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Scania Value Q3 2013 - shareholder magazine


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Scania Value Q3 2013 - shareholder magazine

  1. 1. A MAGAZINE FOR SCANIA’S SHAREHOLDERS QUARTER 3 2013 % 20 Operating margin 16 12 8 4 0 -11 -11 -12 -12 -12 -12 -13 -13 -13 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Report. Stronger SEK pulled down margin. > PAGE 2 Interview. “China’s transport sector is facing major changes.” > PAGE 3 Finance. Analysts on Scania’s Capital Markets Day. > PAGES 6–7 Ready for extremes 14.1% FIGURE IN FOCUS: Xxxxx xxxx xxxxxxxx xx x adaptation to new markets Climatic wind tunnel speedsxxxxxx xxxxx. > SID 4–5 >PAGES 4–5 EN01_cover.indd 1 Market share, trucks in Europe, first nine months of 2013. 2013-10-28 14:14:34
  2. 2. FIRST 9 MONTHS IN FIGURES Order bookings and deliveries by region, Q3 (number of vehicles) EURASIA EURASIEN Order bookings Orderingång 1,838 -8% 1 756 +5% EUROPE EUROPA Order bookings Orderingång Deliveries Leveranser 11,454 +81 6 329 -15%% 1,932 -6% 1 661 +16% Deliveries Leveranser 7,138 +15 6 215 -9%% LATIN AMERICA LATINMERIKA AFRICA AND OCEANIA AFRIKA OCH OCEANIEN ASIA ASIEN Order bookings Orderingång Order bookings Orderingång Order bookings Orderingång Deliveries Leveranser Deliveries Leveranser Deliveries Leveranser 4,557 -21% 5 791 +2% 2,808 +45% 1 935 -31% 1,152 +10% 1 114 +3% 1,122 +21% 927 0% 6,128 -19% 4 262 +44% Net sales 1,924 -55% 1 782 +8% Operating income and margin Net sales by product segment* SEK m. 25,000 Other 2% Operating income, SEK m. % Used vehicles 6% SEK m. Operating margin, percent 20 3,500 3,000 20,000 16 Services 20% 2,500 15,000 12 Trucks 63% 10,000 2,000 1,500 8 Engines 1% 1,000 5,000 4 Buses and coaches 7% 500 0 3 2 Q Q 13 13 20 4 1 13 Q 20 3 Q 12 20 2 Q 12 20 1 Q 12 20 4 Q 12 20 Q Q 11 11 20 *Refers to first nine months of 2013 20 3 0 20 2 3 Q 13 1 Q 13 20 4 Q 13 20 3 Q 12 20 2 Q 20 Q 12 12 20 4 1 20 12 Q Q 11 20 20 20 11 Q 3 0 Key figures (SEK m. unless otherwise noted) Net sales, Scania Group Operating income, Vehicles and Services Operating income, Financial Services 2013, 9 mo. 2012, 9 mo. 61,864 57,261 Change in % 8 5,428 5,702 -5 511 433 18 Operating income 5,939 6,135 -3 Income before taxes 5,925 6,156 -4 Net income for the period 4,233 4,750 -11 Operating margin, % 9.6 10.7 Return on equity, % 17.6 20.2 Return on capital employed, Vehicles and Services, % 21.0 25.2 Earnings per share, SEK 5.30 5.94 -11 1,362 2,176 -37 Number of employees, 30 September 40 739 38 580 Order bookings (units, trucks and buses) 65,160 52,320 25 Deliveries (units, trucks and buses) 56,224 46,879 20 Cash flow, Vehicles and Services 2 SCANIA VALUE • Q3/2013 EN02_rapporten.indd 2 FIRST 9 MONTHS 2012 i korthet: IN BRIEF: LEVERANSERNA VEHICLE DELIVERIES minskade med 21 procent rose by 20 fordon. to till 46 879 percent 56,224 units RÖRELSERESULTATET OPERATING MARGIN minskade med 36 procent amounted 6 135 (10.7) till MSEK to 9.6% EARNINGS PER SHARE KASSAFLÖDET decreased by 11 percent uppgick till MSEK 2 176 to SEK 5.30 2013-10-28 14:14:14
  3. 3. INTERVIEW TEXT: CONNY HETTING PHOTO: DAN BOMAN “The advantages of having such a strong partner as Scania will thus become more evident every day.” Mats Harborn, Executive Director, Scania China Strategic Centre How does Scania’s position in China look today? “We have ten successful years behind us during which we have built up a strong position among the more advanced Western transport companies in the country, based on organic growth. Scania’s business model in the heavy truck segment works well in the Chinese market and we don’t need to change our concept since the focus is increasingly shifting from purchase price to vehicle uptime and fuel efficiency. This is where we differ from other Western vehicle manufacturers that instead concentrate on locally-adapted vehicles produced in collaboration with Chinese manufacturers.” Scania conducts a very active dialogue with customers and decision-makers in China in order to modernise the country’s transport and logistics industry. What kind of feedback have you received? “A milestone for Scania in China” The newly constructed dealership facility in Guangzhou will play an important part in boosting Scania’s presence in China. Mats Harborn, Executive Director of the Scania China Strategic Centre, now sees great opportunities as the country’s transport industry is modernised and consolidated. Scania China has grown rapidly in recent years. Its two large offices in Beijing and Shanghai have now been supplemented by the new facility in Guangzhou, which is also the first vehicle dealership to be wholly-owned by a Western manufacturer. EN03_intervju.indd 3 “For Scania China, this is a milestone and represents a fantastic opportunity to get even closer to our customers while gaining deeper knowledge about how the Chinese transport market operates,” says Harborn. How does the company’s own dealership in Guangzhou fit into Scania’s plans for China? “We will use it to