annual report   2010
This English version of Scania’s Annual Report is a translation of the Swedish-language original, the binding version that...
contents 1                                                          oPeRAtIons                                            ...
2    stAteMent oF tHe PResIDent AnD ceo                      scania stronger after the crisis                      the pas...
3Scania implements continuous efficiency improvements in           trial area, mainly related to commercial vehicles, whic...
4      scAnIA In bRIeF    scania in figures    Scania is a leading manufacturer of trucks and buses for heavy transport ap...
5                                              the world of scania                                              Scania ope...
6    scAnIA’s stRAtegy    scania’s strategy    Scania’s objective is to deliver optimised heavy trucks and buses, engines ...
7stRAtegIesContinuous improvements                                        Cross-functional working methodsScania makes use...
8    Scania 2010
scAnIA’s MoDuLAR systeM 9customised solutions throughthe modular product systemModularisation begins and ends with the cus...
10     scAnIA’s MoDuLAR systeM     Choosing components based on     performance needs     By understanding how a customer ...
11  FROnTS                                     caBS                                                   EnGinES             ...
12     Scania 2010
scAnIA’s WoRKIng MetHoDs 13Methods aimed at maximising efficiencyScania’s entire organisation is strongly focused on refin...
14     Scania 2010
MARKet tRenDs – tRucKs 15global recoveryhaving a flexible production structure andpreserving the company’s core competency...
16    MARKet tRenDs – tRucKs                                        3500 nm, features the highest output and torque of all...
17EUROPE                                                                                             aSia anD OTHER MaRKET...
18     Scania 2010
MARKet tRenDs – buses AnD coAcHes 19                                                                       broadening the ...
20     MARKet tRenDs – buses AnD coAcHes                                                                                  ...
21                                        Fast, efficient public                                        transport systems ...
22               Scania delivers engines for cargo handling equipment in harbours,               as well as for other indu...
MARKet tRenDs – engInes 23strong successfor scania as anengine supplierScania’s long-term investment in sales ofengines fo...
24    MARKet tRenDs – engInes                      More customers among machinery producers                               ...
25engines forpower generationDuring 2010, Scania launched its newrange of engines for electric powergeneration. The engine...
26                   Knowledgeable, dedicated employees in                   Scania’s service network ensure customers    ...
Scania Annual Report 2010
Scania Annual Report 2010
Scania Annual Report 2010
Scania Annual Report 2010
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Scania Annual Report 2010

  1. 1. annual report 2010
  2. 2. This English version of Scania’s Annual Report is a translation of the Swedish-language original, the binding version that shallprevail in case of discrepancies. Translation: Victor Kayfetz, Scan Edit.The Financial Reports encompass pages 68–136 and were prepared in compliance with International Financial Reporting Standards(IFRSs). The Report of the Directors encompasses pages 4–71 and 135–136.The Report of the Directors and accompanying Financial Reports also fulfil the requirements of the Swedish Annual Accounts Act andhave been audited by Scania’s auditors.Scania’s Swedish corporate identity number: Scania AB (publ) 556184–8564.Unless otherwise stated, all comparisons in this Annual Report refer to the same period of the preceding year.
  3. 3. contents 1 oPeRAtIons Statement of the President and cEO 2 RepoRt of the DiRectoRS 4–71 Scania in brief 4 Scania’s strategy 6 Scania’s modular system 8 Scania’s working methods 12 Market trends 14 Trucks 14 Buses and coaches 18 Engines 22 Services 26 Financial services 30 Production 32 Research and development 36 Sustainability report 40 Sustainable entrepreneurship 40 Sustainable transport 42 Employees 44 The environment 46 Managing and monitoring sustainability work 48 Scania share data 50 articles of association 52 Risks and risk management 53 corporate Governance Report 57 Board of Directors 64 Executive Board and corporate Units 66 FInAncIAL RePoRts Group financial review 68 consolidated income statements 72 consolidated balance sheets 74 consolidated statements of changes in equity 76 consolidated cash flow statements 77 notes to the consolidated financial statements 78 Parent company financial statements, Scania aB 131 notes to the Parent company financial statements 133 RepoRt of the DiRectoRS 135 –136 Proposed guidelines for salary and other remuneration 135Scania is a leading manufacturer of trucks and buses Proposed distribution of earnings 136for heavy transport applications, and of industrial audit report 137and marine engines. A growing proportion of the Quarterly data 138company’s operations consists of products and Key financial ratios and figures 140services in the financial and service sectors, assuring Definitions 141Scania’s customers of cost-effective transport Multi-year statistical review 142solutions and maximum uptime. annual General Meeting and financial information 144 Scania 2010
  4. 4. 2 stAteMent oF tHe PResIDent AnD ceo scania stronger after the crisis the past year was characterised by clearly improved sales volume for vehicles, engines and service in most markets. Scania was well equipped for the upturn and is a stronger company today than before the deep economic downturn. We not only preserved our core competency in the company by avoiding lay-offs, but also enhanced the skills of our employees through extensive training programmes, both theoretical and practical, directly at workplaces. our renewed product ranges – for trucks, buses, engines and services – were well received by our customers. When demand returned, we were quickly able to ramp up production, which helped us to deliver the best earnings and cash flow in the company’s history. Operating income rose to SEK 12,746 m. in 2010. Higher delivery times. Scania customers must be able to count on vehicle and service volume and significantly higher capacity quick delivery of the vehicle they have ordered, normally utilisation were the main reasons for the sharp improvement six to eight weeks from order date to chassis delivery. compared to 2009. The global economic recovery led to in- a large order backlog with long delivery times always creased activity in the transport industry during 2010, with a represents a high risk of cancellations of existing orders. number of markets outside Europe quickly rebounding after Scania hired more employees in 2010 to meet increas- the downturn. Latin