A MAGAZINE FOR SCANIA’S SHAREHOLDERS QUARTER 2 2012 %% Rörelsemarginal Operating margin 20 20 16 17 12 14 8 11 4 8 0 -10 -10 -10 -11 -11 -11 -11 -12 -12 -06 -07 -07 -07 -07 -08 -08 -08 -08 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Kv4 Kv1 Kv2 Kv3 Kv4 Kv1 Kv2 Kv3 Kv4 Report. Report. Lower delive- Xxxx xxx xxx ries xxx xxx xxx xxx and higher costs pulled xx xxx. > SID 2 the mar- down gin. > PAGE 2 Interview. Focusing xxxxxx xxx Xxxx xxx on service at Scania xxxx xxxx xx xxxxxx in Latin America. xxx xxxxxx xxx. > SID 3 3 PAGE Finance. Stock market. Incentives and Xxxx xxx xxxxxx sport will get xxxx xxx xx xxxxxxBrazil moving again. xxxx xxx xxxxxx. > PAGE 6–7 > SID 6–7 Lower emissions XXX FIGURES IN FOCUS: FIGURES IN FOCUS: Scania’s broad efforts to reduce environmental impact. > PAGE 4–5Xxxxx xxxx xxxxxxxx xx x xxxxxx xxxxx. > SID 4–5 4.06 Xxxxxx xxx xx Earnings per share (SEK) in the xxxx xxxx xxxxx xxx first six months xxxx xxxxx xx.
First six months in figuresOrder bookings and deliveries by region, Q2 (number of vehicles) EURASIA Order bookings europe Order bookings 2,407 -13% Deliveries 8,150 -14% 1,736 -11% Deliveries 7,020 -20% LATIN AMERICA AFRICA AND OCEANIA ASIA Order bookings Order bookings Order bookings 4,669 +6% 989 -6% 3,371 -33% Deliveries Deliveries Deliveries 3,234 -42% 963 -6% 2,841 -28%Net sales Net sales by product segment* Operating income and margin SEK m. Other 2% % SEK m. Operating income, SEK m. 25,000 Used vehicles 6% 20 Operating margin, percent 4,000 3,500 20,000 16 Services 21% 3,000 15,000 2,500 12 2,000 Engines 2% Trucks 61% 10,000 8 1,500 1,000 5,000 4 Buses and 500 coaches 8% 0 0 0 2 3 4 1 2 3 1 2 1 4 2 3 1 2 3 4 2 4 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 10 10 10 11 11 11 11 12 12 12 10 10 11 11 11 11 12 10 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 *Refers to first half of 2012 20Key figures (SEK m. unless otherwise noted) 2010, H1 2009, H1 Change in % Net sales, Scania Group Operating income, Vehicles and Services 39,338 3,944 43,665 6,414 -10 -39 First six months Operating income, Financial Services Operating income 313 4,257 238 6,652 32 -36 in brief: Income before taxes 4,275 6,828 -37 DELIVERIES Net income for the period 3,249 4,947 -34 fell by 21 percent to 32,032 Operating margin, % 10.8 15.2 fordon. Return on equity, % 23.1 35.0 Return on capital employed, Vehicles and Services, % 29.2 44.2 OPERATING INCOME Earnings per share, SEK 4.06 6.18 -34 fell by 36 percent to SEK Cash flow, Vehicles and Services 1,769 3,218 -45 4,257 m. Number of employees, 30 June 37,802 36,941 Order bookings (units, trucks and buses) 35,395 42,103 -16 CASH FLOW Deliveries (units, trucks and buses) 32,032 40,300 -21 amounted to SEK 1,769 m. 2 SCANIA VALUE • Q2/2012 www.scania.com/se
interview text: erik aronsson photo: dan boman Service must be a major focus of Scania’s future expansion in Latin America, says Martin Ståhlberg.Scania stands strongin Latin AmericaLatin America is not only Scania’s to meet the specific demands of each market. Ståhlberg, Scania has been able to take advantagesecond biggest region but also “We have a strong brand in all the markets of having been well prepared for the change-over.an important region of the world, we operate in. In Mexico, we have a 65 percent “Scania has good experience of the Euro 5with different countries presenting market share for intercity buses. In Peru, there is technology since it is already available in Europe.different demands and conditions. strong potential for mining applications but also Our customers here are happy with what we canMartin Ståhlberg, head of Scania’s for intercity buses. In Venezuela, we have very deliver since they can enjoy the same benefits asLatin American operations, is successfully launched our industrial engines. In the previous technology in terms of fuel economyfocusing on service. Colombia and Chile, we have developed our Bus and productivity,” he says, while pointing out Systems by Scania concept, in which buses occupy that during the first five months of 2012 ScaniaMartin Ståhlberg was appointed head of dedicated lanes in a system that resembles rail- captured the largest market share when it comesScania’s Latin American operations in September bound service.” to sales of Euro 5 vehicles. Overall, the heavy truck2011. Prior to this, he had served as head of Scania market shrank