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SCANIA YEAR-END REPORT – JANUARY – DECEMBER 1997

Our 1997 truck and bus volume was the highest in Scania’s history. Operating income remained at the 1996 level. Competition in western European markets intensified. In particular, German manufacturers are aggressively trying to increase their volume and capture market share. In my judgement, the competitive situation will not change during 1998.

Summary

Fourth quarter of 1997, compared to fourth quarter of 1996

  • Number of trucks and buses sold: 13,942 (11,119).
  • Sales: SEK 11,531 m. (9,164) [USD 1,465 m. (1,164]*.
  • Operating income: SEK 1,004 m. (628) [USD 127 m. (80)], equivalent to a margin of 8.7 (6.9) percent.
  • Adjusted for the positive nonrecurring effects of rulings on tax disputes concerning indirect taxes in Latin America, operating income was SEK 904 m. (183) [USD 115 m. (23)], equivalent to a margin of 7.8 (2.0) percent.

Full year 1997, compared to full year 1996

  • Number of trucks and buses sold: 46,976 (42,991).
  • Sales: SEK 39,719 m. (33,730) [USD 5,047 m. (4,286)].
  • Sales of service-related products rose by 22 percent to SEK 5,649 m. (4,616) [USD 718 m. (587)].
  • Operating income: SEK 3,047 m. (3,057) [USD 387 m. (388)], equivalent to a margin of 7.7 (9.1) percent.
  • Adjusted for the positive nonrecurring effects of rulings on tax disputes concerning indirect taxes in Latin America, operating income was SEK 2,877 m. (2,477) [USD 366 m. (315)], equivalent to a margin of 7.2 (7.3) percent.
  • Income after financial items: SEK 2,751 m. (2,706) [USD 350 m. (344)].
  • Net income: SEK 1,985 m. (1,981) [USD 252 m. (252)].
  • Earnings per share: SEK 9.90 (9.90) [USD 1.26 (1.26)].
  • Earnings per share according to U.S. GAAP: SEK 11.10 (10.30) [USD 1.41 (1.31)].
  • Proposed dividend for 1997: unchanged SEK 5.50 (5.50) [USD 0.70 (0.70)] per share.

 

* Translated solely for the convenience of the reader at an exchange rate of SEK 7.87 = USD 1.00.

 

THE MARKET IN BRIEF

Fourth quarter of 1997, compared to fourth quarter of 1996

  • Order bookings for heavy trucks in western European markets rose by 31 percent.
  • Order bookings in Latin America fell.

Full year 1997, compared to full year 1996

  • Order bookings for heavy trucks in western European markets rose by 23 percent.
  • Scania’s market share for heavy trucks in western Europe was 15.1 (15.5) percent.
  • In Latin America, truck deliveries rose by 27 percent. Scania’s market share in Brazil was 39.5 (38.2) percent.
  • Bus and bus chassis sales were the highest ever.

Comment by Leif Östling, President and CEO of Scania, on the Year-End Report, 20 February 1998

“Our 1997 truck and bus volume was the highest in Scania’s history. Operating income remained at the 1996 level. Competition in western European markets intensified. In particular, German manufacturers are aggressively trying to increase their volume and capture market share. In my judgement, the competitive situation will not change during 1998.

“Scania’s 1997 earnings were affected by more than SEK 300 m. in increased depreciation. Warranty, goodwill and changeover costs both in distribution and production rose by SEK 400 m. The changeover to our new bus range in Europe affected earnings by about SEK 100 m.

In 1998, warranty costs will remain high in Europe during most of the year, then gradually diminish. The changeover to the 4-series range in Latin America is expected to lower 1998 earnings. Most of this effect will occur during the first quarter of the year.

“The introduction of 4-series trucks and buses in Latin America means that Scania will be the only manufacturer that can offer the same products in all markets. Once the introduction of the 4-series range is fully completed, Scania will have a higher technical production capacity globally.

“We are also in the midst of investing aggressively in our service and distribution network for the purpose of increasing our market presence and thereby stepping up sales. In western Europe, we are implementing extensive structural changes at the distribution and service level in order to create effective units where customers operate. The trend towards greater outsourcing of maintenance, repairs and other services by fleet operators generates strong expansion in sales of service-related products. In eastern Europe, we are rapidly enlarging our presence in order to create a broad base for the vigorous expansion under way in these markets.

“During the second half of 1997, developments in South East Asia were increasingly gloomy. Demand slowed significantly in most countries. It is now clear that the financial crisis will continue during 1998, with very weak demand for heavy trucks as a consequence. In this situation, our highest priority in the region is to ensure the survival of our distributors.

“Today we are laying the foundation for continued global expansion by means of our new model program and a substantially improved distribution and service network.”

Contact persons

Lars Christiansson, Communications and Public Affairs Tel +46 8 5538 1212, mobile tel +46 70 590 50 80

Thomas Skoglund, Communications and Public Affairs Tel +46 8 5538 1258, mobile tel +46 70 556 07 97

Magnus Hahn, Communications and Public Affairs Tel +46 8 5538 3510, mobile tel +46 70 551 79 03

Cecilia Edström, Investor Relations Tel +46 8 5538 3557, mobile tel +46 70 588 35 57

 

 

SUMMARY

1997

Full year 1997

Full year

Full year

Q 4

Q 4

Q 3

Q 2

Q 1

Units

USD m.*

1997

1996

USD m.*

Trucks and buses
– Order bookings

50,891

39,739

12,540

12,784

13,185

12,382

– Sales

46,976

42,991

13,942

10,601

12,274

10,159

Amounts in SEK m. unless otherwise stated
Sales

5,047

39,719

33,730

1,465

11,531

9,247

10,137

8,804

Operating income

387

3,047

3,057

127

1,004

620

781

642

Income after financial items

350

2,751

2,706

114

900

503

771

577

Net income

252

1,985

1,981

81

635

349

581

420

Operating cash flows

-7

-55

1,625

50

393

-784

712

-376

Capital expenditures

326

2,566

2,579

91

713

501

784

568

Operating margin, percent

7.7

9.1

8.7

6.7

7.7

7.3

Number of employees

31 Dec

1997

31 Dec

1997

30 Sep 1997

30 Jun 1997

31 Mar 1997

European operations

19,464

17,956

18,857

17,864

17,737

– Marketing companies

6,160

4,877

5,607

5,095

4,852

– Production companies

13,180

12,988

13,137

12,676

12,794

– Customer finance etc

124

91

113

93

91

Latin American operations

4,299

4,250

4,357

4,236

4,256

Total number of employees

23,763

22,206

23,214

22,100

21,993

* Translated solely for the convenience of the reader at an exchange rate of SEK 7.87 = USD 1.00.