america showed strong growth, and ing demand. To ensure flexibility, in many cases this was such countries as Brazil have been able to benefit greatly done using temporary contracts. i would also like to from asian demand for agricultural products and minerals. point out the impressive contribution made by Scania’s Meanwhile middle-class consumption is growing rapidly, sub-contractors during the rapid upturn, especially in the also increasing the need for transport. in addition, demand second half of 2010. collaboration with our suppliers has for trucks in Brazil has been supported by tax breaks and been outstanding, despite the large and rapid fluctuations interest rate subsidies. Scania has taken advantage of the we have experienced over the past two years. Group’s common global product range and production structure, which has enabled the company to meet the Successful new product ranges strong demand for vehicles and parts in Latin america. Scania has launched a number of new products and Demand in the European truck market improved gradually services that have been well received in the market. during 2010. Hauliers’ capacity utilisation improved and Scania’s R-series – international Truck of the Year 2010 freight prices began to recover. The Russian truck market – is built to meet high standards of fuel economy, driver recovered strongly during the fourth quarter. Service appeal and reliability. The R-series is available with a very volume in Europe gained momentum during the second wide selection of powertrain alternatives and has been half of 2010, leading to higher capacity utilisation in work- very well received by our customers. shops. Scania’s new V8 features high torque and high output compared to its market competitors. Scania’s V8 models Strong productivity growth enjoy a strong position in the high-output segment of the During the 2009/10 recession, Scania made very large truck market, with a market share of about 30 percent in investments in employee training. above all, it improved the the output segment above 600 hp. Our V8 engines are collective competency of the production network. This in- highly appreciated by our customers who work under volved a majority of employees at Scania’s production units. really tough operating conditions and require outstanding When higher order bookings led to a sharp increase in performance and functionality. the production rate, this occurred quickly without bottle- necks or disruptions. We were thus quickly able to regain Reducing environmental impact, step by step the productivity that prevailed before the autumn 2008 The step-by-step task of reducing the environmental im- downturn. During a recession as deep as in 2009/10, there pact of the vehicles we deliver and from Scania’s industrial is better openness and understanding about eliminating operations continued with undiminished intensity. Scania time-consuming, costly tasks and operations that do not has the technical solutions in place for Euro 6, the next contribute to customer value. During the period of four-day stage of European emission legislation. Technical develop- weeks, we also learned to work more efficiently in the ment work until the end of 2013, when Euro 6 takes effect, company’s administrative units. will focus on making various technical solutions simpler Our flexible production structure enabled us to imple- and more robust, to ensure that we can deliver high-quality ment rapid production increases without lengthening Euro 6 vehicles to our customers. Scania 2010
  5. 5. 3Scania implements continuous efficiency improvements in trial area, mainly related to commercial vehicles, whichits industrial processes when it comes to the use of energy, would make it possible for Scania and Man to profit fromwater, chemicals and raw materials, in an effort to minimise synergies in research and development, manufacturingall forms of waste. and sourcing. These investigations have shown that a full realisation of potential synergies requires closer coopera-Ecolution by Scania tion by combining the two companies, while maintainingScania works closely with its customers to environmentally the unique brand values of each respective company. nooptimise their transport services. Ecolution by Scania is a decision has been made, since there are a number ofnew package of products and services that provides the outstanding issues of a commercial and legal nature.customer with substantial savings. it includes fine-tuning thetechnical characteristics of vehicles, selecting the right fuel Outlook for 2011type, training drivers, providing driver support and designing We saw a very sharp recovery in our earnings duringservice and maintenance in an optimal way. 2010. in our assessment, the level of demand in early 2011 The ambition is to create low carbon dioxide emissions will be similar to the level prevailing during the second halfby means of the best possible fuel economy, thus making of 2010. But at the same time, we must remember that theit easier for a customer to achieve a profitable operation. Swedish krona has continued to strengthen, increasingScania will continue working to refine the concept in partner- the importance of cost-effectiveness and improvedship with its customers. productivity. The negative effects of the stronger Swedish krona, which impacted us in the fourth quarter of 2010,Long-term market expansion will be more pronounced during the first quarter of 2011.Global economic development will lead to a constantly it is also important to continue our focus on delivery times.growing need to transport goods and people. Today 70 There is a continued risk of bottlenecks among bothpercent of all goods transport in Europe goes by road. This sub-contractors and bodybuilding companies.percentage has been stable since the early 1970s, and thereis no indication that this situation will change. There is also Employee dedication invaluablegood growth potential for buses and coaches. The environ- The major improvements that Scania has achievedmental advantages of shifting urban passenger transport throughout its operations – research and development,from cars to buses are obvious. in peak traffic, carbon production, sales, service and administration – are baseddioxide emissions per passenger in a fully occupied bus are on the dedication of all employees and the day-to-day15 grams per kilometre, compared to about 150 g/km for efforts of many people to implement continuous improve-one person driving a car to work. in the mega-metropolises ments.that are now emerging globally, public transport will be i would like to thank all Scania employees for theircrucial in ensuring that traffic can flow at all. We can thus impressive contributions.look forward to a very expansive global market for heavycommercial vehicle and service-related products.Investigation of possible combination with MANSince 2010, Scania and German-based vehicle and engine Leif Östlingmanufacturer Man have investigated projects in the indus- President and cEO Scania 2010
