Scania interim report, January - September 2001

SCANIA INTERIM REPORT, JANUARY - SEPTEMBER 2001 "Demand in western Europe has weakened further. The markets in Argentina and Brazil are decreasing in volume." Further more, Leif Östling, President and CEO, repeated that the operating income will be clearly lower this year than in 2000. First three quarters in brief Nine months Chang Third quarter e in % Units USD 2001 2000 USD 2001 2000 m.* m.* Trucks and buses - Order bookings 36,0 40,7 -11 10,1 11,9 44 20 47 61 - Deliveries 35,1 39,4 -11 10,3 11,7 65 16 44 69 Sales and earnings1 SEK m. unless otherwise stated Sales 3,555 37,9 36,2 5 1,098 11,7 10,9 00 03 07 06 Operating income 187 2,00 3,05 -34 38 402 901 4 7 Operating margin, Scania Group, percent 5.3 8.4 3.4 8.3 Operating margin, Scania products2, 5.7 9.4 3.7 9.4 percent Income after 142 1,52 2,58 -41 28 298 742 financial items 4 8 Net income 96 1,03 1,79 -42 19 199 514 7 1 Return on equity, 14.8 19.6 14.8 19.6 percent Return on capital employed, excluding customer finance 14.4 17.3 14.4 17.3 operations, percent Earnings per share, 0.49 5.19 8.96 0,09 0.99 2.57 SEK Cash flows before 223 2,37 2,90 121 1,29 1,42 acquisitions 6 1 1 7 Number of shares: 200 million Unless otherwise stated, all comparisons in brackets refer to the same period of last year. This report is also available at www.scania.com * Translated solely for the convenience of the reader at a closing exchange rate of SEK 10.660=USD 1.00. 1 Beginning with the current year, the Scania Group is applying the new recommendation RR 11 of the Swedish Financial Accounting Standards Council on revenue recognition. See page 6. 2Trucks, buses, engines and service-related products. SCANIA, FIRST THREE QUARTERS OF 2001: COMMENTS BY THE PRESIDENT AND CEO "For the first nine months of 2001, the operating income for Scania products was SEK 1,924 million, which represents a 34 percent decline. Operating income in European operations reached SEK 2,177 million. In Latin America, operating income was strongly negative, especially during the third quarter," Leif Östling notes. "The operating income of the Scania Group, including car operations, amounted to SEK 2,004 million during the first nine months, and during the third quarter it was SEK 402 million. "Global uncertainty about economic developments over the next few years increased dramatically after the terrorist attacks in the United States. Our core markets in western Europe and Latin America will go through a period of further weakening in demand for heavy trucks and buses. In the current downturn phase, we are mainly prioritising profitable transactions. Contracts in which customers demand far-reaching guaranteed repurchase values have low priority at present. This has resulted in a somewhat lower market share in western Europe, 13.6 percent. In Latin America, our market share is largely unchanged. "The adjustment of our European production organisation to a lower volume is continuing. According to the plans we have established, around 1,200 persons will have left the organisation by year-end. The bulk of these are employed on short-term contracts. Under an early retirement programme that applies to a small number of employees, SEK 125 million was charged to earnings during the third quarter. Further staffing cutbacks are planned during next year as part of a restructuring of bus and coach operations and cab production in Europe. "In Scania's European sales and service organisation, the level of activity is good. Sales of service-related products, including parts, rose by 24 percent to SEK 6.7 billion during the first nine months, of which the acquisition of Beers contributed SEK 625 million.. Despite the good level of activity, we are running a number of programmes in this part of the organisation to streamline both structures and working methods. This applies primarily to Great Britain, France and Germany. "In Latin America, we are continuing the steps that have been planned in order to boost profitability to an acceptable level. Unfortunately the economic situation has deteriorated substantially during the past quarter, especially in Argentina. This has more than eaten up the improvements that have been implemented. These developments put further pressure on us to raise the prices of Scania products, but also to continue cutting costs. We are running a number of programmes aimed at quickly achieving lower cost levels. But, due to recent developments, structural changes will be necessary. "Standard and Poor's, the credit rating agency, has assigned Scania a rating of A- for long-term borrowing and A-2 for short-term borrowing. "In light of recent developments in the world economy, we expect clearly lower operating income this year compared to 2000. We do not expect any market upturn until early 2003," Mr Östling says. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/30/20011030BIT00820/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/10/30/20011030BIT00820/bit0001.pdf The full report