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Scania Interim Report January–March 2017


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Scania Group Press Release  /  May 5, 2017

Scania’s net sales rose to a record high SEK 28.4 billion and earnings for the first quarter reached SEK 3,081 m. Higher vehicle and service volumes were partly offset by the high investment level related to Scania’s new truck generation.

Summary of the first three months of 2017

  • Operating income rose by 35 percent to SEK 3,081 m. (2,275)

  • Net sales increased by 23 percent to SEK 28,411 m. (23,056)

  • Cash flow amounted to SEK 2,351 m. (133) in Vehicles and Services

Comments by Henrik Henriksson, President and CEO:

“Scania’s net sales rose to a record high SEK 28.4 billion and earnings for the first quarter reached SEK 3,081 m. Higher vehicle and service volumes were partly offset by the high investment level related to Scania’s new truck generation. Demand for trucks in Europe remains very strong due to the positive economic situation. Scania’s market share for trucks in Europe amounted to 16.8 percent compared to 17.4 percent in 2016. In Latin America demand is positively impacted by increases in Brazil, a market that now seems to have bottomed out at low levels. In Eurasia the demand trend is developing positively thanks to Russia. In Asia, demand increased due to a good performance in China, Iran and India. In Buses and Coaches, demand was strong in Asia, mainly related to Iran. The trend in demand for industrial and marine engines is still positive, while remaining weak on power generation side. Service revenue amounted to a record high SEK 5,849 m. (5,152), an increase of 14 percent. Scania’s revenue generated directly or indirectly from the 250,000 connected vehicles in the Scania fleet is constantly increasing. Connectivity is an important component, which is enabling Scania to offer customers more efficient services aimed at improving their profitability. The new Scania R 450 received the “Green Truck 2017” award in the heavy tractor class. The award is based on the superior fuel performance in comparative on-road testing and the figures speak for themselves – an average consumption of 23.7 litres/100 km. Whether trough fuel-efficient diesel vehicles or through alternative fuels, sustainability and profitability go hand in hand according to Scania. Apart from offering the industry’s most energy-efficient powertrains, Scania is making dedicated efforts to reduce transport companies’ dependence on fossil fuels. Scania has the market’s broadest range of hybrids and engine alternatives for all commercially available biofuels. All of Scania’s standard vehicles may be operated using biodiesel and up to 100-percent hydrotreated vegetable oil (HVO).“


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The truck giant wants a new job in Sweden

Dagens Industri  /  May 5, 2017

Scania lost its position as the most profitable truck manufacturer last year, but it was only a one-time deal. CEO Henrik Henriksson, who in an interview reports on record prospects after the start of the race in 2017, is offensive in Sweden and how the company is to reclaim the winning tone.

Scania has got a flying start of the year. Turnover during the first three months of the year hit a new record after rising 23 percent to SEK 28.4 billion compared with the first quarter last year. The operating profit increased by 35 percent to SEK 3.1 billion.

"I'm pleased. It was a really strong quarter," says Henrik Henriksson.

For many years, Scania has often been described as the world's most profitable truck manufacturer. However, in 2016, the Södertälje-based industry star, now owned by German Volkswagen, found that its Swedish archival, driven by former Scania chief Martin Lundstedt, drove in profitability races measured as profit margin. While Scania's operating margins backed sharply from 10.2 percent to 6.1 percent, the Volvo Group stopped at 6.9 percent.

But the Scania boss does not say he's worried. The margin decline last year was largely due to a provision of SEK 3.8 billion for the ongoing process with the EU, where Scania is suspected of having participated in a record and illegal cartel, yet a company still contests and is ready to process again for several years to come.

"Looking at the operating profit excluding the one-off item, we keep our head start," says Henrik Henriksson.

And when Scania presented its first quarter report, the scheme was restored. Although Volvo recently surprised by raising its operating margin to 9.1 percent, Scania's was again significantly higher by 10.8 percent.

"We believe we need to be higher than the competitors, and are not satisfied if we do not have a least double-digit profit margin. Several factors indicate that the margin can rise in the future, including gradually phasing out our old truck generation that draws significant additional costs. Gradual return to more normal volumes in Latin America will also mean a lot, "says Henrik Henriksson.

And he is very pleased with the beginning of the year, where many of the arrows point in the right direction. In addition to record sales and profit raises, order intake increased by 29 percent to almost 28,000 trucks and buses.

"Demand in Europe is very strong thanks to the favorable economic climate, and our new truck generation has received a very good reception. But we also benefited from increasing demand for vehicles, as well as service that is becoming increasingly important, even in many other markets," says Henrik Henriksson

In Latin America, order intake rose by 71 per cent, mainly following an increase in Brazil, where the freefall cases in recent years hit hard against Scania.

"Brazil has historically been our most important market, and it is therefore very welcome that it seems to have lived there. But it is still very low," says Henrik Henriksson.

Even Russia, where the market has previously collapsed, has turned it around and contributed positively.
Scania boss now believes that 2017 will be a new record year in sales.

"With the strong start we have had and what prospects look like now, we also believe in a very strong result for the full year," says Henrik Henriksson.

He leaves, however, a good luck.

"There are a number of risks, not least political ones, which can affect the business cycle and market. How is Brexit, for example, what does the elections in France and Germany mean and what happens in the United States with the new administration."

However, Scania has a great deal of confidence, which has led, among other things, to major new positions, primarily at home. The number of employees in Sweden increased by around 1 400 only last year and there may be more new jobs in the future.

"It's all about coping with increased volumes, but also greatly increasing investment in research and development, among other things. And we aim to continue growing, where we now want to take a leading role in electrification, digitization and autonomous vehicles that are in the process of Revolutionize our industry, "says Henrik Henriksson.

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