  6. 6. 4 scAnIA In bRIeF scania in figures Scania is a leading manufacturer of trucks and buses for heavy transport applications, and of industrial and marine engines. a growing proportion of the company’s operations consists of products and services in the financial and service sectors, assuring Scania’s customers of cost-effective transport solutions and maximum uptime. VEHicLES anD SERVicES TRUcKS BUSES anD cOacHES EnGinES SERVicES Scania develops, manufactures and Scania delivers buses and coaches with industrial and marine engines from Scania’s service-related products ensure sells trucks with a gross vehicle weight high passenger capacity for use as tour- Scania are used in electric genera- high customer uptime. They encompass of more than 16 tonnes (class 8), ist coaches and in scheduled intercity tor sets, construction and agricul- everything from parts and maintenance intended for long-distance, construc- and urban service, often combined with tural machinery as well as in ships agreements to other services such as tion and distribution haulage as well as services. and pleasure boats. Most sales are for driver training, Scania assistance and public services. During 2010, Scania delivered 6,875 generator sets, either for continuous Fleet Management. During 2010, Scania delivered buses and coaches. electricity supply or as stand-by power. During 2010, net sales amounted to 56,837 trucks. During 2010, Scania delivered SEK 16,455 m. 6,526 engines. Key FIguRes 2010 2009 2008 Deliveries, units Fordonsleveranser per region ENG Trucks 56,837 36,807 66,516 Vehicles delivered by region, 2010 Buses and coaches 6,875 6,636 7,277 Engines 6,526 4,235 6,671 Net sales, Vehicles and Services, SEK m. 78,168 62,074 88,977 Africa and Oceania 6 % Operating income, SEK m. Europe 39 % Vehicles and Services 12,575 2,648 12,098 Asia 19 % Financial Services 171 –175 414 Total 12,746 2,473 12,512 America* 32 % Operating margin, percent 16.3 4.0 14.1 Eurasia 4 % Income before taxes, SEK m. 12,533 1,602 11,978 net income for the year, SEK m. 9,103 1,129 8,890 * Refers to Latin America Earnings per share, SEK 11.38 1.41 11.11 Nettoomsättning per produktområde ENG Cash flow, Vehicles and Services, SEK m. 11,880 5,512 1,774 net sales by product area, 2010 Return, percent on equity 34.7 5.1 38.3 on capital employed, Vehicles and Services 39.5 9.4 43.1 Miscellaneous 3 % Trucks 59 % Net debt/equity ratio*, Used vehicles 6 % Vehicles and Services –0.30 0.21 0.49 Equity/assets ratio, percent 30.5 23.7 19.9 Services 21 % Net capital expenditures, excluding acquisitions, Vehicles and Services, SEK m. 2,753 3,031 5,447 Engines 1 % Research and development expenditures, SEK m. 3,688 3,234 3,955 Buses 10 % Number of employees, 31 December 35,514 32,330 34,777 * net debt (+), net surplus (–). Scania 2010
  7. 7. 5 the world of scania Scania operates in about 100 countries and has more than 35,500 employees. Of these, around 15,000 work with sales and services in Scania’s own subsidiaries around the world. about 12,300 people work at production units in seven countries and delivery centres in six emerging markets. Research and development operations are concentrated in Södertälje, Sweden, and employ some 2,900 people. Scania’s Head Office is located in Södertälje, the workplace of most of the 5,300 people who perform administrative and other tasks. Scania’s corporate purchasing department in Södertälje is supplemented by local procurement offices in Poland, the czech Republic, the United States, china and Russia.FinanciaL SERVicES number of employees*, 2010 Luleå Södertälje 10,070 São Paulo 3,246 Södertälje Oskarshamn 1,706 Oskarshamn St. Petersburg Zwolle Zwolle 1,576 Angers Słupsk Słupsk 697 Busan angers 635 Luleå 601 Taipei Tucumán 549 Dubai * Refers to the total number of employees at Scania’sFinanciaL SERVicES Kuala Lumpur production sites.Financial services are an important partof Scania’s business. They are oftenone element of cost-effective compre- Tucumán São Paulo Johannesburghensive solutions for customers, whocan choose between loan financing,various forms of leases and insurancesolutions. ■ Sales and services ■ Delivery centres Production ■ Research and developmentVeHIcLes AnD seRVIces Avkastning på sysselsatt kapital ENG (ROCE) Return on capital employed (Roce) Return on capital employed Scania’s operating income increased continuously starting in 2001 as a result of increased business volume and higher margins. Meanwhile capital employed in % Vehicles and Services was largely unchanged. 50 The most important reasons behind this successful trend was that the increase 40 in vehicle deliveries occurred largely due to productivity improvements in existing 30 facilities and the fact that service operations expanded in collaboration with independent entrepreneurs and through streamlining of the Scania-owned sales 20 and services network. 10 Scania’s operating income increased sharply during 2010, mainly as a result 0 of increased demand for vehicle deliveries and significantly higher capacity 00 01 02 03 04 05 06 07 08 09 10 utilisation in the production network, while capital employed during the year decreased somewhat. Kassa öde cash flow Cash flow Scania has historically had a strong increase in cash flow, mainly due to the strong upturn in earnings. SEK m. The economic slowdown during the second half of 2008 led to a greater need for 12,000 working capital, mainly an increase in inventories. During 2009, the sharp decline in 10,000 cash flow before changes in working capital was offset by a reduction in inventories 8,000 and receivables. During 2010, cash flow was affected by the strong upturn in earnings 6,000 as well as by increased liabilities as a consequence of the higher production rate and 4,000 a reduced inventory of used vehicles. 2,000 net investments during 2010 amounted to SEK 2,753 m. and were in line with depreciation, which totalled SEK 2,544 m. 0 00 01 02 03 04 05 06 07 08 09 10 Scania 2010
  8. 8. 6 scAnIA’s stRAtegy scania’s strategy Scania’s objective is to deliver optimised heavy trucks and buses, engines and services that enable its customers to achieve the best earning capacity and operating economy − thereby becoming the leading company in its industry. Scania’s core values are the basis for developing its working methods and ensuring the dedication of its employees. coRe VALues Scania’s core values permeate its entire corporate culture and influence its day-to-day work. Customer first, respect for the individual and quality are closely linked and are applied as a unified concept. These core values form the basis of Scania’s corporate culture and are the point of departure for all business development. Customer first Through knowledge of its customers’ business operations, Scania delivers solutions for sustainable profitability by means of high earning capacity and low operating costs. The customer is at the centre of the entire value chain: from research and development via procurement and production, to sales, financing and delivery of services. Respect for the individual all employees are stimulated to achieve continuous improvements in operations, since Scania utilises their knowledge and experience. Day-to-day work provides inspiration and new ideas, at the same time as em- ployees enhance their skills. This results in improved quality and efficiency as well as job satisfaction. Quality customer satisfaction and profitability require the delivery of high-quality solutions from Scania. Through knowledge of customers’ needs, Scania continuously improves the quality of its products and services. Deviations from targets and standards are used as a valuable source of continuous improvement in Scania’s processes in research and development, production, sales and services. Scania 2010
