A magazine for scania’s shareholders                                                           quarter 1 2012             ...
FIRST 3 MONTHS IN FIGURES      Order bookings and deliveries by region, Q1 (number of vehicles)                           ...
interview                                                                                                             text...
focus: R&D in the field      On site where it happens                             “We have two aims with this. One is to d...
TEXT: ERIK ARONSSON PHOTOS: DAN BOMAN, VINAYAK DAS , CARL - ERIK ANDERSSON                                                ...
Finance: scania in India      India – a huge, fast-growin      6 SCANIA VALUE • Q1/2012          www.scania.com12SCV1_05_f...
text: erik aronsson photos: scanpix , erik ljungberg , istockphotowing economy        With a population of more than 1    ...
IN BRIEF                                                                                                       editor: eri...
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Scania Value Q1 2012 - Shareholder magazine


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Scania is investing strongly in expanded participation in the growing global market for bus systems, with a focus on the bus passenger, says Klas Dahlberg, who has just taken over as head of Scania Buses and Coaches, in an interview in the new issue of Scania Value. The magazine has also interviewed some employees who have left the research and development centre in Södertälje in order to work close to customers in their day-to-day businesses.

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Scania Value Q1 2012 - Shareholder magazine

  1. 1. A magazine for scania’s shareholders quarter 1 2012 % % Operating margin Rörelsemarginal 20 20 16 17 12 14 8 11 4 8 0 -10 -10 -10 -10 -11 -11 -11 -11 -12 -06 -07 -07 -07 -07 -08 -08 -08 -08 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Kv4 Kv1 Kv2 Kv3 Kv4 Kv1 Kv2 Kv3 Kv4 Report. Report. Lower deliver- Xxxx xxx xxx ies xxx xxx xxx xxxand capaci- ty xxx. xx utilisation > SID 2 down the pulled margin. >PAGE 2 Interview. Interview. Xxxx xxx xxxxxx xxx Klas Dahlberg xx xxxxxx xxxx xxxx wants growth xxx xxxxxx xxx. in the bus market. > SID 3 > PAGE 3 Stock market. Focus. xxxxxx Xxxx xxx R&D creates better xxx xx xxxxxx xxxx customer xxxxxx. xxxx xxx relations. > PAGE 4–5 > SID 6–7 Investment in India FIGURES IN FOCUS: FIGURES IN FOCUS: XXX 1,763 A hugexxxx xxxxxxxx xx x xxxxxx xxxxx. > SID6–7 Xxxxx economy with strong growth. > PAGES 4–5 Xxxxxx xxx xx xxxx xxxx (SEK m) in Cash flow xxxxx xxx Vehicles and Services. xxxx xxxxx xx.12SCV1_01_omslag_6063.indd 1 2012-05-03 16:42:52
  2. 2. FIRST 3 MONTHS IN FIGURES Order bookings and deliveries by region, Q1 (number of vehicles) EURASIA Order bookings EUROPE Order bookings 1,468 +29% Deliveries 7,430 -8% 1,175 -12% Deliveries 7,134 -17% LATIN AMERICA AFRICA AND OCEANIA ASIA Order bookings Order bookings Order bookings 3,404 -37% 833 +1% 2,674 -33% Deliveries Deliveries Deliveries 4,302 -3% 884 +6% 2,743 -30% Net sales Net sales by product segment Operating income and margin SEK m. Other 2% % Operating income, SEK m. SEK m. 25,000 Used vehicles 5% 20 Operating margin, percent 4,000 3,500 20,000 16 Services 22% 3,000 15,000 2,500 12 2,000 Engines 2% Trucks 62% 10,000 8 1,500 1,000 5000 Buses and 4 coaches 7% 500 0 0 0 1 2 3 4 1 2 3 4 1 1 1 2 3 4 1 2 3 20 Q4 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 10 10 10 10 11 11 11 11 12 12 10 10 10 10 11 11 11 11 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Key figures (SEK m. unless otherwise noted) 2012, 3 mo 2011, 3 mo Change in % Net sales, Scania Group Operating income, Vehicles and Services 20,127 2,192 20,692 3,232 -3 -32 Q1 IN BRIEF: Operating income, Financial Services 131 107 22 OPERATING INCOME Operating income 2,323 3,339 -30 Income before taxes 2,395 3,482 -31 decreased by 30% to Net income for the period 1,794 2,514 -29 SEK 2,323 m. Operating margin, % 11.5 16.1 NET SALES Return on equity, % 26.2 36.4 decreased by 3%to Return on capital employed, Vehicles and Services, % 33.5 43.9 SEK 20,127 m. Earnings per share, SEK 2.24 3.14 -29 Cash flow, Vehicles and Services Number of employees, 31 March 1,763 37,366 1,129 36,253 56 CASH FLOW increased by 56% to Order bookings (units, trucks and buses) 15,809 19,457 -19 SEK 1,763 m in Vehicles Deliveries (units, trucks and buses) 16,238 19,065 -15 and Services. 2 SCANIA VALUE • Q1/2012 www.scania.com12SCV1_02_rapporten_6064.indd 2 2012-05-03 16:42:57