by 32 percent during the first half ofin France and Sweden and as Managing Director Distribution segment is important the year. Demand was strong in both 2010 and 2011.of Scania’s dealerships in Stockholm. In his cur- Yet Brazil is the country to which Ståhlberg is When it comes to future expansion in Latinrent role, he is in charge of one of Scania’s most devoting the greatest attention. America, Ståhlberg believes that the primaryimportant regions. “In Brazil, we are currently focusing on the local focus must be on service. “Latin America today represents about 20 per- distribution segment but we are also very strong “We are focusing on continued improvementcent of Scania’s vehicle deliveries and the region in long-haulage, in products for the agricultural of our service network and service offering. Wehas accounted for reasonably stable growth in industry and in off-road solutions for the con- believe that knowledge of our customers’ busi-recent years, despite the economic downturn dur- struction and mining sectors,” he says. ness and of our customers’ customers means thating 2008 and 2009,” says Ståhlberg. One important factor that is reducing demand not only can we understand, but also predict what Aside from Brazil, Scania has a strong presence in Brazil this year is the transition to the new needs our customers will have. In this way we canin several other countries where the company has Euro 5 emission standard. But according to help improve their business.”www.scania.com Q2/2012 • SCANIA VALUE 3
focus: environment Scania is working on a broad front and in cooperation with customers to help reduce the environmental impact related to carbon dioxide and other substances. Demands for reduced emissions from the transport sector are increasing while economic growth means that transport volume is growing. This represents a great challenge for vehicle manufacturers and transport companies.Meeting environmentalchallengesFor a long time, there have been regulations which came when Scania’s R 480 Euro 6 tractor model importance to Scania’s customers. However,prescribe limits for discharges of particulates and recently received the “Green Truck 2012” award there are still no actual regulations regardingnitric oxide. Many countries have introduced the from the respected German trade magazines emissions of carbon dioxide for commercialEuro emission standards, and the Euro 5 standard Verkehrsrundschau and Trucker. “The good results vehicles. There are many opportunities to reducecurrently applies in the European Union, Brazil achieved by the Scania R 480 Euro 6 in these climate impacting emissions aside from impro-and elsewhere. The next stage in Europe will press tests confirm that Scania’s engineers have ving the efficiency of the traditional diesel engine.be the Euro 6 standard, which enters into force done an excellent job in developing the engines,” Alternative fuels are one method.within the EU and certain neighbouring coun- says Scania’s Managing Director for Germanytries on 31 December 2013 for all new vehicles and Austria, Alexander Vlaskamp.that are sold. The Euro 6 standard means about one fifth of the emissions of nitric oxide andScania’s early Euro 6 launch particulates compared toAs early as March 2011, Scania launched its first Euro 5. Lower carbonEuro 6 engines in order to give far-sighted hauli- dioxide emissions is aners the opportunity to be one step ahead before area that is in constantthe new emission standard go into effect. focus since lower fuel An acknowledgement of the successful launch consumption is of great4 SCANIA VALUE • Q2/2012 www.scania.com
text: erik aronsson foto: scania “ ioethanol can deliver up to B For more than 20 years, Scania has workedwith bioethanol as an alternative fuel. Todaybioethanol is the most widely used biofuel intransport services. It is also the fuel which hasthe best prospect of being supplied in large and 90 percent lower CO2 emis- sions compared to ordinaryenduring quantities in the future, and it offersthe highest cost efficiency and best operationalrange of the renewable fuels available at present. A major advantage is that bioethanol is avail-able in liquid form and in commercial quantities diesel.”all over the world. It is easy to produce from avariety of different raw materials – such as sugarcane, beets and cellulose – and it is used both as round-the-clock for