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Investing.com -- Iveco Group NV (BIT:IVG) shares surged over 13% on Friday, buoyed by strong fourth-quarter earnings and an optimistic outlook for 2025.
The Italian commercial vehicle manufacturer exceeded analysts’ expectations, reporting an adjusted EBIT of €248 million, which was 6% above the company-compiled consensus.
As per analysts at Morgan Stanley (NYSE:MS), Iveco’s ability to expand its industrial EBIT margin in a challenging environment played a key role in the stock’s rally.
The company managed to achieve this through disciplined pricing strategies and cost control measures across its Truck, Defence, and Powertrain divisions.
While revenues of €4.56 billion fell slightly short of Morgan Stanley estimates, they still surpassed broader market consensus, underscoring the company’s resilience.
Free cash flow was another area of strength for Iveco, coming in 4% ahead of consensus estimates.
The company also announced a proposed FY24 dividend of €0.33 per share, further bolstering investor confidence.
Iveco estimates a heavy-duty truck market of 280,000 to 290,000 units in Europe by 2025, while the medium-duty segment will see a slight decline.
During the first half of this year, industrial adjusted EBIT is expected to be weaker than expected, followed by a stronger second half.
Additionally, the company said that its board is evaluating a potential spin-off of its Defence business.
Morgan Stanley analysts noted that such a move could be well-received by investors, given the higher valuation multiples typically seen in the defence sector compared to commercial vehicles.
If executed, a spin-off could unlock additional shareholder value, particularly given Iveco’s relatively low market capitalization.