Scania Releases Interim Report

Scania has released its interim report for January-September 2018 .

Summary of the first 9 months of 2018: 

• Operating income amounted to SEK 10,153 m. (9,080) 
• Net sales increased by 11% 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 9 months of 2018 amounted to SEK 98.7 billion, an increase of 11% compared to the previous year. Earnings in the first 9 months of 2018 rose to SEK 10,153 m., which resulted in an operating margin of 10.3%. 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 favorable 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 normalizing our cost levels as our earnings are not fully reflecting the current favorable market situation.

"Order bookings for trucks fell by 7% during the first 9 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%. Financial Services reported operating income of SEK 1,059 million and credit losses remain at low levels.”