reloading to the Iron Ore tion where all vehicles can use the system andpure fuel and as an additive to traditional fuels. Line, a railway that will carry the ore to a port thus share the large investment cost to rebuild Scania is the only vehicle manufacturer to offer on the Atlantic coast of northern Norway. In a the road network. A feasibility study from thea number of heavy haulage products that can recent report, the Swedish Transport Administra- Svenska Elvägar (“Swedish Electric Roads”) pro-be powered by bioethanol – for example buses, tion (Trafikverket) stated that electrically-pow- ject shows that electrification of heavy road traf-trucks and refuse collection vehicles. ered trucks are a realistic alternative. Power sup- fic in Sweden would make it possible to reduceScania’s engines for bioethanol fuel have the plied by overhead cables is probably also the best CO2 emissions by 4.2 million tonnes, equivalentsame energy efficiency as a standard diesel engine solution for this service, since the road is built on to 9 percent of national fossil fuel emissions.and meet the Euro 5/EEV emission standards. bogs and moves up and down. Together with Volvo Powertrain, Bombardier, “Of course many people want to rely on future “Development of our electrified vehicle has Alstom and other companies within the trans-technology, but there is so much we can do even to take place on a step-by-step basis,” explains port industry, Scania has applied for fundingtoday. Bioethanol can deliver up to 90 percent Johan Lindström, Expert Engineer at Hybrid from the government-backed Strategic Automo-lower CO2 emissions compared to ordinary die- Systems Development, Scania. tive Research and Innovation (FFI) research pro-sel,” says Urban Wästljung, Manager, Sustainable “We are using electrified gearboxes developed gramme, for a study on electric road transportTransport at Scania. in hybrid projects, but then a large electrical systems, which is expected to be completed in Scania is also working on solutions to reduce motor must be added to the powertrain to drive early 2013.CO2 emissions which as yet are only in the 90 tonnes of payload entirely by electricity.” In Scania’s view, different solutions will beexperimental stage. Some time ago, the car However, some problems would have to be required in different markets to make suchindustry launched electric cars of different kinds. resolved in order to adapt such a system to systems commercially viable in meeting futureA major challenge in the case of commercial enable both heavy vehicles and ordinary cars to emission challenges. This is due to varyingvehicles is the limitation in battery technol- obtain power from aerial lines. access to alternative fuels and also depends onogy, which for example cannot provide enough Scania is therefore also examining solutions how developed the electrical infrastructure willcapacity for a truck carrying a 25 tonne payload, where vehicles obtain their power supply from be in the future. Scania has a good starting posi-driven very long distances. the roadway through induction or some other tion, given its extensive experience of a modular technique. This will deliver a more flexible solu- product range.Electric motorways– a future possibilityHowever, if a vehicle can obtain electric powerfrom the roadway itself, the potential will bemuch greater. It may sounds a bit like science fic-tion, but it is a field where Scania even today isinvolved in several different projects. A future system of electrified motor-ways has a number of advantages:there is less environmental impactfrom operation of vehicles, elec-tric engines are more efficientthan ordinary internal combus-tion engines and power can besupplied to the vehicles withoutneeding to use heavy batteries. Several interesting projectsrelating to electrified roadsare underway in Sweden. Oneexample is Scania’s coopera-tion with Siemens regarding electric truckoperation on the road between Pajala and the Today’s electric vehicles are often powered by batteries, but such vehicles have a limited drivingiron mine at Svappavaara in far northern Swe- distance due to their low storage capacity. Scania is therefore evaluating various alternatives forden. There, trucks containing iron ore will drive transferring electricity between roadway and vehicle, including inductive power transfer.www.scania.com Q2/2012 • SCANIA VALUE 5
