Scania interim report January - March 2000

SCANIA INTERIM REPORT JANUARY - MARCH 2000 RESULTS First quarter of 2000, compared to first quarter of 1999 * The number of trucks and buses sold increased by 1 percent to 13,006 (12,910) units. * Sales rose by 8 percent to SEK 12,675 m. (11,779) [USD 1,462 m. 1 2 (1,359)] , including the contribution from acquired companies . * Operating income amounted to SEK 1,105 m. (1,240) [USD 127 m. (143)], equivalent to a margin of 8.7 (10.5) percent. * Earnings in European operations were in principle unchanged, excluding currency effects amounting to SEK -100 m. [USD -12 m.]. * In Latin American operations, operating income amounted to SEK -122 m. (-96) [USD -14 m. (-11)] including items affecting comparability of SEK - 50 m. (+100) [USD -6 m. (+12)]. Underlying earnings improved. * Operating income in customer finance operations rose to SEK 38 m. (30) [USD 4 m. (3)]. * Net income: SEK 661 m. (770) [USD 76 m. (89)]. * Earnings per share: SEK 3.30 (3.85) [USD 0.38 (0.44)]. * Earnings per share according to U.S. GAAP: SEK 3.40 (4.15) [USD 0.39 (0.48)]. * Operating cash flows, excluding acquisitions of companies, improved to SEK 481 m. (-144) [USD 56 m. (-17)]. MARKET First quarter of 2000, compared to first quarter of 1999 * Order bookings for heavy trucks in western Europen markets rose by 24 percent. * Scania's market share for heavy trucks in western Europe was 15.6 (15.2) percent, according to preliminary statistics. * Sales of service-related products rose by 19 percent, including the contribution from acquired companies. * Order bookings from markets in central and eastern Europe rose somewhat, while order bookings doubled from low levels in Asia. * Order bookings for heavy trucks in Latin America declined somewhat. 1 Translated solely for the convenience of the reader at an exchange rate of SEK 8.67 = USD 1.00. 2 The distributors in Finland, Norway and Latvia. Unless otherwise stated, all comparisons refer to the same period of last year. This report is also available at www.scania.com SCANIA INTERIM REPORT, JANUARY - MARCH 2000 European operations* showed largely unchanged earnings during the first quarter of 2000, excluding currency effects of about SEK -100 m., compared to the same quarter of last year. An improved internal cost situation partly offset the effect of continued depressed prices in the European heavy truck market. Due to fewer production days, sales volume in European operations was limited during the first quarter. Operating income in Latin American operations included costs for personnel cutbacks as part of the ongoing action programme, while the same quarter of last year was affected by a positive non-recurring effect related to the devaluation of the Brazilian currency. The truck market in western Europe remained very strong. This is also applicable for April. Scania's truck order bookings in western Europe rose by 24 percent in the first quarter, compared to the same period of 1999. Demand was strong in most western European markets. In central and eastern Europe, demand rose somewhat. Order bookings from markets in Asia doubled. In both cases, volume was low. In Latin America, Scania's truck order bookings declined somewhat during the first quarter, compared to the same period of last year. The total market in Latin America was somewhat larger than last year and is expected to improve further during 2000. In Brazil, Scania's market share fell to 27.6 (35.8) percent. For the full year 1999, its share amounted to 31.7 percent. In Argentina, Scania's market share rose to 27.6 (25.6) percent in a market that shrank by 13 percent. According to preliminary statistics, during the first quarter for 2000 a total of about 65,000 (62,000) heavy trucks were registered in western Europe, up 5 percent. Recalculated to a rolling twelve-month basis, this is equivalent to an annual rate of around 240,000 trucks. During the first quarter, about 10,300 (9,400) Scania trucks were registered, for a preliminary market share of 15.6 (15.2) percent. The total number of Scania trucks sold was essentially unchanged. In European operations, the number of trucks sold rose by 3 percent. The number of buses sold increased somewhat and totalled 952 (897). In Latin America, bus sales rose significantly. Sales of service-related products during the first quarter rose by 19 percent, including the contribution from acquired companies, compared to the same period of last year. The customer finance portfolio increased by about SEK 400 m., compared to the end of 1999. On 27 March, Scania's main owner Investor