Scania six-month report - January - June 2002

SCANIA SIX-MONTH REPORT - JANUARY - JUNE 2002[REMOVED GRAPHICS] [REMOVED GRAPHICS] "In Europe, demand has proved somewhat better than we had expected, but substantial uncertainty persists. In Latin America there are few bright spots. The outcome of the presidential election in Brazil as well as economic and political developments in Argentina will be crucial to the business development in the region. All this leads to high uncertainty regarding the market development. Scania's action programmes in the form of a stricter price policy and streamlining of the production network, together with good growth in service-related business, are targeted to achieve further improvements" says Leif Östling. First half in brief Change First half in % Units USD 2002 2001 m.* Trucks and buses - Order bookings 24,244 25,897 -6 - Deliveries 21,096 24,821 -15 Sales and earnings SEK m. unless otherwise stated Sales, Scania products1 2,495 22,860 23,285 -2 Operating income, Scania 187 1,716 1,540 11 products Capital gain in car 60 550 - operations Total operating income 249 2,277 1,602 Income after financial items 211 1,930 1,226 Net income 159 1,459 838 Operating margin, Scania products, percent 7.5 6.6 Return on equity, percent2 10.6 17.4 Return on capital employed, 10.9 16.5 excluding Customer finance operations, percent2 Earnings per share, SEK 0.80 7.30 4.20 Earnings per share excluding capital gain, SEK 0.50 4.55 Cash flow excluding Customer finance operations and 108 988 1,085 divestments/acquisitions of companies Cash flow excluding Customer finance operations and including 238 2,181 199 divestments/acquisitions of companies Number of employees, 30 June 27,561 28,652 Number of shares: 200 million 1 Trucks, buses, engines and service-related products. 2 Unless otherwise indicated, calculations are based on an average of five measurement points (quarters). * Translated solely for the convenience of the reader at a closing exchange rate of SEK 9.1625 = USD 1.00. Unless otherwise stated, all comparisons in brackets refer to the same period of last year. This report is also available at www.scania.com SCANIA, FIRST HALF OF 2002 - COMMENTS BY THE PRESIDENT AND CEO "The operating income of the Scania Group was at nearly the same level as during the first half of 2001 if the capital gain from the divestment of Svenska Volkswagen AB and Din Bil AB as well as the effects of new accounting principles are excluded. The operating margin for Scania products amounted to 7.5 percent during the first half of 2002 and 8.4 percent during the second quarter," notes Leif Östling, President and CEO of Scania. "Operating income was mainly affected by the fact that 3,700 fewer trucks and buses were sold. Sales of service-related products parts and workshop services rose by 8 percent. In customer finance operations, earnings are continuing to rise. "The demand picture in Europe is divided. The downturn in Great Britain, Italy and Spain is limited, while the decline is significantly larger in Germany, France and the BeNeLux countries. Scania's market share during the first five months of 2002 was 14.3 percent. There is considerable uncertainty about future developments. Demand for heavy trucks in western Europe has currently stabilised at an annual rate of around 190,000 units. "The markets in central and eastern Europe are performing relatively well, with the exception of Poland. Russia in particular shows substantially higher order bookings than last year. Scania has strengthened its position in several eastern European markets and has a share of more than 15 percent in the region. In the Middle East, demand remains good despite the unrest in the region. In the Far East, South Korea is performing especially well and has again become a significant market for Scania. "In Latin America, demand is continuing to decline. In practice, the Argentine market for commercial vehicles is non-existent. Demand in Brazil is declining, due among other things to continued uncertainty as the presidential election approaches. The Brazilian currency has weakened greatly in recent months and the real now stands at close to 3 per US dollar, 15 to 20 percent weaker than a few months ago. Scania's programme for increasing prices in Brazil to world market level remains in place, even though this has meant a significant decline in market share. Steps to reduce costs are continuing, and our break-even level has now halved compared to last year. Deliveries of components and complete vehicles to markets outside Latin America are increasing and will have a positive effect on earnings in Latin America. "Co-ordination of bus and truck operations is proceeding as planned. Early in July, the last bus chassis was manufactured in Katrineholm, Sweden. In August, all European bus chassis production as well as development, marketing and procurement departments for trucks and buses, will be co-ordinated in Södertälje. Remaining in Katrineholm is Scania's wholly owned bus bodybuilding company Omni. During 2003, the full effect of these measures on Scania's earnings will materialise. "The divestment of the importer operations of Svenska Volkswagen AB and the dealership chain Din Bil AB to Volkswagen AG of Germany was completed when the transactions were approved by the competition authority of the European Commission. The combined purchase price amounted to more than SEK 1.3 billion, and the capital gain was SEK 550 m. In terms of liquidity, the divestments represent a positive effect of more than SEK 1.5 billion. "Preparations are continuing for the introduction of Scania trucks in Japan, in co-operation with the Japanese-based company Hino. Meanwhile we are taking further steps to define other potential areas of co- operation. "In Europe, demand has proved somewhat better than we had expected, but substantial uncertainty persists. In Latin America there are few bright spots. The outcome of the presidential election in Brazil as well as economic and political developments in Argentina will be crucial to the business development in the region. All this leads to high uncertainty regarding the market development. Scania's action programmes in the form of a stricter price policy and streamlining of the production network, together with good growth in service-related business, are targeted to achieve further improvements," Mr Östling concludes. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/07/19/20020719BIT00270/wkr0001.doc The full report http://www.waymaker.net/bitonline/2002/07/19/20020719BIT00270/wkr0002.pdf The full report

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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 2018, we delivered 88,000 trucks, 8,500 buses as well as 12,800 industrial and marine engines to our customers. Net sales totalled to over SEK 137 billion, of which about 20 percent were services-related. Founded in 1891, Scania now operates in more than 100 countries and employs some 52,000 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 SE. For more information visit: www.scania.com.

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