Scania’s revenue increased by 16 percent during the first nine months of 2007 and by 21 percent in the third quarter.
- Order bookings remain strong
- Net sales increased by 16 percent in the nine month period and 21 percent in the third quarter
- Net income increased by 42 percent, resulting in earnings per share of SEK 7.31
- Deliveries of vehicles are expected to total some 75,000 units during 2007
- Scania predicts continued strong demand for transport equipment
Scania, first nine months of 2007 – comments of the President and CEO
Scania’s revenue increased by 16 percent during the first nine months of 2007 and by 21 percent in the third quarter. The strong growth was mainly due to higher volume of vehicles and services as well as a higher share of vehicles with Euro 4 and Euro 5 engines and price increases. Net income strengthened by 42 percent and earnings per share rose to SEK 7.31 (5 .14). Return on capital employed amounted to 37.3 percent.
Order bookings increased by 38 percent and deliveries rose by 15 percent to 53,873 vehicles. Scania expects to deliver about 75,000 vehicles during 20 07 and predicts continued strong demand for services.
The demand for vehicles and services is high in most markets where Scania operates and we expect demand for heavy trucks to remain strong. So far there are no signs that the recent credit market turmoil has affected our customers’ businesses. Lead times remain long among chassis manufacturers as well as manufacturers of superstructures and trailers.
There is a shortage of transport capacity in Europe, with high demand for both new and used trucks. Transport prices have increased for the first time in many years, due to the shortage of transport capacity. Investments in the new European Union (EU) member countries, Russia and the other countries of the Commonwealth of Independent States (CIS) are expected to remain high for several years ahead.
Scania’s production units are operating at a very high level of capacity utilisation after the sharp increase in the production rate during 2007. By the end of 20 09 Scania will have gradually boosted its technical production capacity to 100,000 vehicles per year. In a longer perspective, Scania can increase its capacity to some 130,000-140,000 vehicles.
Service-related sales increased sharply as a result of high economic activity and a growing population of Scania vehicles. The shortage of transport capacity is al so leading to a larger number of older vehicles on the roads requiring service. To meet the very high workload at service workshops, we are focusing on improving efficiency and raising capacity. Scania will invest about SEK 1 billion annually during the coming years in expansion of the service network, primarily in the markets of central and eastern Europe including Russia.
There is a shortage of drivers in Europe. To meet the increased need for well trained drivers, Scania is launching a pan-European driver training concept, in line with the EU’s directive on mandatory periodic training. Driver training is an important means of raising productivity among our customers as well as enhancing road safety and environmental performance. Scania also organises driver competitions around the world on the art of driving safely and fuel efficiently. A total of some 40,000 drivers are expected to participate in these competitions.
Scania is the first truck manufacturer in the world to launch engines that meet Euro 5 emission standards without aftertreatment, two years ahead of legislation. The new engine platform has been developed for exhaust gas recirculation (EGR) and Scania XPI, the new injection system. This is to ensure that the engines will meet established tar gets and standards for performance and fuel efficiency, as well as for consistent environmental performance, robustness and convenient operation.
We are now broadening our truck range with the new G-series in order to strengthen our position in the construction sector and in important fast-growing markets. Our broadened truck range, together with the new engine platform, will contribute to continued future growth.
Scania expects continued strong growth with good profitability and cash flow. This means that Scania’s financial outlook remains unchanged: an annual increase in sales averaging about 10 percent during 2007–2009 and an operating margin of 12–15 percent. Return on capital employed is expected to surpass 30 percent.
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