develop and help our noncaptive dealerships all over China to work according to Scania standards. Meanwhile, the facility will also serve as a home for Scania China. It houses a Pre-Delivery Centre where final adaptation of vehicles is carried out for each customer as well as a training centre, which aims to supply Scania’s service network in China with professional service technicians – all aimed at supporting Scania’s continued growth in China.” “Our strategy is gaining respect among the Chinese authorities. They are fully aware that high transport and logistics costs point to an inefficient transport system, which is hurting the growth potential of the Chinese economy. In China, transport and logistics costs total about 18 percent of overall GDP. Reducing this figure by one percentage point would save USD 73 billion. Pressure for a more efficient logistics system is also coming from multinational companies that have established production in China. They have higher logistics demands when it comes to uptime, fuel efficiency and environmental impact.” How can Scania benefit from improving the efficiency of China’s transport services? “In general cargo, there are now 800,000 transport companies, with an average of 1.7 trucks each. So the market is very fragmented and characterised by limited knowledge about transport and logistics. Companies often have poor profitability. We can thus expect substantial consolidation; some analysts are talking about a reduction to 80,000 transport companies. In order to survive, you have to be better than the others and have higher profitability. The advantages of having such a strong partner as Scania will thus become more evident every day.” Q3/2013 • SCANIA VALUE 3 2013-10-28 09:27:47
  4. 4. FOCUS: INNOVATION “We can test again and again under exactly the same conditions until we have the answers we need.” Lars Hult, Project Manager for Scania’s climatic wind tunnel From Siberian ice to Saharan heat Here is Scania’s latest investment in innovation. Vehicles are tested in the new climatic wind tunnel to ensure they can cope with extreme weather conditions in future markets. An arctic storm is raging on top of “The Mountain”, as the Scania Technical Centre in Södertälje, Sweden is familiarly known. But sub-zero temperatures (-35 degrees Celsius) can swiftly shift into a hot desert storm. All possible climatic and weather conditions can be simulated in Scania’s climatic wind tunnel. After years of intensive engineering work, the SEK 400 million investment is now ready to challenge each test vehicle with extreme weather conditions. Now that Scania is planning for growth in markets such as China, India, Indonesia and Africa, the climatic wind tunnel is an important tool for developing vehicles and services adapted for special customer needs and local conditions. 4 SCANIA VALUE • Q3/2013 EN04-5_tema.indd 4 “This is the first climatic wind tunnel in Europe adapted for full-size trucks and buses and probably the only one in the world,” says Project Manager Lars Hult. This offers several advantages: Winter tests can be carried out in the middle of summer without needing to transport prototypes to a location with the right climate. The company also avoids having to rely on unpredictable natural weather conditions. Shorter lead times The facility will play an important part in optimising future vehicles when it comes to fuel efficiency, improved uptime as well as lower noise and emissions. These parameters can be measured and analysed in widely differing climatic conditions. Comprehensive tests will mean even higher quality. Lead times for development of new products can also be shortened. “Repeatability is a great benefit,” says Hult. “We can test again and again under exactly the same conditions until we have the answers we need. This isn’t possible in reality.” Another advantage is that the company can conduct vehicle tests which focus on various types of applications. It is important for Scania to test the performance not only of the chassis but also of different superstructures, such as tipper trucks for construction and mining operations, concrete mixers and timber trucks. Fully-built buses are another area where testing possibilities were previously limited to field tests. Each test run in the tunnel takes at least a day and up to a week to complete. Next to the test cell is a large hall where the vehicle is prepared before being driven in. Once inside the test cell, it is parked on rollers – one for each set of wheels, enabling simulation of speeds of up 100 km/h, the maximum for many trucks and buses. At the front end of the cell is a huge air nozzle, with a surface area of 13 square metres, from which air is forced over the vehicle. Snow or rain is also pumped through the nozzle when required. Developed in-house The software used to communicate with the vehicle in the tunnel was developed in-house, 2013-10-28 09:27:30
