Scania profits keep on trucking

Swedish truckmaker Scania, which is majority-owned by Volkswagen, reported strong second-quarter profits on Friday, beating expectations but warning that 2009 could offer a bumpier ride.

For the April to June period, the company posted a net profit of 3.03 billion kronor ($503 million), up 51.3 percent from the year-ago quarter.

Scania also said its net sales swelled 14.2 percent to 23.89 billion kronor, while its operating income leapt 41.4 percent to 4.25 billion kronor.

The results far exceeded analyst expectations of a net profit f 2.5 billion kronor and an operating income of 3.64 billion, according to a poll conducted by the Down Jones financial news agency.

“Scania’s earnings reached new record levels in the first half and in the second quarter of 2008, primarily driven by higher vehicle and service volume and increased prices,” company chief executive Leif Östling said in the earnings statement.

By region, Scania’s sales ballooned 18.5 percent in its main market of western Europe, by 13.3 percent in central and eastern Europe, and by 14.5 percent in Latin America.

In Asia however, its sales slipped 1.1 percent and in remaining markets they were down 6.5 percent.

Up until June 30 this year, Scania said it had delivered 39,574 vehicles, up five percent from the 37,578 it had delivered a year earlier.

For the full-year 2008, the company said it expected to increase its annual production capacity to 90,000 vehicles, and that by the end of 2009 it should be able to make 100,000 trucks a year.

Scania however said uncertain market conditions, especially in Europe, made it difficult to provide a financial outlook for the rest of 2008 and for 2009, hinting only that its earnings this year should be higher than last year.

The company’s reluctance to offer up a forecast was “something new and quite negative,” according to Evli Bank analyst Michael Andersson.

“In the first quarter they were talking about normalization from high levels, but now they are talking about greater economic uncertainties,” he told AFP.

The company had previously had forecast a sales increase of more than 10 percent between 2007 and 2009 and operating margins of between 12 and 15 percent.

Like its Swedish competitor Volvo, Scania said its order bookings had declined significantly, with truck orders across all markets falling 25 percent on average, pulled down especially by western Europe, where they plunged 48 percent.

Following its report, Scania saw its stock price swell 4.6 percent to 90.50 kronor in afternoon trading on the Stockholm stock exchange, which on average was down 0.2 percent.

“Scania has a strong balance sheet and great cash flow compared to other competitors (and) they beat expectations, so that lifts the shares,” Andersson said.


Volkswagen gets shares to take over Scania

Volkswagen, Europe's biggest carmaker, was set to take full control of Swedish truck manufacturer Scania on Tuesday after a small but crucial shareholder agreed to sell its shares.

Volkswagen gets shares to take over Scania
Swedish pension fund Alecta previously held out for a higher share price but agreed to sell its 2.04-percent stake in Scania, paving the way for Volkswagen to acquire full control the company.
On April 30, the German car giant said it lacked less than two percent more shares to reach its 90 percent goal, and thereby force the sale of the remaining shares.
"After new discussions with Volkswagen we have concluded that there will be no increase in their offer," Alecta said in a statement, referring to Volkswagen's refusal to pay more than 200 kronor ($30.5) per share.
In February, Volkswagen offered €6.7 billion ($9.3 billion) to acquire the nearly 40 percent of Scania it did not already own and to strengthen its position against its German competitors Daimler and the Swedish truck maker Volvo.
Scania's board of directors recommended shareholders not to part with shares at the price offered.
The offer expired on April 25th. However, confident that shareholders could be won over, Volkswagen extended its offer to May 16.
The German auto giant already owns truck and bus-maker MAN and bought into Scania in 2000.
It had previously said that it could make annual savings of €650 million through economies of scale by taking full control of the Swedish company.
The takeover is just the latest to hit Sweden's beleaguered vehicle manufacturing sector which has seen Chinese takeovers of the once iconic car brands Saab and Volvo.
Volvo Trucks announced more than 4,000 job cuts over the last six months and a voluntary redundancy scheme aimed to cut costs and increase profitability.