By Valentina Za and Nick Carey
MILAN -Iveco Group is targeting compound annual growth in industrial revenue of 5% through to 2026 as its owner CNH Industrial prepares to spin off the truck and bus maker to focus on farm machinery and construction equipment.
CNH’s move mirrors a similar one by Daimler, whose truck operations will list next month after being spun off, and follows the 2019 listing of Volkswagen’s truck unit Traton.
Traton this year snapped up U.S. truckmaker Navistar as the sector consolidates in the face of the costly challenges of developing both fully-electric models for short-haul trucks and hydrogen fuel cells for longer distance trucks.
Iveco is Europe’s second largest player in the medium-sized commercial vehicle segment after Daimler, 2020 data provided by lobby group ACEA showed, but it lags competitors in the heavy-duty commercial vehicle market.
In its listing prospectus, Iveco had said its spin-off from CNH would help both take part in consolidation.
Iveco said on Thursday it will develop a range of fully-electric buses by 2023 and a new range of electric and fuel-cell heavy-duty trucks by 2024.
A latecomer to electric trucks, Iveco has set up a joint venture with U.S. group Nikola to produce battery electric vehicles, starting with the Nikola Tre heavy truck and hydrogen fuel cell trucks from the end of 2023.
Iveco said it is targeting revenue of between 16.5-17.5 billion euros ($18.7-$19.8 billion) by 2026, a compound annual growth rate of 5% versus 2019, before the COVID-19 pandemic.
CNH shareholders are due to approve the demerger on Dec. 23, paving the way for Iveco shares to start trading on Jan. 3.
Iveco, which also makes specialty and defence vehicles as well as powertrains, reported revenues of 10.4 billion euros in 2020, down from 11.8 billion euros in 2019.
And it forecast an adjusted operating profit margin for industrial activities of 5.0-6.0% in 2026, up from 3.6% in 2019.
It is targeting free cash flow of 500 million euros in 2026, up from 30 million in 2019.
($1 = 0.8819 euros)