  5. 5. TEXT: HANNAH KIRSEBOM , PER - OLA KNUTAS , PETER MATHSSON PHOTOS: DAN BOMAN, PEGGY BERGMAN, KJELL OLAUSSON The new climatic wind tunnel offers the possibility of testing the vehicles of the future. The comprehensive tests will mean even higher quality and shorter lead times. Looking towards 2030 Scania’s Technology Road Map (TRM) describes the knowledge that the company will need over the next 20 years in order to ensure that the necessary competencies are in place. Looking ahead towards 2030, the TRM lays the groundwork for developing technologies as diverse as inter-vehicle communication, alternative fuels and new composite materials. “It has forced us to define what goals we want to aim for. It’s not about what exact customer solutions we should develop, but rather what we feel is needed so we can develop these in the future,” says Tony Sandberg, Head of Scania’s Research Support Office. Here are some of the innovations and technological solutions that Scania is working on in the short and long term: allowing Scania to adapt the facility as the test vehicles change. Erik Söderberg, Senior Engineer at Scania, has been involved in the project since the early pilot studies in 2008. He points out that Scania can now test secret prototypes in realistic environments, or as close to reality as you can get. “Many of the tests are completely new in the truck world,” says Söderberg. “For instance, now for the first time we can measure emissions under realistic operating conditions. And above all, it’s quite novel and incredibly efficient to be able to carry out all kinds of tests in the same rig.” Test Cell Operator Per-Arne Brodd is inside the test cell, where the lowest possible temperature is minus 35 degrees Celsius – cold enough to enable frost to build up. EN04-5_tema.indd 5 1 Automated queue assistance – an autopilot in trucks that can take over operation in traffic jams and follow surrounding trucks in a motorway queue. The driver can then take care of adminstrative work in the cab, for example. 2 Platooning – truck driving in convoys – is a system featuring computers, advanced radar and WiFi systems that allows trucks to operate in a tight formation. This enables them to reduce air resistance, thereby saving fuel. 3 Electrification – Scania has initiated collaboration with various partners on electrically powered vehicles and is focusing on two different methods of power supply – either from electrified roadways or from overhead cables. Q3/2013 • SCANIA VALUE 5 2013-10-28 09:27:41
  6. 6. FINANCE: CAPITAL MARKETS DAY 2013 During the afternoon, participants had the opportunity to take part in four different activities: presentations of Scania’s China strategy, the Climatic Wind Tunnel and Scania Streamline and a chance to test-drive Scania Streamline trucks. Jens Hedar and Johan Leteus, analysts from Svensk Exportkredit, in discussion during the coffee break. “The afternoon provided a fantastic opportunity to get a deeper understanding and a better insight into Scania’s operations and products,” said Leteus. Scania’s path towards 2020 Scania is well-positioned for growth up to 2020. There is global potential to deliver 120,000 trucks per year by 2020 and an ambition to increase service-related products to 25–30 percent of total sales, said Scania’s President and CEO Martin Lundstedt at the company’s Capital Markets Day in Södertälje, Sweden. “To succeed we must move more towards being an integrated part of our customers’ business. We must continue to develop our business model and find various ways of affecting and improving customer profitability,” said President and CEO Martin Lundstedt at Scania’s Capital Markets Day on 19 September, which focused on growth opportunities up to 2020. A number of analysts appreciated the Scania’s management’s clarity regarding the future direction of the company. “The messages regarding objectives and 6 SCANIA VALUE • Q3/2013 EN06-7_finans.indd 6 direction were very clear,” said Olof Larshammar, equity analyst at the Swedish private bank Erik Penser. A common denominator for all Scania markets is that volume is gradually shifting to the heavy truck segment, in which Scania operates. Henrik Henriksson, Head of Sales and Marketing, said Scania expects that the European markets will start to recover, which implies higher volume. In growth markets such as Asia, Eurasia, India and Africa, it’s about building a presence to gain market shares when higher standards for transport efficiency take effect. Christian Levin, Head of Commercial Operations, explained that Scania will boost its market share on the service side while broadening its services portfolio. This will boost growth. “Fuel efficiency and uptime are extremely important for our customers, and services are becoming increasingly important in enabling us to deliver this,” he said. Lundstedt emphasised the importance of adopting a holistic approach and of working together with both transport companies and buyers of transport services. Building sustainable transport solutions requires close collaboration in order to work on continuous improvements. Here, he emphasised the “Ecolution by Scania” product and 2013-10-28 09:27:19