Finance: scania in brazilBrazilTechnology shift inScania’s largest marketThe transition to a new emission local level we should see a greater effect. Seasonal- of the recovery within the industrial and thestandard and generally weaker ly adjusted, I think we may start to see a sequential agricultural sectors, acceptance of new rules foreconomic conditions have reduced recovery during the summer even though we do fuels and engines, and better access to govern-demand for heavy trucks in Brazil. not expect that registrations and production will ment incentive measures,” writes the US invest-But the Brazilian government is increase compared to last year,” says Björn Enar- ment bank JP Morgan in an analysis.now making an effort to get the son, analyst at Danske Bank.economy moving again, however, Mantega has had to reduce the growth out- High average age of truck fleetso far the measures have not had look on several occasions and in mid-July JP Morgan also points out in its analysis that thean effect. Reuters reported that the GDP forecast had Brazilian truck fleet, which is estimated to num- been cut to 2.5 percent for 2012. In 2011, growth ber about a million trucks, still has a high aver- was 2.7 percent. age age, suggesting a large replacement need.Demand for heavy trucks in Brazil has been at However, in the longer term, analysts believe The same applies in the bus and coach market.a very high level in recent years, but the transi- that there are factors that point towards a good Transport needs in particular will be in focustion to the Euro 5 emission standard during performance in Brazil. Infrastructure investments for the two gigantic sporting events that arethe first half of 2012 has had a negative impact connected to the football World Cup in 2014 and planned in Brazil in the next few years. Aheadon demand. Buyers of new trucks have been the 2016 Olympic Games in Rio de Janeiro com- of the World Cup in 2014, there are plans for ahesitant about assuming the cost implied by an bined with the demographic trend and the above- number of infrastructure investments and theinvestment in the new trucks. The shift from mentioned incentive measures imply a good out- government is also hoping for greater economicthe Euro 3 emission standard to Euro 5 means look for the entire automotive industry. activity during the event in the form of tourismthat vehicles gain exhaust purification technol- “We predict a strong rebound in demand and and increased private consumption.ogy which has not been used in Brazil to date. production of heavy trucks in early 2013 in light “We believe that the World Cup will have Meanwhile the generally weaker economic some positive effect on the market, particu-conditions have reduced demand throughout larly as regards construction equipment, thanksthe Brazilian economy, which has also affected to all of the planned building projects,” saysdemand for vehicles. The Brazilian government Enarson.has tried to get growth moving again through The 2016 Olympic Games in Rio de Janeirovarious incentives and the central bank has will also require extensive infrastructure invest-reduced interest rates in several stages. In ments. In March 2012, Brazil’s President DilmaApril, Brazil’s finance minister Guido Mantega Rouseff and Rio de Janeiro’s Mayor Eduardointroduced a package including tax cuts, in- Paes announced plans for bus and light railcentives to local industry through government transport solutions in Rio that are expected toprocurement and better financing measures for cost approximately USD 1 billion, the equiva-export companies. lent of SEK 8 billion. However, this is a minor factor when compared to the World Cup.Reduced growth forecasts “The positive effect from the Olympics will“So far, this has not had a significant effect but as Brazil’s finance minister, Guido Mantega, hopes not be as significant since there is only one citydecisions regarding support are moved out to a to get the country’s economy moving again. involved,” says Enarson.6 SCANIA VALUE • Q2/2012 www.scania.com
text: erik aronsson photos: göran wink and vanessa carvalho /getty images The World Cup in 2014 and the 2016 Olympics in Rio de Janeiro will require investments in Brazil’s infrastructure. Facts Brazil Area: 8,514,877 km², the world’s fifth largest country Population: About 192 million, the world’s fifth most populous country GDP: +2.7 percent (2011) Currency: Real (100 reais= about 50 US dollars) Capital: Brasilia (Sources: IMF, OECD, CIA World Factbook)www.scania.com Q2/2012 • SCANIA VALUE 7
