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SCANIA INTERIM REPORT– JANUARY – MARCH 2005

“Scania’s operating income in the first quarter of 2005 rose by 15 percent to SEK 1,679 m. The operating margin climbed to more than 12 percent. Net income rose by 19 percent to SEK 1,155 m., which resulted in earnings per share of SEK 5.78 (4.87),” says Leif Östling, President and CEO.

SCANIA, FIRST QUARTER OF 2005 – COMMENTS BY THE PRESIDENT AND CEO

Scania’s operating income in the first quarter of 2005 rose by 15 percent to SEK 1,679 m. The operating margin climbed to more than 12 percent. Net income rose by 19 percent to SEK 1,155 m., which resulted in earnings per share of SEK 5.78 (4.87). Order bookings for vehicles fell 1 percent, while deliveries climbed by 7 percent. Service revenue and Customer Finance showed continued good development.

Demand for heavy trucks was somewhat subdued in western Europe during the first quarter. Deliveries rose by 2 percent, while order bookings declined by 5 percent compared to the strong first quarter of 2004. There were major variations between countries. The Nordic countries continued their strong development, while the markets in Germany, the Netherlands and Great Britain weakened.

In central and eastern Europe, deliveries climbed while order bookings fell after last year’s strong growth, which was mainly stimulated by the accession of new member states to the European Union. Above all, weaker demand in Poland was behind the downturn. In Latin America, order bookings continued to strengthen. Asia showed lower order bookings, mainly caused by market developments in Turkey and South Korea.

Demand for buses and coaches rose during the first quarter. Growth was especially good in Brazil, Sweden and Great Britain. Among other things, Scania received two major orders, one for ethanol buses in Sweden and the other for tourist coaches in Great Britain.

The strengthening of the euro against the US dollar and fluctuating oil prices are restraining economic activity in Europe. In a number of markets, for example in Germany, France and Italy, economic growth is at low levels. This affects private consumption and industrial demand and leads to uncertainty about the demand for heavy trucks. The current year is thus to be regarded as an off year for western European growth. In Latin America, we expect to see a continued strong market during the first half of 2005. In Asia, we are currently seeing positive signals from South Korea. In Turkey as well, demand has begun to rebound after a weak patch early in the year.

In light of the large volume of trucks that were registered in the late 1990s, over the next few years there will be a continued replacement need. Within a few years, the market for heavy trucks in western Europe is expected to surpass the previous peak achieved in 2000, when 244,000 heavy trucks were registered. Also contributing to market growth are continued exports of used vehicles to central and eastern Europe.

The changeover to Scania’s new truck range continued to proceed without disruptions during the first quarter of 2005. The changeover in Europe was completed, and production there now consists 100 percent of the new truck range launched in 2004. Increases in material prices affected earnings in the first quarter. A stable production rate will provide good potential for continued productivity improvements at Scania’s production units.

During the report period, Scania completed its offer for Ainax, which was accepted by 96.3 percent of that company’s shareholders. This means that as from 22 February, Ainax is a subsidiary of Scania. Ainax shares will be de-listed on 29 April. Scania intends to carry out a liquidation of Ainax during 2006. After the offer for Ainax, the number of Scania shareholders has risen from just above 46,000 to more than 110,000.

For more information please see attached pdf.

Contact persons

Cecilia Edström, Corporate Relations
tel. +46 8 5538 3557
mobile tel. +46 70 588 3557

Stina Thorman, Investor Relations
tel. +46 8 5538 3716
mobile tel. +46 70 518 3716

Eric Österberg, Corporate Communications
tel. +46 8 5538 5883
mobile tel. +46 70 590 0599