Downshift in Scania orders sends shares plummeting

Swedish truckmaker Scania said Friday that orders had plunged because of the financial crisis but that it had made slim rise in third-quarter profits.

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Orders for trucks fell 41 percent in July-September against the previous quarter. In western Europe, they dived 69 percent, and in eastern and central Europe, which had been seen as strong growth markets, orders slumped 45 percent.

"Due to uncertainty about future business conditions as well as liquidity shortages, customers in Europe have become increasingly cautious about placing new orders," chief executive Leif Östling said in a statement.

He said orders had declined in Russia, and warned the group would have to reduce production. "Scania will use the flexibility it has with employees on temporary contracts, today close to 20 percent of the workforce in the manufacturing organization."

For July-September, Scania's net profit grew by 3.6 percent to 1.81 billion kronor ($ 227 million), while sales inched up by 2.6 percent to 20.4 billion, it said in a statement.

Operating income climbed by 10 percent to 2.82 billion kronor during the period.

At the end of September, Scania had 36,226 employees worldwide, compared to 34,650 a year earlier.

Östling said the group's forecast of higher earnings in 2008 "remains unchanged."

However, "in view of the currently unclear situation about future business conditions, Scania is providing no forecast for 2009."

He noted that the long-term outlook "remains good, with an increasing need for transport services."

Earlier, rival Volvo reported a 36.5-percent net profit slump in the third quarter and cut market growth forecasts for this year, saying orders had fallen 55 percent for two quarters running.

Volvo's net profit for the quarter fell on a 12-month comparison by 36.5 percent to 2.0 billion kronor and operating profit fell 36.6 percent to 3.17 billion kronor even though sales edged up 2.0 percent to 69.6 billion kronor.

Both Volvo and Scania saw their share prices plunge on the Stockholm stock exchange on Friday.

Shortly after 3pm, Scania's shares were down nearly 11 percent to 52.50 kronor.