announced an agreement to sell 34.0 percent of the voting power and 18.7 percent of the share capital in Scania to Germany's Volkswagen AG. After this transaction is completed, Investor's ownership will amount to 15.3 percent of the votes and 9.1 percent of the capital in Scania. At the end of the quarter Volvo's shareholding in Scania amounted to 30.6 percent of the votes and 45.5 percent of the capital. * European operations are the portion of Scania's operations that supply all markets expect Latin American ones with the company's products and services. SALES AND EARNINGS During the first quarter, the Scania Group sold 13,006 (12,910) trucks and buses, an increase of 1 percent. In monetary terms, the Scania Group's sales rose by 8 percent to SEK 12,675 m. (11,779), including the contribution from acquired companies. Sales of Scania products rose by 7 percent. Excluding the contribution from acquired companies, sales rose by 1 percent. Operating income amounted to SEK 1,105 m. (1,240), equivalent to an operating margin of 8.7 (10.5) percent. In European operations, unit sales of trucks and buses increased by 2 percent. In monetary terms, sales rose by 7 percent, including the contribution from acquired companies. Operating income amounted to SEK 1,134 m. (1,244). Currency effects lowered earnings by about SEK 100 m. Continued depressed prices in the European truck market were partly offset by an improved internal cost situation. The operating margin decreased to 10.8 (12.7) percent. In Latin American operations, units sales of trucks and buses declined to 1,686 (1,827), mainly due to a shift in the holiday period during the first quarter of 1999. Operating income amounted to SEK -122 m. (-96). During the first quarter, earnings were lowered by about SEK 50 m. in costs for a planned personnel reduction in accordance with the ongoing cost-cutting programme. Last year, operating income during the first quarter was boosted about SEK 100 m. by translation effects due to the Brazilian devaluation. Underlying earnings thus improved by about SEK 120 m., due to improved prices and a lower cost level. The operating income in European customer finance operations rose to SEK 38 m. (30) as a consequence of higher financing volume and lower administrative cost per contract. Operating income for Svenska Volkswagen products amounted to SEK 55 m. (62). Net financial items totalled SEK -150 m. (-130). In European operations, net financial items improved, compared to the first quarter of 1999. In Latin America, net financial items deteriorated, due to negative cash flows and higher interest rates. The Scania Group's tax expenses were equivalent to 30.7 (30.5) percent of income after financial items. CASH FLOWS Scania's operating cash flows, excluding customer finance operations, improved during the first quarter to SEK 468 m. (-804). Excluding acquired companies, cash flows amounted to SEK 481 m. (-144). Cash from operating activities amounted to SEK 1,143 m. Tied-up working capital rose by SEK 280 m. This increase was attributable to tax payments of more than SEK 300 m. related to 1999. Net investments amounted to SEK 395 m. (1,195). Excluding acquisitions, net investments amounted to SEK 382 m. (481). The number of employees totalled 25,906 at the end of the report period. This represented an increase of 92 persons since the beginning of the year. The increase was attributable to marketing companies in Europe as well as Swedish car operations. As a consequence of personnel reduction programmes, the number of employees in Latin American operations declined by 157. Annual General Meeting The Annual General Meeting of Shareholders in Scania will be held at 5.30 p.m. on Wednesday, 24 May 2000 at Scaniarinken, Södertälje, Sweden. Dividend The Board of Directors of Scania has decided to propose to the Annual General Meeting an increase in the dividend for the 1999 financial year to SEK 7.00 per share (6.50). Södertälje, 27 April 2000 Leif Östling President and CEO This Interim Report has not been subject to special review by the company's auditors. The next Interim Report will be published on 19 July 2000. Magnus Hahn, Corporate Tel. +46-8 5538 3510, mobile Communications tel. +46-70 551 79 03 Ulf Söderström, Corporate Tel. +46-8 5538 1044, mobile Communications tel. +46-70 680 95 95 Oscar Stjerngren, Investor Tel. +46-8 5538 3657, mobile Relations tel. +46-70 598 36 58 ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/04/27/20000427BIT00080/bit0001.doc The full report http://www.bit.se/bitonline/2000/04/27/20000427BIT00080/bit0002.pdf The full report