Scania’s earnings for the full year 2008 were the strongest ever, primarily driven by high vehicle volume and high prices. Service revenue remained at a high level and increased by 8 percent.
- Operating income rose to all time high level of SEK 12,512 m. (12,164)
- Net sales increased by 5 percent to SEK 88,977 m. (84,486)
- Net margin amounted to 10.0 (10.1) percent and earnings per share rose to SEK 11.11 (10.69)
- The Board of Directors proposes a dividend of SEK 2.50 (5.00) per share
Comments by Leif Östling, President and CEO
“Scania’s earnings for the full year 2008 were the strongest ever, primarily driven by high vehicle volume and high prices. Service revenue remained at a high level and increased by 8 percent. During the second half, financial turbulence had a broad impact on the markets where Scania operates. Transport companies had considerable difficulties obtaining investment financing and business loans. Together with lower economic activity, this led to postponement of both orders and deliveries of trucks ordered earlier. In a number of cases, previously ordered trucks were re-specified for new customers, and inventories are higher than normal. Customers can therefore hold off on their investment decision until a vehicle needs to be placed in service. At present, order bookings are thus not a good indicator of demand for new trucks; instead, deliveries better reflect the demand situation. Late in 2008, our production rate was adjusted to lower demand, but also in order to reduce inventories. By the end of the first quarter of 2009, most of the 2,000 production employees with fixed term temporary contracts will have left the company − a reduction from 12,000 to 10,000 employees. The number of high-cost work shifts will be fewer, leading to further cost reduction. Despite these measures, Scania will have a surplus of production employees. Permanent production employees will receive further training during the first half of 2009 in order to accelerate efficiency improvements and strengthen core competence when the market normalises again. In the prevailing market situation, tied-up capital has increased. Aside from steps to reduce working capital, Scania is postponing investments in machinery, equipment, development projects and IS/IT systems. The number of outside consultants is being reduced. The restructuring of Scania’s European axle and gearbox production has been completed and annual savings of SEK 300 m. will be achieved with full effect from 2009. In Scania’s judgement the long-term prospects for economic growth remain good, and this will also result in an increasing need for transport equipment and services. However, due to the current difficult market conditions, the uncertainty for the coming quarters is high.”
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