Tough trading conditions in the heavy duty truck sector hit Scania's financial performance in 2012 with net income down 30%. However, the company reported an upturn to orders in the fourth quarter.
In the fourth quarter of 2012, Scania generated net sales of SEK22.34bn (US$3.54bn), a decline of 2% from SEK22.89bn in the corresponding period of 2011. The operating income fell 21% to SEK2.17bn in the fourth quarter. The company reported net income of SEK1.89bn, a decrease of 11.35%.
Scania reported net sales of SEK79.60bn for the full year 2012, a decrease of 9% from SEK87.69bn a year ago. Full year operating income amounted to SEK8.30bn compared to SEK12.4bn in 2011, a decrease of 33%. Net income of the company was down 30% to SEK6.64bn, from SEK9.42bn a year earlier.
Scania's president and CEO, Martin Lundstedt said, "Scania's earnings for the full year 2012 amounted to SEK 8,300 m. Lower vehicle volume, lower capacity utilisation and a higher level of costs pulled down earnings. Order bookings for trucks rose during the fourth quarter of 2012. The upturn was driven by Latin America and order bookings were exceptionally strong in Brazil, where extensive subsidies impacted demand positively. Order bookings in Europe remained at a low level.
"Customers are hesitant about investing in new vehicles in view of the uncertain economic climate. "
However, Scania sees higher replacement demand for truck fleets in the years to come. There is a replacement need, given the low truck deliveries in recent years, the company says.
The coming transition to Euro 6 emission standards may also provide some support to demand, it maintains. In Russia, order bookings were at a good level. Order bookings in Asia decreased compared to the previous quarter, mainly due to markets in the Middle East. Order bookings for buses remained at a low level, with an upturn in Europe and a downturn in Latin America compared to the third quarter. Order bookings for engines improved compared to the very low level in the third quarter. Service sales are generally at a stable level with increased demand in several regions outside Europe during the full year 2012.
Lower economic activity is adversely impacting service demand in southern Europe. Given low demand for vehicles in Europe and the Middle East, the daily production rate is reduced by about 15% in Europe in the beginning of the first quarter of 2013 compared to the end of 2012. A total of about 700 personnel on hire have been affected. An adjustment of the general cost level to lower demand is also under way, Scania says.