  9. 9. 7stRAtegIesContinuous improvements Cross-functional working methodsScania makes use of the knowledge and experience The co-location of sales, marketing, research, develop-gained through its improvement activities. There is ment, production and purchasing in Södertälje, Swedena strong emphasis on working methods instead of is one reason why Scania is characterised by a holistic,traditional earnings targets. These principles have been cross-functional perspective. Employees are aware of thedeveloped since the 1990s and have spread and been value of their delivery to the next stage in the work flow,adapted to different parts of the company. They have reducing the risk of waste and shortening time-to-marketled to a way of thinking that is very important for the for new products and services.development of Scania’s employees and organisation. Long-term growthModular product system Every customer is unique and performs different transportScania’s modular product system has been built up over tasks. This is why Scania must be able to offer a largeseveral decades and makes it possible for the company number of different technical solutions through a combi-to create individual specifications for a large number of nation of products, services and financing.different customers by using a limited number of compo- Scania works to maximise customer revenue andnents in its product range. This enables each customer minimise costs. To maximise revenue, the companyto receive an optimised product, while keeping costs optimises technical specifications, cargo capacity andthroughout the value chain at a more competitive level vehicle uptime. To minimise costs, Scania deliversthan otherwise possible. high quality, fuel efficiency and effective repairs and maintenance. This leads to a far-reaching collaborationSales and services network between the customer and Scania that is profitable forThis network consists of both Scania-owned and both parties. it also supports Scania’s long-term growth,independent units and gives Scania close contact with which focuses on growing together with its customers inits customers. an extensive company-owned network profitable markets and in profitable segments.provides better control of operations and the brand. Thecompetition between captive and non-captive sales andservices units stimulates creativity and entrepreneurship,leading to higher customer satisfaction.Flexible productionBecause Scania has short, stable lead times, customerscan obtain fast delivery of their vehicles. This is possiblethanks to a global production structure, a global productrange, a flexible production cost structure and manningthat preserves core competency, enabling Scania toquickly and efficiently adjust its production volumeto changes in demand. Scania 2010
  10. 10. 8 Scania 2010
  11. 11. scAnIA’s MoDuLAR systeM 9customised solutions throughthe modular product systemModularisation begins and ends with the customer. the starting point is the diverse operationsand needs of customers – different tasks, varying climates, good or poor infrastructure, long orshort driving distances. the modular product system is Scania’s answer to customers’ demandsfor different specifications. the total number of parts used in Scania products is limited due tomodularisation, quality is high and production series longer, which is cost-effective both forcustomers and for Scania.The starting point for modularisation is to understand These interfaces are designed in such a way that theythe customer’s operations and needs. The components do not change over time. This makes it possible to installrequired to satisfy varying customer needs are developed new components with improved performance in vehiclesand manufactured efficiently. These components are without any need to change the surrounding components.combined in ways that provide customers with vehicles Examples of performance steps are different cab sizes,that fit their particular needs and transport tasks in the engine output steps and numbers of axles.most advantageous, cost-effective manner. customer needs may be the same despite different Scania’s modular system means that customer applications, in which case Scania uses the principlewishes – and new legal requirements – can quickly be “same need, identical solution”. The shortest cab variantmet without expanding the number of parts included in may be needed in order to maximise cargo capacity boththe products. in light distribution service and in a heavy tipper truck operating in a mine. a powerful, high-torque engine mayStandardisation of interfaces satisfy the need for maximum tractive power in a demand-Modularisation is based on standardisation of the inter- ing operation or for maintaining high average speed duringfaces − connection points − between component series long highway journeys.to ensure that they fit together in different combinations.Vehicles for varying customer needsLong-haul trucks are sometimes driven up to 300,000 km per year, or even Scania’s P-series featuring a low-mounted cab is suitable for urban and distributionmore. Minimising fuel consumption by means of aerodynamic devices and traffic. This refuse collection truck featuring Scania’s low-entry cab, which is extraeconomical gearing is thus an obvious customer choice, along with high low-mounted, is more comfortable to get in and out of during transport tasks withuptime and availability of service at times that fit the vehicle’s work schedule. an extremely large number of stops per day. it is available with diesel-, ethanol- or gas-powered engines. Scania 2010
