Scania's first quarter results impress

Scania Reports Record High Net Sales For Q1 2018

Swedish truck manufacturer Scania recently released an interim financial and progress report for Q1 2018 covering the months January to March, and the news is largely good. Part of Volkswagen Truck & Bus, Scania reports that its net sales for the period climbed to a record SEK 31.1 billion (about 4.66 billion AUD), with earnings amounting to SEK 3.315 million (about 496,400 AUD), providing the company with an operating margin of 10.7%.

Strong Demand

In a statement concerning the report, Henrik Henriksson, Scania president and CEO, cited high vehicle and service volume as contributing positively to the company’s Q1 results. Conversely, Henriksson pointed to a “less favourable market mix, higher production costs for running double product ranges, and continued constraints in the supply chain” as negatively impacting earnings.

In terms of truck demand in Europe, Henrikkson says it remains “very good” due to the region’s positive economic situation. Elsewhere, continued recovery in Brazil drove Scania truck demand up in Latin America, while “very strong” orders stemming from Russia drove positive demand in Eurasia. Demand in Asia, meanwhile, remains high, “mainly due to Iran,” Henrikkson noted. European demand for Scania buses and coaches also remains strong, with Henrikkson noting Scania experienced “record high demand” for engines in Europe, “mainly driven by order bookings for industrial engines.”

“There is high-capacity utilisation in customer vehicle fleets, and service revenue amounted to a record high SEK 6.5 million (about 973,744 AUD), an increase of 11% in local currency,” Henrikkson said. “The steady growth in service revenue is a clear result of Scania’s strategic investment in a vertically integrated service business, which means that we comprehensively support our customers’ operations.”

Trending Upward

Henrikkson says that due to the company’s “breadth and flexibility” in its service-related products, digital and connected services, driver services, and financing and insurance, Scania can tailor its solutions to customer needs, with improved profitability being a by-product. Henrikkson also said Scania’s credit losses remain low, while the company’s Financial Services continued a trend of increased profitability with a reported operating income of SEK 302 million (about 45.2 million AUD).

In terms of performance-related findings, Scania reports its new generation of trucks received top ratings in cab, driveline and performance, fuel consumption, and cost and payload categories in the 1000 Point Test, a comprehensive European comparative test concerning trucks. Scania also received the Green Truck Award stemming from a comparative test concerning fuel consumption. Scania states that since launching its new truck generation in autumn 2016, it “has come out victorious in practically all comparative and individual trade press tests.”