Percy Barnevik's comments about Scania at Investor AB€s press conference on February 11, 1999

Percy Barnevik's comments about Scania at Investor AB's press conference on February 11, 1999 Let me start by saying this. As you certainly understand, I am not prepared at this moment to discuss the different alternatives in the middle of this process. I want to say two things to you that perhaps can help you to understand a little about the course of events from here on. One is that Scania is on the way up towards a 50-percent higher profit level, according to what the Board of Directors and the executive management have reported here recently. Over the course of two to three years Scania has had a tough running-in period with new trucks, buses, South America, Europe, guarantee costs, turnover costs that led partly to an underestimated comprehension of and the time it would take, so the share price has remained and has been sliding round 170-180 over 2-3 years. Now that this is behind us, now we can say that it is a cash-in period for the company. It is happening now and, therefore, we can say that the timing to discuss now the value of Scania as it goes and as it stands is a bit unfortunate. The stock market would probably like to see some quarters where this holds and where you can really have a price level of maybe around 240, 250, 260, totally regardless of speculation. This is one point that you should be aware of. And the second point is that we believe, as main owners of Scania that they may very well for 5, 6, 7 years from now stand on their own. It is well positioned, it can earn good money, it is not out there to throw itself to just any bidder and neither are we out there looking for any buyer. But in the long run there will be change in this industry where global volume counts and where you work with platforms and components for America, Europe, Asia and Latin America. And where we feel it can be in Scania's interest for the next generation to be in a constellation with other manufacturers. This is the picture. Then, we do not entirely determine ourselves when these types of discussions come up and it is a fact that changes in the industry are happening right now. There is a lot of discussion among parties and many are interested in Scania. But it is these two underlying factors I want to emphasize. (Inaudible question) I am only saying how Scania looks. Scania's interest and need for an industrial collaboration in the long run and Scania's profitability today. Then there is no doubt that with the comments made here last spring, for example from Volkswagen in the media, that they would like to buy Scania. Now, Volvo's acquisition of 13 percent is a very clear indication that there are parties who want to merge and who want to merge now. We are not running this on our own so you can say that the company is in play, a little bit through these events, and naturally you have to have ice in your veins and evaluate the situation and see to the shareholders' interest that it is a full-valued company and that industrially there is a sensible solution for the long term, if anything is forced, because of someone else's interest. Yes, this is as much as I want to say, and nothing more. As for Volvo, Fiat, Volkswagen, Daimler and Paccar and the other guys, how good or bad they are for Scania, I do not wish to comment upon that now. I say that if you think about the p/e ratios in the industry for Scania, if the company is 50 percent up in earnings capacity then it stands to reason that it is worth 50 percent more in value. But the fact that this has not happened suddenly so that there could have been a forecast is quite understandable for there has been a number of forecasts that have not been delivered in the last 2-3 years and now people just want to see this really delivered and it will take a number of quarters for Scania to show January, February, March, April etc. that we now are at the old level we were at earlier and where we have been for decades. It is this that is a bit unfortunate in the timing just now and that's why I say that the 170-180 in terms of share price should really be around 250. Should we interpret this 250 as such that you want to have a usual premium on this price? That's exactly how you should interpret it for if we should have two merging together.. Where do you think it should be at? No, I don't think I want to say that. But I think I want to say that regarding this talk about merging with another company and that there is a certain amount of synergy to be shared, then it should be shared in some way. If you choose to call that a premium or whatever else, but there is more money on the table, you can say, in the form of future extra profit possibilities. There is one problem to be resolved, to evaluate for Scania and for the counterparty and for different counterparties. But it should certainly be added. You mentioned that you were informed about Volvo's planned purchase the evening before. What was your reaction? Yes, I don't really want to comment any more on this, all the aspects back and forth. Is Scania a prioritized holding in Investor's portfolio? All the holdings we have are prioritized and we are extremely concerned that Scania, both short and long-term, should have a good development and I find it a bit difficult sometimes to understand these somewhat negative comments about it. Comments like Wallenberg's exit, Barnevik's nightmare. This is no nightmare. It is a happy situation. Scania's profits are rising by 50 percent. That's no nightmare. Many parties are interested in merging with Scania. It would have been worse if nobody was interested. Many are. That's really good. It's only a matter of finding a good solution. But there is nothing negative, rather positive for the opportunities for Scania. You just got to have ice in your veins and find a good long-term solution for the company. Yes, for our part it is OK for it to take quite a long time. We are not in a hurry. It is more the case that different parties are in more of a hurry, as you well know, and you do not entirely control this yourself. For further information: Nils Ingvar Lunndin, Managing Director Corporate Relations, +46-8-614 20 49, +46-70-514 20 49 Per Spångberg, Vice President Investor Relations, +46-8 614 20 31, +46-70 624 20 31 ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/02/12/19990223BIT00070/bit0001.doc http://www.bit.se/bitonline/1999/02/12/19990223BIT00070/bit0002.pdf