  3. 3. interview text: erik aronsson photo: mark bean Klas Dahlberg, who has just taken over as Head of Scania Buses and Coaches. “Think rail, see bus” Scania is investing strongly in It is a matter of developing route networks Cup in 2014 and the Olympic Games in 2016 expanded participation in the where buses have priority over other traffic, and this will predominantly take the form of bus growing global market for bus either by running on their own streets or in systems. systems, with a focus on the bus dedicated bus lanes. Boarding and disembar- “In roughly a dozen of the cities where the passenger. kation are facilitated either by using low-floor arenas are found, they are now carrying out buses or by building bus stops at the same level extensions and renovations or are introducing To be a traffic planner in any of the world’s as the floor of the bus. An infrastructure is built entirely new systems which are dedicated to bus multi-million cities is a major challenge. The around this for payment and ticket manage- traffic,” says Dahlberg. global urbanisation trend means that their ment outside the vehicles, which shortens Aside from Latin America, the market for bus population and thus traffic is constantly waiting time at the bus stop or station. All this systems is growing mainly in Asian countries increasing, while the climate is under threat results in higher average speed and faster trans- such as China, India and Indonesia, but also in from growing carbon dioxide emissions and port than travel by car. Africa and Australia. fossil fuels resources will probably become “We are now concentrating on expanding our scarcer and scarcer. More cost effictive participation in this growing niche. Last year, Klas Dahlberg, who has just taken over as “A well-developed system has a very large we had a record high delivery of buses, almost head of Scania Buses and Coaches, believes that capacity. For example, in Bogotá, Colombia, 8,000, and our goal is to reach 15,000 buses by these problems represent great opportunities there is a solution which can carry 50,000 pas- the next peak in demand. Therefore, this is an for Scania. sengers per hour, says Dahlberg. important market for us,” says Klas Dahlberg. “Public transport systems will have to play a Meanwhile, there is another important aspect An important strategy in reaching this goal is larger role. In the long term, it will not be pos- for the public transport user to consider – to focus on the bus passenger. sible to continue using private cars for transport namely the cost. “Each time someone chooses to take the bus, in the same way as today,” he says. A bus system costs no more than half as much it is a small victory for us. To win many such A number of terms are used to describe the or in many cases just 10-15 percent of what a light victories, we must help to make it easy and con- bus industry’s solution to traffic problems, such rail system costs. It also takes many times longer venient to take the bus. This means, for instance, as BRT (Bus Rapid Transit) or BRS (Bus Rapid to construct a light rail system compared to a bus using modern IT so that passengers can have a System). Scania has chosen the name “Bus sys- system, which can be built in 1-3 years. constant connection for their mobile devices tems by Scania”, which implies that the bus itself A market that gets what it’s all about is Latin throughout the entire system. Time is money is just one of the elements. The motto is “think America. Brazil is investing in expanded public but if their time can be used, the trip pays for rail – see bus”. transport systems ahead of the football World itself,” he says. www.scania.com Q1/2012 • SCANIA VALUE 312SCV1_03_intervju_6065.indd 3 2012-05-03 16:43:01
