Scania Releases First Quarter 2019 Report

Scania’s net sales rose to SEK 36.1 billion and earnings in the first quarter amounted to an all-time-high of SEK 4,207 m., which gave an operating margin of 11.7%. 

Summary of the first three months of 2019

• Operating income rose by 27% to SEK 4,207 m. (3,315)
• Net sales increased by 16% to SEK 36,092 m. (31,115)
• Cash flow amounted to SEK 507 m. (64) in Vehicles and Services

Comments by Henrik Henriksson, President and CEO

"Scania’s net sales rose to SEK 36.1 billion and earnings in the first quarter amounted to an all-time-high of SEK 4,207 m., which gave an operating margin of 11.7%. Higher vehicle and service volume, currency effects and the market mix contributed positively while higher production costs due to the changeover in Latin America and supply chain constraints impacted earnings negatively. Scania’s last PGR series truck has rolled off the assembly line and only trucks from the new truck range are now produced in the entire global production system. The final stage of the transition was completed during the quarter with the changeover of production in Latin America. Some limitations remain in the flexibility and capacity of our global production system. There is still a higher than normal cost situation in general for products and production related to the new truck generation. The measures put in place to normalize cost levels are continuing.

"Service revenue during the first quarter of 2019 amounted to a record high SEK 7,166 m. (6,500), an increase of 10%. Financial Services reported operating income of SEK 345 m. and maintained its trend of increased profitability.

"Order bookings for trucks fell by 9% in the first quarter of 2019 compared to the high level during the year-earlier period. Demand for trucks in Europe remains strong due to the positive economic situation. In Latin America, the trend in demand is positive thanks to the recovery in Brazil. Demand in Eurasia was impacted negatively by a slowdown in Russia. In Asia, order bookings fell in comparison with the previous year due to the Middle East, while demand in other parts of Asia remained strong. Buses and coaches were also impacted negatively by lower order intake in the Middle East and overall order bookings for buses and coaches were 28% lower than last year. In the Engines business area, demand remains at a high level.

"We see ever-increasing interest in Scania’s gas vehicles. When the city of Bogotá renewed their Bus Rapid Transit system, TransMilenio chose 741 Scania Euro 6 gas buses, the cleanest and most silent buses on the Colombian market. Scania will also deliver 100 gas trucks to a customer in Germany for transports to the food retail sector. Regardless of whether they are powered by biogas or natural gas, Scania’s gas engines have essentially the same technical solution. From a sustainability perspective, biogas is preferable since this fuel reduces CO₂ emissions by up to 90% (20% with natural gas). However, the use of biogas is hampered by a shortage of fuel. For this reason, Scania is working actively in various partnerships to secure the production of biogas and thereby enable a broader penetration for sustainable gas solutions to reduce carbon footprint."