  12. 12. 10 scAnIA’s MoDuLAR systeM Choosing components based on performance needs By understanding how a customer uses the vehicle, technically expressed in a set of user factors, the Scania sales person can recommend components with the right performance steps. a vehicle is specified by choosing a combination of components when ordering. This enables Scania to work with order-controlled production. The truck and bus variants that are being built are con- tinuously evaluated, enabling Scania to have the smallest possible number of parts and the largest possible number of variants in its product portfolio. This is cost-effective both for customers and for Scania. Optimised products profitable for customers Modularisation increases customers’ profitability by providing optimised vehicles with exactly the specification that they need. The modular product system contrib- utes to high quality and less downtime, while requiring a smaller number of parts and providing more efficient servicing. The modular product system also makes it possi- When ordered, each vehicle is tailored to customer wishes. ble to produce vehicles closer to the delivery date. The customer can thus make changes at a late stage, while Scania ties up less capital. in addition, Scania’s modular product system plays a key role in ensuring an efficient and profitable Scania. it strongly contributes to the corporate culture and is an approach shared throughout the company, from research and development through production to the sales and services network. Heavy mining work requires components with robust dimensions Even special-purpose trucks, such as this fire truck, take and high uptime. This Scania R 580 in indonesia has a powerful full advantage of the modular product system. The truck’s V8 engine and Scania Opticruise automated gearchanging. it pulls factory-supplied Scania crewcab is built as part of the normal gross weights of up to 200 tonnes for 18–24 hours per day. production flow. Scania 2010
  13. 13. 11 FROnTS caBS EnGinES Wind- screen Forward Many engine compo- roof section nents are common to the entire engine range, regardless of the number of cylinders. Front corner section Grille a few front components make it Standardised inter- possible to compose the three faces: Regardless cab families in the P-, G- and R- of variant, the parts series with different heights, but fit together, allowing using one common windscreen. maximum flexibility. Short cabs Day cabs Sleeper cabs Low-entry Crew cab Long crew cab Low normal Highline Topline P-SERiES Scania’s P-series featuring a low- mounted cab is mainly used for distri- bution and construction haulage. The P-series is also the base for Scania’s low-entry and crew cabs. G-SERiES Scania’s G-series is a versatile model DOORS anD SiDEWaLLS featuring a spacious cab for long- haulage and construction haulage and with more powerful engines than the P-series. R-SERiES Scania’s R-series has the largest, most spacious cabs, featuring a high level of equipment. When equipped with a V8 engine, the R-series provides the Doors and sidewalls in a few variants cover highest performance and has become the entire cab range. a legend in the road transport business.a tourist coach has many components in common with the truck range – for Like its tourist coaches, Scania’s city and suburban buses are based on modularisedexample the engine, transmission, axles, electronics and control systems, components. This is also true of the bodywork, which can be tailor-built according toinstruments and controls. This guarantees the availability of service and parts customer requirements in many different configuations, for example as a low-floor bus,all over the world via the Scania network. a low-entry bus, or a two-axle, three-axle, double-decker or articulated bus with the help of the same set of components. Scania 2010
  14. 14. 12 Scania 2010
  15. 15. scAnIA’s WoRKIng MetHoDs 13Methods aimed at maximising efficiencyScania’s entire organisation is strongly focused on refining its working methods. thecustomer’s perspective is decisive, and work flows are designed to meet customer needsin an increasingly efficient way and to deliver custom-tailored vehicles and services.Scania’s working methodology developed first in its Identifying and eliminating deviationsglobal production network, in the form of the Scania Scania’s working methods are standardised. EmployeesProduction System (SPS). This same way of working has are encouraged to find deviations from a normal situa-been adapted to the sales and services network – as the tion, in the form of disruptions that prevent operationsScania Retail System (SRS) – and to research and devel- from working optimally.opment units as the R&D Factory concept. By finding deviations, it is also possible to do some- improvement activities are driven by Scania’s employ- thing about them, but they must not be sent onward,ees, with the support of managers and Group executives. either internally or to the customer. new solutions areThe focus is on cutting lead times by eliminating waste. tested and evaluated. When a new solution has been introduced at a unit, it is spread methodically to otherEveryone is responsible for improvements units in the global Scania organisation to ensure thatEmployee involvement is at the core of efforts to improve these deviations will not re-occur.efficiency. allocating time to working with continuousimprovements is part of normal operations. This means Continuous productivity improvementsthat a large proportion of improvement efforts have shifted SPS, SRS and R&D Factory are powerful instrumentsfrom staff and management levels to individual employees. for boosting productivity at all levels. For example, with The result is broad involvement in these efforts, higher limited investments the same number of employees canproductivity, greater job satisfaction and higher attend- build more vehicles. in a similar way, the service organi-ance, as well as lower employee turnover. sation can handle an increasing number of customers without an equally large growth in the workforce.Cross-functional working method Working methods are of crucial importance toan important part of efficiency improvement work occurs Scania’s ability to continuously improve its productivityin cross-functional (interdepartmental) groups including and grow within its existing structure. Scania’s vision isrepresentatives from research and development, produc- to have the capacity to deliver 150,000 vehicles per yeartion and procurement, sales and services. This helps cut during the next cyclical peak, using the existing produc-lead times and assure quality at an early stage. tion structure. improvement groups are a natural part of regular operations at Scania. Scania 2010
  16. 16. 14 Scania 2010
