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Profits and orders plummet at Scania

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11:44 CET+01:00
Swedish truckmaker Scania reported a 44 percent drop in fourth quarter net profits and sharp drop in new orders on Tuesday, at the same time the board recommended shareholders reject Porsche's takeover bid.

For the October to December quarter, the company said it recorded 1.5 billion kronor ($179 million) in net profits, down from 2.7 billion kronor for the same quarter a year earlier.

Orders for trucks meanwhile fell 91 percent to some 2,420 units, while deliveries slipped 18 percent to nearly 18,000 trucks during the quarter, the company said in a statement.

Scania's net sales also fell, dropping eight percent to 22.7 billion kronor from 24.5 billion in the year-ago quarter.

"During the second half (of 2008), financial turbulence had a broad impact on the markets where Scania operates," Scania chief executive Leif Östling said in the statement.

For all of 2008, the company said it had seen its net profit swell four percent to 8.9 billion kronor, while its net sales grew five percent to 89 billion kronor.

Order bookings meanwhile plummeted 46 percent during the year to just over 51,000 trucks, it said, cautioning that the time ahead would also be tough.

"Scania is postponing investments in machinery, equipment, development projects ... the number of outside consultants is being reduced," Östling said.

The restructuring of the company's axle and gearbox production had been completed, he said, and would entail annual savings of 300 million kronor as of this year.

"In Scania's judgement the long-term prospects for economic growth remain good, and this will also result in an increasing need for transport equipment and services," Östling said.

"However, due to the current difficult market conditions, the uncertainty for the coming quarters is high," he added.

In a separate statement, Scania's board of directors meanwhile recommended that the company's shareholders reject a 2.8-billion-euro (3.6-billion-dollar) bid from Germany's luxury sportscar maker Porsche.

"The board of Scania unanimously recommends that shareholders do not accept the offer," it said, stressing that the trucking company was a "strong, well-positioned business" and the offer price was about 15 percent lower than the pre-offer price for the Swedish firm.

"The board believes that the offer does not reflect the long-term value of Scania."

When Porsche bid for Scania on January 19, it stressed that it had "no strategic interest" in the company and that the offer was merely a Swedish legal requirement following its acquisition of more than 50 percent of Volkswagen, which in turn owns more than 30 percent of Scania.

The German company offered the minimum price required by law for the truckmaker.

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