Scania Interim Report January-September 2018
Summary of the first nine months of 2018
- Operating income amounted to SEK 10,153 m. (9,080)
- Net sales increased by 11 percent to SEK 98,674 m. (89,111)
- Cash flow amounted to SEK -134 m. (3,002) in Vehicles and Services
- The period was affected by major disruptions in the supply chain resulting in negative cash flow
- As from the 2018 financial year, the presentation of the income statement has been adjusted to align with Volkswagen Group’s (including comparative periods)
Comments by Henrik Henriksson, President and CEO
“Demand for the new truck range remained strong and the trend in services is positive. Scania’s net sales for the first nine months of 2018 amounted to SEK 98.7 billion, an increase of 11 percent compared to the previous year. Earnings in the first nine months of 2018 rose to SEK 10,153 m., which resulted in an operating margin of 10.3 percent. Higher vehicle and service volume contributed positively and so did currency effects while higher production costs for running double product ranges and disruptions in the supply chain impacted earnings negatively. Earnings were also negatively impacted by a less favourable market mix. The disruptions in the supply chain related to the shift to the new truck range were further aggravated by the strike that occurred at a components supplier, which led to a temporary stop in deliveries and sales of V8 engines. As a result of these disruptions, inventory levels increased, which combined with the high investment level impacted negatively on cash flow. With only Latin America remaining, within the coming two quarters we will have completed the task of shifting production to the new truck range in Scania’s production facilities globally. As we approach the end of our biggest industrial transition ever we are concurrently focusing on normalising our cost levels as our earnings are not fully reflecting the current favourable market situation.
Order bookings for trucks fell by 7 percent during the first nine months of 2018 compared to the year-earlier period. Demand for trucks in Europe remains at a good level. In Latin America the demand trend is reflected by the slow recovery in Brazil. There is currently uncertainty related to global trade. In the Middle East, demand has fallen drastically in Iran and Turkey, causing both cancelled orders and hampering new order intake. Overall order bookings in the Asia region were also negatively impacted by a slowdown in China. Demand in Eurasia continues to develop positively, mainly due to Russia despite its uncertainties. Demand for Buses and Coaches is also affected negatively by the situation in Iran but overall order bookings are in line with the same period in 2017. In the Engines business area the demand is at good levels in all segments, partly due to a pre-buy effect in Europe. Service revenue amounted to a record high SEK 19.6 billion, an increase of 12 percent. Financial Services reported operating income of SEK 1,059 million and credit losses remain at low levels.”
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Scania is a world-leading provider of transport solutions. Together with our partners and customers we are driving the shift towards a sustainable transport system. In 2017, we delivered 82,500 trucks, 8,300 buses as well as 8,500 industrial and marine engines to our customers. Net sales totalled nearly SEK 120 billion, of which about 20 percent were services-related. Founded in 1891, Scania now operates in more than 100 countries and employs some 49,300 people. Research and development are concentrated in Sweden, with branches in Brazil and India. Production takes place in Europe, Latin America and Asia, with regional production centres in Africa, Asia and Eurasia. Scania is part of TRATON AG. For more information visit: www.scania.com.