  17. 17. MARKet tRenDs – tRucKs 15global recoveryhaving a flexible production structure andpreserving the company’s core competencyenabled Scania to meet rising demand withoutincreasing delivery times. the new R-seriesfrom Scania was named international truckof the Year 2010.after a sharp downturn during 2008 and 2009, demand fortrucks rebounded in most markets. However, the recoverywas slow in Europe, and 2010 was the first year that Scaniadelivered more than half its truck production to customersoutside Europe. in the long term, transport systems will expand world-wide and will increasingly resemble those of the indus-trialised countries. Transport companies are focusing onprofitability during the entire service life of vehicles and oncargo capacity. as a result, customers are prioritising suchfactors as optimised specification of each vehicle, reliability,productivity, access to service workshops, fuel efficiency,environmental characteristics, driver proficiency and resalevalue. Scania foresees very good opportunities to grow ina market that increasingly demands these types of vehiclesand services.Flexible delivery times and rising demandScania’s truck deliveries increased by 54 percent to a totalof 56,837 during 2010, compared to 2009. in Europe, de-liveries increased by 24 percent, mainly related to Germanyand France. in Eurasia, deliveries rose by 119 percent due toan increase in Russia. in Latin america, the delivery upturnwas 89 percent, which was explained by very strong growthin Brazil. in asia as well as in africa and Oceania, Scaniaalso noted increased deliveries during the full year 2010. Byhaving a flexible production structure, Scania was able tomeet rising demand without delivery times becoming longer.Rapid deliveries of vehicles on order enabled customersto respond to the increasing need for transport services.Scania avoided growth in its order backlog. Scania suppliedLatin america, where sales grew the fastest, with compo-nents from its European production units, thereby meetingstrong Latin american demand.New V8 consolidates Scania’s leading positionScania’s V8 models enjoy a strong position among custom-ers who demand the highest standards of productivity andoutput. These trucks also project a strong brand image.Scania’s new V8 truck range was launched in the spring of2010. The most powerful engine version, with 730 hp and Scania 2010
  18. 18. 16 MARKet tRenDs – tRucKs 3500 nm, features the highest output and torque of all in long-haulage, Scania’s new R-series − named series-produced trucks. The new engine, which incor- international Truck of the Year 2010 – has been much porates a number of innovations, raises the productiv- appreciated by customers. Because R-series trucks can ity standard for heavy trucks and provides increased be equipped with the new V8 engine, Scania has strength- revenue to customers who perform transport work in ened its dominance in the growing prestige area above the most demanding areas of the world. 540 hp. The new engine is based on the same modular in construction haulage, Scania offers very robust platform and technology that are used in Scania’s other products for the very heaviest tasks, for example in mines, engines. where Scania trucks are a flexible alternative to traditional heavier dumpers − mainly due to their lower fuel and main- Euro 6-compliant solutions in place tenance costs and substantially lower investment cost. For the growing category of environmentally conscious in recent years, Scania has increased its focus in many customers, it is important to be able to incorporate markets on urban goods distribution vehicles. Scania’s vehicles with the best environmental technology in their ability to deliver and service vehicles, including body- fleets as early as possible. With the introduction of its work, is a clear competitive advantage. Scania has also new V8 range, Scania has the technical solutions and strengthened its position in the special-purpose vehicle the complete engine platform needed to meet the re- area, for example refuse collection and fire trucks. its quirements of the next step in European Union emission ability to offer vehicles that run on alternative fuels such legislation, which goes into effect at the end of 2013 and as biogas, biodiesel and ethanol is important to many is known as Euro 6. compared to previous standards, customers. particulate emissions must be halved and nitrogen oxide emissions must be reduced by about 80 percent. Used vehicles a core business For Scania, used trucks are a strategic business, both Product segmentation a key success factor because of the actual sales transactions and the oppor- Scania’s truck sales mainly encompass three segments: tunity to provide continued service at Scania workshops. long-haulage, which generally accounts for more than During 2010, used truck sales increased by 5 percent 70 percent of total truck deliveries; construction and and the price level was higher than in 2009. The inventory distribution trucks, which account for some 25 percent; of used trucks gradually shrank, reaching a normal level plus public service and special-purpose vehicles, which during the year. account for less than 5 percent. a used Scania truck is also a premium product, and in order to broaden its product range to encompass its condition is important to the reputation of the Scania additional categories of truck buyers, in recent years brand. Scania approved is a formalised system for the Scania has implemented more pronounced market seg- handling of used vehicles: from trade-in, reconditioning, mentation. Due to its modular product system, Scania any upgrading (for example, with regard to environmental has especially good potential to satisfy specialised performance) − possible thanks to the Scania modular needs. product system − to warranties for the new owner. Levererade Scanialastbilar per region ENG Lastbilar nettoomsättning ENG Marknadsandelar, lastbilar över 16 ton; EU + Norge o Schweiz ENG scania truck deliveries by region, 2010 trucks, net sales Market shares Trucks above 16 tonnes, 24 EU countries plus norway and Switzerland. SEK m. % Africa and Oceania 5 % Europe 41 % 60,000 55,566 25 47,580 50,000 Mercedes Asia 18 % 20 40,000 32,832 MAN 30,000 15 DAF America* 32 % Volvo 20,000 Scania 10 Renault Eurasia 4 % 10,000 Iveco * Refers to Latin America 0 5 08 09 10 02 03 04 05 06 07 08 09 10 Scania delivered a total of 56,837 trucks during 2010. in 2010, net sales increased Scania’s competitors in Europe are Mercedes, Man, by 45 percent. DaF, Volvo, Renault and iveco. Scania 2010
  19. 19. 17EUROPE aSia anD OTHER MaRKETSslow recovery Increased order bookingsThe entire European truck market improved in asia a recovery occurred in all market areas,during 2010. The recovery was most pro- and order bookings rose by 192 percent. Thenounced in northern Europe. The year was largest increase occurred in the Middle East.characterised by improved capacity utilisation Order bookings increased in both china andamong hauliers as well as by somewhat higher india, but from a low level. in other markets,freight prices towards the end of the year. including southern africa, an upturn also Order bookings rose by 102 percent to occurred. Demand in Russia improved during29,176 trucks. Especially Germany, France, the 2010 from a very low level in 2009, with anordic countries, the netherlands and Great sharp upturn in order bookings during theBritain noted increased demand. Service fourth quarter.volume in Europe gained momentum during in asia’s biggest markets, the demand forthe second half of 2010. LaTin aMERica the type of trucks that Scania produces is still Scania also noted an upturn in short-term strong demand limited, and local manufacturers supply mostrentals in northern Europe and expanded its volume. as logistics systems evolve, how- in Latin america, demand was at a highcapacity. ever, such factors as reliability, fuel economy, level, with Brazil as the main growth engine. cargo capacity, resale value and environmen- Order bookings increased by 68 percent tal performance are becoming increasingly compared to 2009. important. This means that the portion of the in Brazil the truck market strengthened market that requires vehicles of Scania’s type due to high economic activity. Sales were is expanding. also supported by interest subsidies and One important element of Scania’s strategy tax cuts. in Brazil, customers continued to is proximity to customers. This is why the increase their use of Scania’s workshops for company is expanding its service network as servicing and repairs. By opening a finance the number of Scania vehicles in operation company in Brazil, Scania further strength- grows. Scania is also establishing delivery ened its customer offering. Towards the end centres in emerging markets in order to move of the year, demand stabilised at a high level. closer to its customers and cut delivery times. argentina, chile and Peru also showed good demand. Scania 2010
