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SCANIA INTERIM REPORT, 1998-08-03

JANUARY - JUNE 1998

HIGHLIGHTS, SECOND QUARTER OF 1998

Operating income rose by nearly 30 percent.

A stronger market in Europe and a resulting increase in sales volume improved earnings.

Price levels in Europe stabilised.

In central and eastern Europe, rapid market growth continues. Scania is continuing to invest in its marketing organisation. Order bookings rose by 30 percent during the quarter.

In Latin America, the production changeover to the new truck range has been completed. 

RESULTS

Second quarter of 1998, compared to second quarter of 1997

Number of trucks and buses sold: 13,041 (12,274).

Sales: SEK 11,604 m. (10,137) [USD 1,458 m. (1,273)]*.

Operating income: SEK 1,010 m. (781) [USD 127 m. (98)], equivalent to a margin of 8.7 (7.7) percent. 

First half of 1998, compared to first half of 1997

Number of trucks and buses sold: 24,710 (22,433).

Sales: SEK 22,027 m. (18,941) [USD 2,767 m. (2,380)].

Operating income: SEK 1,639 m. (1,423) [USD 206 m. (179)] , equivalent to a margin of 7.4 (7.5) percent.

Income after financial items: SEK 1,489 m. (1,348) [USD 187 m. (169)].

Net income: SEK 1,054 m. (1,001) [USD 133 m. (126)].

Earnings per share: SEK 5.25 (5.00) [USD 0.67 (0.63)].

Earnings per share according to U.S. GAAP: SEK 5.45 (6.30) [USD 0.68 (0.79)]. 

THE MARKET

Second quarter of 1998, compared to second quarter of 1997

Order bookings for heavy trucks in western European markets rose by more than 20 percent.

In European operations, truck deliveries rose by about 15 percent. 

First half of 1998, compared to first half of 1997

Order bookings for heavy trucks in western European markets rose by more than 20 percent.

Scania’s market share for heavy trucks in western Europe was 15.2 (15.4) procent.

In Latin America, truck deliveries declined due to the production changeover. Scania’s market share in Brazil was 33.1 (41.5) percent. 

* Translated solely for the convenience of the reader at an exchange rate of SEK 7.96 = USD 1.00. 

SUMMARY

Jan-June

 

 

 

1998

Jan-June

Jan-June

Change

Units

USD m.*

1998

1997

 

Trucks and buses

– Order bookings

27,274

25,567

7%

– Sales

24,710

22,433

10%

Amounts in SEK m. unless otherwise stated

Sales

2,767

22,027

18,941

16%

Operating income

206

1,639

1,423

15%

Income after financial items

187

1,489

1,348

10%

Net income

133

1,054

1,001

5%

Operating cash flows

80

634

336

89%

Capital expenditures

125

992

1,353

-27%

Number of employees

30 June

1998

31 Dec

1997

Total number of employees

23,703

23,763

* Translated solely for the convenience of the reader at an exchange rate of SEK 7.98 = USD 1.00. 

 

Scania’s operating income during the first six months of the year improved by SEK 216 m. or 15 percent to SEK 1,639 m. This improvement in earnings was attributable to operations in Europe, where higher volumes led to greater capacity utilisation. Operating income for Latin America was negative due to expenses for the introduction of the 4-series truck generation as well as expenses for employee cutbacks.

The market for heavy trucks in western Europe continued to grow during the first half of 1998. Scania’s order bookings rose by more than 20 percent, compared to the corresponding period of 1997. Price levels stabilised during the second quarter.

The trend in the total western European market indicates an annual volume of 200,000 heavy trucks, compared to an average total market of about 170,000 vehicles annually over the past three years. Scania’s market share for the first half of 1998 amounted to 15.2 (15.4) percent.

The market trend in central and eastern Europe remained strong. Scania’s order bookings rose by more than 50 percent and deliveries by 80 percent, compared to the same period of 1997.

Scania continued the expansion of its marketing organisation. During the second quarter, Scania signed an agreement in principle to acquire Italscandia, the importing company in Italy. A number of importer and distributor facilities in central and eastern Europe were inaugurated.

In the Far East, market activity remained low. Scania’s operations focused mainly on providing service to existing customers and on keeping its distribution network intact.

In Latin America, the Brazilian market was nearly unchanged during the first half, compared to the same period of 1997. In the run-up to the coming presidential election in Brazil, there is some uncertainty about the market trend for the remainder of the year. In Argentina, the total market expanded by about 30 percent during the first half.

During June, truck production reached planned levels after certain initial problems, mainly related to deliveries from sub-contractors. The introduction of Scania’s 4-series product range involves the establishment of a new sub-contractor structure. As its truck deliveries have gradually increased, Scania has started to regain market share both in Brazil and Argentina which was lost in conjunction with the 4-series introduction.

In May the new Scania bus and coach range was introduced in Latin America. The bus production changeover is taking place during the second and third quarter.

Magnus Hahn, Communications and Public Affairs

Tel +46 8 5538 3510, mobiltel +46 70 551 79 03

Oscar Stjerngren, Investor Relations

Tel +46 8 5538 3657, mobiltel +46 70 598 36 58

Ulf Söderström, Communications and Public Affairs

Tel +46 8 5538 1044, mobiltel +46 70 680 95 95

Torbjörn Boije, Financial Reporting

Tel +46 8 5538 2228, mobiltel +46 70 591 50 16