IN BRIEF editor: erik aronsson photos: scaniaWeak demand for Martin Lundstedt has been appointed newbuses and coaches President and CEO of Scania AB.Scania Production Slupsk, in Poland, is issuingredundancy notices to 142 employees due tocontinued weak demand for buses and coachesfor public transport in the most important mar-kets for Scania’s fully-built buses in the Omnirange. Various support programmes have beendeveloped in consultations between the com-pany and the trade unions that for instance willoffer the affected employees the possibility ofearly retirement and redundancy payment. “The economic situation in our most impor-tant markets is showing no sign of improve-ment, which means that we expect continuedweak demand for public transport buses in thecoming year. Therefore, we have to adjust pro-duction to significantly lower volume,” says Klas Martin Lundstedt named new CEODahlberg, Senior Vice President, Scania Buses The Board of Directors of Scania has appointed “We shall continue to be the Scania that our Coaches. Martin Lundstedt the new President and Chief customers appreciate, a small big company The facility in Słupsk, with close to 700 employ- Executive Officer of Scania AB. He takes up his working tightly together with them, alwaysees, is the hub of Scania’s European production new position on 1 September 2012 and succeeds keeping it simple and straightforward.”of fully-built (bodied) buses for public transport. Leif Östling, who has been appointed a member The company’s core values remain in placeThe Scania OmniCity and OmniLink models are of the Board of Management of Volkswagen AG. and the same goes for Scania’s strategies.bodyworked here. Chassis for the Scania OmniC- Martin Lundstedt, born in 1967, has a Master “We shall continue to be the premium choiceity are also assembled in Słupsk. These chassis are of Science degree in Industrial Engineering and for all customers in the transport and enginealso delivered to other, independent bus body- Management and is currently Scania’s Executive sectors all over the globe. And we will do thatbuilders in Europe, Africa and Asia. Vice President and Head of Franchise and by building on our strong portfolio of products Factory Sales. He joined the company in 1992 and and services, in our modular system, and with has held various senior positions including head a strong emphasis on the sales and services of Scania’s industrial operations in France from network. 2001 to 2005 and Senior Vice President, Trucks “Being the premium choice means that until 2007, when he assumed his current position. we are working as partners with our customers, Scania is well positioned, and Lundstedt sees always providing the best return on their invest- no reason to change the path Scania has cho- ments over the life cycle of these products.” sen in recent years. Would you like to subscribe? For a free subscription, visit Scania Value is published by Scania www.scania.com/scaniavalue and targeted to Scania shareholders.First Euro 6 Publishermunicipal vehicle Per Hillström, firstname.lastname@example.org Editor-in-chief email@example.comScania exhibited the world’s first fully Project Managerequipped Euro 6 sewer cleaner vehicle atthe IFAT ENTSORGA trade show, held in UPcoming events firstname.lastname@example.org Art Director email@example.comMunich, Germany in May. Scania’s modu- Productionlar product system made the design possible, 22 October 2012 Appelberg Publishing Groupalso showing that Scania’s Euro 6 engines can Interim Report, Jan-Sep 2012 www.appelberg.com Printing: Trosa Tryckeribe specified for virtually any application on Cover photo: Dan Bomanthe market. Week starting 29 October “Assembling such a complicated super- Scania Value Quarter 3, 2012 Contact Scania Investor Relationsstructure on Scania’s Euro 6 chassis was really (on www.scania.com and as 151 87 Södertälje, Swedeneasy,” says Brian Stage, CEO of Danish-based a printed version) Tel: 08-553 81 000bodybuilder J Hvitved Larsen A/S. “The E-mail: firstname.lastname@example.org is identical to the one we usefor Euro 5 vehicles, which is a major benefitfrom a cost- and lead-time standpoint.”8 SCANIA VALUE • Q2/2012 www.scania.com