  20. 20. 18 Scania 2010
  21. 21. MARKet tRenDs – buses AnD coAcHes 19 broadening the customer base in the past few years, Scania has invested in a renewed bus and coach range that ensures the best operating economy, comfort and safety. this has resulted in an ever-broadening customer base. During 2010, for example, Scania made a breakthrough as a supplier of city buses in Germany. increased urbanisation is leading to more passenger traffic within and between urban areas. The demand for economi- cally and environmentally sustainable passenger transport will increase in the rapidly growing cities of emerging market regions. There are major advantages in reallocating pas- senger transport from cars to buses, especially in terms of carbon dioxide emissions per passenger-kilometre. Scania delivers buses and bus chassis with high pas- senger capacity for use as tourist coaches and in scheduled intercity and urban traffic. To an increasing extent, Scania is a supplier of comprehensive passenger transport solutions − providing complete buses including bodywork, services and other systems. Services include maintenance and repairs, driver training, financing and insurance. Scania’s modular product system means that the same main components and technology are used in different products, which allows sizeable economies of scale. a large proportion of the components in a bus chassis are shared with a truck chassis. This means major advantages in devel- opment, production, parts supply and servicing. Higher demand in Latin America and Asia The very sharp downturn that occurred in the truck market during late 2008 did not have an equivalent in the bus and coach market, but both order bookings and deliveries ofJohannesburg, South africa has an efficient Bus Rapid Transit buses and coaches fell somewhat during 2009. Demand(BRT) system. in such a system, high passenger capacity busesoperate in dedicated lanes on existing streets. This reduces traffic increased during 2010, mainly in asian and Latin americancongestion and contributes to fast, comfortable and environmen- markets, while order bookings in Europe were stable. in asiatally sounder public transport. the upturn was related to the Middle East, while the order increase in Latin america occurred in a number of markets. in terms of the number of buses and coaches ordered, Latin america was the largest region and there is potential for continued good growth. among other things, Brazil will host the 2014 football World cup and the 2016 Olympic Games. Scania 2010
  22. 22. 20 MARKet tRenDs – buses AnD coAcHes Scania’s total deliveries of buses and bus chassis in- creased by 4 percent during 2010. in the European market, deliveries fell by 10 percent while in Latin america they increased by 48 percent. Deliveries in asia increased by 13 percent, while they decreased by 37 percent in Eurasia and by 36 percent in africa and Oceania. Long-term strengthening of market position Over a number of years, Scania has gradually strength- ened its position in the bus and coach market. Behind this is the development of new bus models for different areas, such as the Omnicity for passenger service in the urban core and the OmniLink for suburban traffic, as well as new services. Scania is increasingly supplying complete buses with its own bodywork. Because the customer thus does not need to order bodywork from independent suppli- ers, this greatly shortens the time from order to delivery of a finished bus or coach, and the customer has only a single supplier that assumes overall responsibility. Scania has also established close collaboration with a number of selected bodybuilding companies in order to improve the efficiency of deliveries to customers and assure quality. Bus Rapid Transit (BRT) systems are a new concept for Scania for fast, efficient passenger transport as well as another example of segmentation. Scania foresees great potential in large cities that will have to improve their environment and offer efficient alternatives to automobile traffic. Scania vehicles can run on all available alternative fuels. During 2010, Scania launched a new, efficient methane gas engine intended for use in buses and local distribution trucks. Modern, efficient factory in Poland in September 2010, Scania re-inaugurated its production unit in Słupsk, Poland, which after an extensive upgrade has become a very modern, efficient bus factory. The plant, which has 700 employees, is Scania’s main Euro- pean production unit for fully built (bodyworked) public transport buses. lev buss per region ENG Bussar nettoomsättning buses and coaches, net sales scania bus and coach deliveries by region, 2010 SEK m. Africa and Oceania 10,000 12 % Europe 26 % 8,837 8,186 7,713 8,000 Asia 31 % Eurasia 1 % 6,000 4,000 America* 30 % 2,000 * Refers to Latin America 0 08 09 10 net sales decreased by Scania delivered a total of 6,875 buses and coaches 13 percent during 2010. during 2010. Scania 2010
  23. 23. 21 Fast, efficient public transport systems Bus Rapid Transit (BRT), with dedicated public transport lanes and easy boarding and disembark- ing, allows faster traffic and a more efficient flow of passengers. in the run-up to the 2010 World cup, Johannes- burg, South africa chose Scania to supply all 143 buses: 41 articulated and 102 standard models. The articulated buses, 18 m long and with room for 112 passengers, are equipped with Scania’s 9-litre, 310 hp Euro 4 engine. The other buses are 12 m long, carry 81 passengers and are equipped with Scania’s 9-litre, 270 hp Euro 4 engine. a decisive factor in choosing Scania was its complete range of vehicles with good operating economy and environmental performance, plus a wide selection of services.breakthrough for scania touringcity buses in germany introducedThe transport group Transdev, one of the largest The first deliveries of the Scania Touringbus operators in Europe, has ordered Scania occurred late in 2010. This new coach,Omnicity and Scania OmniLink buses to provide designed for occasional service, was jointlyurban and suburban passenger services in developed by Scania and the chinese bus andgreater cologne, Germany. in evaluating the coach manufacturer Higer. The coach wasalternatives, Transdev attached great importance designed with typical Scania features by theto overall operating and ownership costs as well styling department at Scania. This partnershipas Scania’s well-developed service network. The is one element of Scania’s efforts to industrial-contract also includes servicing and repairs to ise its bus and coach production. Scania chas-ensure maximum vehicle uptime. The buses are sis are bodyworked at Higer’s factory in china.equipped with Scania’s adjustable dashboards Sales, including complete service and partsto provide the best working environment for the support, take place via the Scania network.drivers. This ensures quality at all stages. Scania 2010
