industrial activities almost tripled to 180 million euros, thanks to strong pricing power. That just beat a company-provided analysts' consensus of 164 million euros.

($1 = 0.9463 euros)

(Reporting by Giulio Piovaccari and Alessandro ParodiAdditional reporting by Giancarlo NavachEditing by Giulia Segreti and Mark Potter)