  4. 4. focus: R&D in the field On site where it happens “We have two aims with this. One is to devel- working in a more strategic way by choosing To boost Scania’s knowledge about how products are used by op our employees’ skills and knowledge, and the markets it wants to focus on. Employees customers, some employees have the other is to develop products that genuinely are currently stationed in Germany, Italy, Latin left the research and development meet market needs,” says Sven-Åke Edström, America, Singapore, Malaysia, India, Indonesia centre in Södertälje in order to Senior Vice President, Truck, Cab and Bus Chas- and China, among other places. work close to customers in their sis Development. “We want to have quite a broad pres- day-to-day businesses. In the past, the stationing of R&D employ- ence out there and gather knowledge from ees in the field has been partly determined by new markets. It is about new geography, for Scania wants to continue growing in the future, demand – when a given market asked for such instance the impact of climate and topogra- among other ways by entering new markets a resource, it then received it. Today, Scania is phy, but it is also about new customer seg- and new customer segments. Meanwhile its offering to existing customers must be con- stantly strengthened. The task of Scania’s R&D operations is to effectively develop new prod- We want to develop our employees’ ucts and services. A good understanding of the skills and knowledge, and develop customer’s business is essential if you want to develop products that really match the cus- products that genuinely meet tomer’s needs. For this reason, there are cur- market needs. rently about ten employees from Research and Sven-Åke Edström, Senior Vice President, Development placed in local markets around Truck, Cab and Bus Chassis Development. the world. 4 SCANIA VALUE • Q1/2012 www.scania.com12SCV1_04_tema___r_d_pa_f_ltet_6066.indd 4 2012-05-03 16:43:06
  5. 5. TEXT: ERIK ARONSSON PHOTOS: DAN BOMAN, VINAYAK DAS , CARL - ERIK ANDERSSON Presence on three continents Research and Development employees are locally stationed in both mature European markets and emerging markets. Jörgen Andersson clocks up many kilometres every week by working with customers out in the field. Here at Kadia O.C.P. (NCI) in Singrauli he talks to drivers Voices from the markets: Balram Prasad and Vibo Agarwaj. Fatima El Itabi, Development Engineer Exhaust Gas Aftertreatment Systems, Engine Development, Brazil: “The biggest difference ally meet customers and ments, where our products and services face between being on site here work closely with them. new demands with regard to loads, ranges and in Brazil compared to being Just meeting customers capacity utilisation, among other things. Half at the Scania Technical regularly makes me aware Centre in Södertälje is all of their situation and what of our products are sold outside Europe, so it the opportunities to actu- their needs are.” is important that we bear this in mind when choosing where to station R&D employees,” says Edström. The people who are selected to be local rep- Fredrik Swartling, Field Test Engineer, Technical Product resentatives are those who Scania wants to give Planning & Vehicle Validation, Italy: an opportunity for professional development, “The absolute best visits Because if you get there but some years of previous job experience are are when you get a phone when the problem has also required. call in the morning and already been solved, you “You need to have specific knowledge in then can visit the customer miss a big part of your order to be respected in the markets,” says already that afternoon. chance to learn something.” Edström and adds that the clear majority of those who work in a different market regard the Jörgen Andersson, Product Development Manager, India: experience as very positive. “In order to understand often do they perform main- “They have gained broader experience and the customer’s demands tenance? We have to gain an a better understanding of the customer’s day- and needs, we must first insight into the customer’s to-day business and needs. This has also given understand the customer’s day-to-day business and in them a much better foundation for their future business: what are their this way design the right career at Scania. And when they come back, we transport tasks? How much product for exactly that type try to find the right challenges so that they can do they use the vehicle? How of transport service.” bring what they learned to their new role at Scania.” www.scania.com Q1/2012 • SCANIA VALUE 512SCV1_04_tema___r_d_pa_f_ltet_6066.indd 5 2012-05-03 16:43:09
  6. 6. Finance: scania in India India – a huge, fast-growin 6 SCANIA VALUE • Q1/2012 www.scania.com12SCV1_05_finans___indien_6067.indd 6 2012-05-03 16:43:14
