Strong truck demand across Europe is reflected in strong first quarter financial results from Scania where revenue rose 24% to SEK 17,246m in the first quarter, and operating income rose 26% to SEK 2,114m.
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This produced an operating margin of 12.3%. Net income rose 25% to SEK 1,447m.
Strong demand resulted in an increase in orders, which were up 23% in the first quarter compared with 16% in the same period a year ago.
Scania president and CEO Leif Ostling: “Also affecting demand is that some European customers are bringing forward their investments in vehicles due to the introduction of digital tachographs in May and the Euro 4 regulations, which enter into force in the autumn of 2006.
“This may lead to a slower pace of order bookings in Europe during the second half of 2006, which may then affect deliveries late in the year and early in 2007.”
Demand was also strong outside Europe.
Ostling said that demand in Brazil had picked up since the second half of 2005, although first quarter demand in the country was lower than during the same period last year. The bus market in Brazil has, however, weakened substantially.
Demand for trucks and buses is strong in Asia, particularly South Korea and Taiwan.
Scania is expanding its European service network and has seen a ‘substantial’ rise in sales of parts and workshop hours. According to Ostling, sales of financial services were stable.
Ostling also said that Scania has decided to concentrate its European production of axles and gearboxes in Södertälje, while European parts management is being concentrated in Belgium. The purpose is to increase efficiency and thereby strengthen Scania’s long-term competitiveness.
These changes will occur over a three-year period and are expected to result in savings of about SEK 300m per year once they are implemented. The announcement has led to some minor production disruptions.
Earlier this year, the liquidation of Ainax was approved.