  7. 7. TEXT: SUSANNA HJERTONSSON PHOTO: PETTER MAGNUSSON During the morning, presentations were given by Scania’s management. From the left: Christian Levin, Head of Commercial Operations; Henrik Henriksson, Head of Sales and Marketing; Jan Ytterberg, CFO; and Martin Lundstedt, President and CEO. “The new management team has done its homework and seems to work very well together,” commented one analyst. service package and presented an example from Spain where Scania, working together with the customer, reduced fuel consumption and carbon dioxide emissions by 16 percent over a nine-month period. Lundstedt also addressed the issue of how the cooperation in the Volkswagen group is proceeding. A number of feasibility stud- ies have shown attractive synergy opportunities for Scania, in areas such as axles, gearboxes, common components and hybrid drive components. During the afternoon, participants were given the opportunity to take part in four different activities: presentations of Scania’s China strategy, the Climate Wind Tunnel and Scania “The management’s messages regarding objectives and direction were very clear.” Olof Larshammar, equity analyst at Erik Penser EN06-7_finans.indd 7 Streamline and a chance to test-drive Scania Streamline trucks. “This provided a fantastic opportunity to get a deeper understanding and a better insight into Scania’s operations and products,” said Johan Leteus, credit analyst at Svensk Exportkredit. “The Climatic Wind Tunnel made it obvious that Scania is well ahead of its competitors when it comes to developing trucks,” commented Olof Larshammar of Erik Penser. Mats Harborn, Executive Director of the Scania China Strategic Centre, said that Scania sees good opportunities for the company’s brand and premium trucks in the Chinese market (see interview, page 3). “As the market is consolidated and logistics and transport solutions are concentrated towards fewer players, demand for our premium trucks will grow,” said Harborn. Q3/2013 • SCANIA VALUE 7 2013-10-28 09:27:26
  8. 8. IN BRIEF EDITOR: PER - OLA KNUTAS PHOTOS: KASPER DUDZIK , WAGNER MENEZES , SCANIA Arne Karlsson, President of Bring Frigo Åkeri. The world’s first Euro 6 gas truck Scania has now delivered the first gas-powered truck complying with the new Euro 6 emission legislation that will take effect in the EU from 2014. The world’s first such truck has been put into service in Sweden by Bring Frigo. “We are keen to give our customers access to the latest in environmental technology,” says Arne Karlsson, President of Bring Frigo Åkeri AB. “The new distribution truck from Scania displays impressive performance and, running on biogas, emissions of harmful substances and CO2 are very low.” Bring Frigo, which is part of Norway Post (Posten Norge), is the Nordic region’s largest supplier of food transport services, with operations all over the world. Scania Eco-roll allows more fuel-efficient driving. Scania utilises gravity to save fuels During the autumn of 2013, Scania is introducing Eco-roll, an advanced system with the potential to lower customer fuel costs by up to two percent. The system calculates when a truck should use gravity to roll in neutral gear on descents. Customers in Europe who now order a truck with Scania Opticruise and Active Prediction The Arena Corinthians stadium in São Paulo. Kicking off the World Cup The Brazilian construction firm Concreserv uses Scania trucks to deliver concrete for one of the 2014 football World Cup venues in Brazil: the Arena Corinthians in São Paulo. The opening ceremony will take place at the Arena, which will then become the home stadium of the Corinthians Paulista team, five-time Brazilian champions. To handle the assignment, Concreserv has invested in 15 new Scania P 310 8×4 concrete mixers. Márcio Pardini, commercial director of the company, says that the payload, torque, high reliability and low maintenance costs of the Scania vehicles were the decisive factors behind choosing them: “Other manufacturers’ vehicles enabled us to carry up to 17.5 tonnes per trip. With Scania it’s nearly 25 tonnes, which allows us to boost our productivity.” EN08_notiser.indd 8 will be able to save fuel and money from the first quarter of 2014 by using the new Scania Eco-roll feature. The truck itself calculates what is most fuel efficient: rolling down large hills with the transmission in neutral and the engine idling, or using engine braking with the fuel supply switched off. Would you like to subscribe? For a free subscription, visit UPCOMING EVENTS 29 January 2014 Year-end Report 2013 25 April 2014 Interim Report January–March 2014 18 July 2014 Interim Report January–June 2014 Scania Value is published by Scania and targeted to Scania shareholders. Publisher Per Hillström, Editor-in-Chief Project Manager Art Director Production Appelberg Publishing Group Printing: Trosa Tryckeri Cover photo: Dan Boman Contact Scania Investor Relations SE-151 87 Södertälje, Sweden Tel: +46 8 553 81 000 E-mail: 2013-10-28 14:14:19