  7. 7. text: erik aronsson photos: scanpix , erik ljungberg , istockphotowing economy With a population of more than 1 cent. Admittedly, growth is expected to decel- “They have had an inflation problem but billion people and annual economic erate during the next few years as a result of there is also reason to view their growth growth potential of 10 percent, the general deterioration in the world econ- positively. There is no doubt that the Indian India is a market that offers great omy, but GDP is still predicted to increase by economy will continue to expand rapidly,” says opportunities for Scania. about 7 percent annually during the period Mauro Gozzo, Chief Economist at the Swedish 2011-2013. Trade Council. From an economic standpoint, India really is a In the long term, there are also good pros- land of contrasts. With a population of about pects for continued strong growth in India. Large investments 1.2 billion people, India is the world’s second According to the OECD, a sustainable growth One factor contributing to this growth is the most populous country after China and almost rate of about 10 percent annually is quite enormous investments that are planned in one third of its population is estimated to live in possible. India’s infrastructure. When the eleventh poverty. But it also includes a large and growing Indian five-year plan was unveiled in early 2011, modern middle class of several hundred million Continued economic growth it doubled infrastructure investments to USD people who have the means to buy cars, TVs, The downside of rapid growth is that is goes 1,000 billion in all. mobile phones, Internet tablets and all kinds hand-in-hand with a high inflation rate and “They probably need this level of investment, of other modern products. According to the in 2010 Indian inflation was more than 10 since infrastructural deficiencies are a real OECD, income per capita doubled in India dur- percent. To curb this trend, the Reserve Bank problem in India,” says Gozzo. ing the past 11 years. of India has raised its key interest rate by 4.75 In other words, there are good reasons to This in turn means that the Indian econ- percentage points to 8.5 percent over a period expect strong demand for trucks, buses and omy is undergoing rapid growth – in 2010, of almost two years, which also had a moder- coaches and engines in India for many years to India’s GDP increased by more than 10 per- ating effect on growth. come. Scania present in India since 2007 Scania has been represented in the Indian market since 2007, when a partnership was initiated with the industrial group Larsen & Toubro (L&T). L&T has successfully estab- lished sales of Scania’s trucks and services and has developed a close partnership with customers in the mining industry. In 2011, Scania established the company Scania Commercial Vehicles India in order to boost its presence through sales to additional Facts on India: segments of the Indian commercial vehicles Area: 3,287,590 km², the market. world’s seventh largest country In early 2012, Scania announced plans to Population: About 1.2 billion build an industrial facility near Bengaluru (2011), the world’s second most (Bangalore) during the coming year. The Sca- Scania’s President & CEO Leif Östling and populous country nia Regional Product Centre, India will also be Henrik Fagrenius (furthest to the right) visit Gross domestic product: the centre of Scania’s commercial operations the site of the planned industrial facility in USD 1,632 billion (2010, source in India. India. IMF), the world’s ninth largest The industrial operations will consist of economy final assembly of truck and bus chassis as lead times further and broaden our product Currency: Rupee (100 rupees well as bodywork and fitting out of complete offering. Our service to customers will also = about 13 Swedish kronor or vehicles. The head office of Scania’s Indian be improved by having a parts depot in the 1.50 euros) company, complete with a service workshop country,” says Henrik Fagrenius, Managing GDP forecast: 7.3% in 2011, and a central parts warehouse, is also being Director of Scania Commercial Vehicles India. 6.7% in 2012, 7.0% in 2013 built at the same site. Scania’s ambition is to sell about 2,000 trucks, (source Swedbank) “The manufacturing of complete trucks 1,000 buses and 1,500 engines per year in the Capital: New Delhi locally in the country means that we can cut Indian market within the next five years. (Sources: IMF, OECD, Swedbank) www.scania.com Q1/2012 • SCANIA VALUE 7 12SCV1_05_finans___indien_6067.indd 7 2012-05-04 10:53:00