  24. 24. 22 Scania delivers engines for cargo handling equipment in harbours, as well as for other industrial applications. Scania 2010
  25. 25. MARKet tRenDs – engInes 23strong successfor scania as anengine supplierScania’s long-term investment in sales ofengines for generator sets, as well as industrialand marine applications, has paid off well inrecent years. industrial engines have showedespecially good growth. Scania has establisheditself as an important supplier of engines tomachinery manufacturers all over the world.Scania focuses on diesel engines with 9- to 16-litre sweptvolume. The largest share of total engine deliveries, normallyabout 60 percent, is for generator sets (gensets), either forcontinuous electricity supply or as stand-by power. Deliveriesfor industrial applications comprise about 25 percent. Theremaining 15 percent of engines are delivered to marine busi-nesses. The largest single customer category is constructionmachinery manufacturers in the industrial segment. The 2009 economic downturn adversely affected allgeographic areas. The market recovered in 2010. Orderbookings rose by 54 percent to 6,249 (4,064) engines. aswith trucks and buses, Latin america showed a strongincrease in demand. The Brazilian market was especiallystrong, with genset engines as the dominant area. in Europe,order bookings recovered from their low 2009 level. Overalldeliveries increased by 54 percent to 6,526 (4,235) units.Major US investmentsScania Engines is the only part of Scania that is active innorth america. One important breakthrough was the agree-ment that Scania signed early in 2010 with Terex corporation.Based in the United States, Terex is a leading global manu-facturer of construction and materials handling machinery.The company is represented all over the world. Becauseof its global service network, Scania can fulfil the highstandards of service and maintenance that Terex customersdemand. The agreement covers deliveries of engines for installationin machinery and other heavy equipment. in conjunction withthe agreement, Scania has invested in strengthening its in-dependent engine service network in north america by morethan 120 new workshops. Deliveries to Terex are beginningduring 2011. Scania 2010
  26. 26. 24 MARKet tRenDs – engInes More customers among machinery producers rescue service. chinese equipment manufacturers, which in addition to its breakthrough with Terex, Scania has have previously prioritised low prices, increasingly value scored other successes among large machinery manu- reliability, fuel economy and long service life. facturers. Like trucks in continuous operation, excavators, wheel loaders, dumpers, stone crushers and forklift trucks Scania engines ready for new are exposed to heavy loads and require engines that emission standards provide powerful performance, good fuel efficiency and Rising environmental standards represent new opportuni- high reliability. This field of applications thus suits Scania’s ties for Scania. Tighter environmental requirements for focus on giving customers the best possible operating industrial applications, Stage iiiB in the European Union economy throughout the service life of a product. and Tier4 interim in the United States, take effect in 2011. During 2010, Scania signed an agreement with South as early as 2009, Scania was able to show its custom- Korean-based Doosan infracore to supply engines for ers a new generation of engines that meet these new construction machinery and other products. standards. The next step for emission standards will occur in 2014 Breakthrough in China with Stage iV in the EU and Tier4 Final in the US. Scania Scania Engines was also successful in china. This includ- has already developed technology that meets these new ed signing an agreement with Shanghai Boden Engine co, standards. Those customers that choose Scania engines Ltd, a distributor of engines for gensets. During the year, today will not need to make major changes in their instal- Scania also delivered marine engines to the chinese sea lation to comply with the next stage. Motorer nettoomsättning ENG Motorer levererade per region ENG engines, net sales scania engines delivered by region, 2010 SEK m. 1,200 1,151 1,148 Africa and Oceania 2 % 1,000 Asia 7 % 821 Europe 40 % 800 600 400 America* 50 % 200 Eurasia 1 % 0 08 09 10 * Refers mainly to Latin America net sales increased by 40 percent Scania delivered a total of 6,526 engines during 2010. during 2010. Scania 2010
  27. 27. 25engines forpower generationDuring 2010, Scania launched its newrange of engines for electric powergeneration. The engines have largerswept volume and improved stageloading. This provides better operatingeconomy for the customer due to higherperformance and 25 percent longerservice intervals. Brazil is one of the biggest markets Agreement with terexfor genset engines. Terex corporation, a leading american manufacturer of construction and industrial machinery, chose Scania engines for its machinery. The agreement on engine deliveries to Terex means that the com- pany’s construction machinery and other heavy equipment will be powered by Scania’s new industrial engines. Scania’s strategy is to continuously improve and expand its global service network in order to support users of machinery with Scania engines. Uptime is crucial to these customers’ operations, as well as to their customers. During 2010, Scania USa inc. expanded its number of service points at a rapid pace. More than 120 new service work- shops for industrial engines have joined theengines for south Korean-based Doosan network. These service points have been selected to provide the best geographicSouth Korean-based Doosan infracore, one of the world’s largest manufacturers of construction coverage.machinery, has signed an agreement with Scania for delivery of engines to be installed in itsproducts for the world market. crucial to this choice were the high performance level of Scaniaengines and Scania’s global service network. The agreement with Doosan gives Scania a sharply improved position as a supplier of enginesin the rapidly growing asian market for construction machinery. Scania 2010
  28. 28. 26 Knowledgeable, dedicated employees in Scania’s service network ensure customers maximum vehicle uptime. Scania 2010

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