  8. 8. IN BRIEF editor: erik aronsson photos: dan boman, scania Fossil-free internal transport services Scania has taken yet another step in its efforts to reduce the climate impact from its own oper- ations. For internal goods transport, Scania has put eight ethanol trucks into service reducing climate-impacting carbon dioxide emissions from transport services in Södertälje by about 70 percent. This is equivalent to the annual carbon dioxide emissions from 12 normal houses that are heated by fossil-based electri- cal energy. “As a supplier of transport solutions, it is important that we ourselves are in the forefront of sustainable alternatives and demonstrate that sustainability and efficiency go hand in hand,” says Anders Nielsen, Executive Vice President and Head of Production and Logistics at Scania. Today Scania offers a range of climate- and energy-efficient products and services – Ecolu- tion by Scania – that helps transport companies Scania will invest a total of about SEK 400 million in Europe and South America. reduce their carbon dioxide emissions and max- imise earnings in their truck and bus businesses. Ecolution by Scania is a comprehensive solution Scania to invest in more efficient parts distribution including optimised vehicles, driver training and continuous monitoring of both vehicles and drivers. Switching to vehicles powered by biofu- Scania has decided to boost its parts distribu- warehouses that supply Scania’s dealerships in els in distribution services will deliver a substan- tion capacity. The central warehouse in Europe the rest of the world. The existing facility will be tial reduction in climate impact. will be extended and an entirely new parts supplemented with a new 36,500 square metre warehouse will be constructed in South Ameri- building. ca. A total of SEK 400 million will be invested in In South America, the parts supply operation these facilities, which will go into service during will be moved from São Paulo to the municipal- the first quarter of 2013. ity of Vinhedo in the Campinas region, which Since 2007, Scania’s central warehouse in has developed into a logistics centre for road Opglabbeek, Belgium has served as the parts and air transport services. The new 16,000 distribution hub for the company’s 1,000 or square metre building will represent a 60 per- so European dealerships and to the regional cent increase in capacity. Major British order Would you like to subscribe? Scania Value is published by Scania The British-based companies Eddie Stobart and For a free subscription, visit and targeted to Scania shareholders. A.W. Jenkinson Forest Products have signed a www.scania.com/scaniavalue Publisher joint procurement agreement with Scania in Per Hillström, ir@scania.com Great Britain totalling 1,000 trucks. They are Editor-in-chief thus repeating an order for 1,000 trucks made anneli.volden@scania.com in 2010, which at that time was Scania’s largest single order in the British market. COMING EVENTs Project Manager erik.aronsson@appelberg.com Art Director The deliveries commenced in March this year karin.soderlind@appelberg.com 12 June 2012 Production and will be completed in December 2013. About 300 of the trucks will be delivered during 2012. Capital Markets Day Appelberg Publishing Group www.appelberg.com Most of the vehicles will consist of tractor units Printing: Trosa Tryckeri from Scania’s R-series, but a large number of 20 July 2012 Cover photo: Getty Images G-series trucks will also be delivered. Interim report, Jan-June 2012 Contact “The agreement reflects our satisfaction with Scania Investor Relations the high level of support provided by Scania’s Week of July 30 151 87 Södertälje, Sweden Tel: 08-553 81 000 dealer network. Scania’s focus on continuous Scania Value Quarter 2, 2012 E-mail: ir@scania.com development will allow Eddie Stobart to continue (on www.scania.com and as to offer its customers sustainable distribution a printed version) and a high level of service,” says William Stobart, Chief Operating Officer of the Stobart Group.12SCV1_06_notiser_6068.indd 8 2012-05-04 10:53:05