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FIGURES IN FOCUS:
XXXXxxxxx xxx xx
xxxx xxxx xxxxx xxx xxxx xxxxx xx.
Finance. Analysts on key indicators in the transport industry. > paGES 6–7
Report. Stronger krona pulled down operating margin > paGE 2
A MAGAZINE FOR SCANIA’S SHAREHOLDERSquarter 1 2013
FIGURE IN FOCUS:
10.0Operating margin in percent
during the first quarter
Interview. Henrik Henriksson on Scania Stream-line and Scania’s business model. > paGE 3
Xxxxx xxxx xxxxxxxx xx x xxxxxx xxxxx. > SID 4–5
Focus on forestrySolutions for better profitability and efficiency > PAGE 4–5
0
4
8
12
16
20% Operating margin
-13 Q1
-11 Q1
-11 Q2
-11 Q3
-11 Q4
-12 Q1
-12 Q2
-12 Q3
-12 Q4
EN01_cover.indd 1 2013-04-26 10:02:02
0
5,000
10,000
15,000
20,000
25,000
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0
4
8
12
16
20
2013
Q1
2011
Q1
2011
Q2
2011
Q3
2011
Q4
2012
Q1
2012
Q2
2012
Q3
2011
Q1
2011
Q2
2011
Q3
2011
Q4
2012
Q1
2013
Q1
2012
Q2
2012
Q3
Trucks 63%
Other 2%Used vehicles 5%
Services 22%
Engines 1%
Buses and coaches 7%
%SEK m. SEK m.
2012
Q4
2012
Q4
Operating income, SEK m.Operating margin, percent
EUROPE
Order bookings
8,295 +12%Deliveries
6,613 -7%
EURASIA
Order bookings
1,917 +31%Deliveries
1,300 +11%
LATIN AMERICA
Order bookings
6,777 +99%Deliveries
6,217 +45%
ASIA
Order bookings
2,668 0%Deliveries
1,895 -31%
AFRICA AND OCEANIA
Order bookings
1,130 +36%Deliveries
913 +3%
Q1 IN BRIEF:DELIVERIES rose by 4 percent to 16,938 vehicles
NET SALES decreased by 4 percent to SEK 19,341 m
EARNINGS PER SHAREdecreased by 22 percentto SEK 1.75
FIRST 3 MONTHS IN FIGURES
Order bookings and deliveries by region, Q1 (number of vehicles)
(SEK m. unless otherwise noted) 2013, 3 mo 2012, 3 mo Change in %
Net sales, Scania Group 19,341 20,127 -4
Operating income, Vehicles and Services 1,778 2,192 -19
Operating income, Financial Services 155 131 18
Operating income 1,933 2,323 -17
Income before taxes 1,918 2,395 -20
Net income for the period 1,398 1,794 -22
Operating margin, % 10.0 11.5
Return on equity, % 17.9 26.2
Return on capital employed, Vehicles and Services, % 21.0 33.5
Earnings per share, SEK 1.75 2.24 -22
Cash fl ow, Vehicles and Services 4 1,763 -
Number of employees, 31 March 38,690 37,366
Order bookings (units, trucks and buses) 20,787 15,809 31
Deliveries (units, trucks and buses) 16,938 16,238 4
2 SCANIA VALUE • Q1/2013 www.scania.com
Net sales by product segment Net sales Operating income and margin
Key fi gures
EN02_rapport.indd 2 2013-04-26 10:01:45
Customer profitability is the right
way forward
text: per-ola knutas photo: göran wink
For Henrik Henriksson, Executive Vice President in charge of sales
and marketing at Scania, the focus is on understanding the customers’
business and being able to offer solutions that boost their profitability.
You have been a member of Scania’s Executive Board since 2012. What is your background?
“I have a business administration degree and a great interest in technology. During my 15 years at Scania, I have worked in the entire chain: with marketing issues at Head Office, at our South African distributor and at a dealer-ship. This has given me a good understanding of our overall operations. Before taking up this position, I was head of Trucks between 2007 and 2012.”Describe your efforts to develop Scania’s business model?
“As we improve our understanding of the cus-tomer’s business and industry, we are increas-ingly working with optimised solutions that include both products and services. In the past, we served mostly as a supplier of vehicles that the customers had specified. Today we have a closer dialogue with the customer, which means that we can work with continuous improve-ments in our relations that deliver even better profitability.
“We are now creating various modules in service-related products in the same way as in our modular product system. We should offer a strong basic package of services that
we can then tailor to some extent for specific customers.” Describe how Scania’s latest launch, Scania Streamline, fits into the business model?
“We are concentrating here on the long-haul-age segment, where fuel is the largest cost item for our customers. With refined aerodynamics and important powertrain improvements, our customers can reduce their fuel consumption by up to 8 percent.
“Using the Scania Communicator on-board computer, we are also releasing various ser-vices that are focused on maximising haulier uptime - for example new functionality in the Scania Fleet Management system that facili-tates communication between driver, office and workshop.
“We are also expanding our engine range and are now launching second generation Euro 6
engines that use even less fuel than Euro 5 engines. This is a very strong sales argument and competitive advantage for us right now.”How do you view the market outlook in the short and long term?
“Europe remains at a historically low level. Meanwhile there is an underlying need to renew the vehicle population. The average vehicle age is the highest in 15 years and the impending shift from Euro 5 to Euro 6 emission standards at the end of 2013 may bolster demand.
“Latin America is an attractive market, with a growing middle class and investments in infrastructure. In Brazil we have expanded in the heavy distribution segment. We are opti-mistic about underlying growth in Asia and Africa. Russia is also performing positively, thanks to the oil and gas industry and strong consumption.” What new markets are you looking at?
“We will continue our step-by-step market expansion in China, India and Indonesia, where we already have a presence today. But we are also looking at markets where we have little or no presence such as West Africa and the coun-tries around India.”
A longer version of this article may be found on www.scania.com/ir
interview
With the launch of the new Scania Streamline truck concept, Scania is strengthening its position in the important long-haulage segment, according to Henrik Henriksson.
“Today we have a closer dialogue with the customer, which means that we can work with continuous improvements that generate even better profitability.”
• SCANIA VALUE 3Q1/2013www.scania.com
EN03_interview.indd 3 2013-04-26 10:02:10
4 SCANIA VALUE • Q1/2013 www.scania.com
After a few tough years in the wake of the 2008 fi nancial crisis and the global economic slow-down during the past year, there is now cau-tious optimism in the forest product industry. Meanwhile, the industry is pursuing further cost effi ciencies and is also being squeezed by declining demand for printed products.
“The forestry sector is very well suited to Scania,” says Andreas Larendius, head of Scania forestry sales. “Haulage companies and the industry impose stringent demands
Holistic view is key to profitability
Forestry is a sector in which Scania has traditionally enjoyed a strong position. Now the company is taking new steps to become an even better partner. Through close collaboration directly with forest product companies, Scania is creating overall logistics solutions, which can boost the industry’s profitability.
SCANIA HAULAGE FIRMS
TRANSPORT SERVICE BUYERS
LOGISTICS SOLUTION
Focus on solutions
Focus on solutionsUnderstanding
Scania’s business model is moving increasingly towards working with overall solutions, which also include the perspective of transport service buyers regarding various industrial fl ows, bus systems and distribution of goods.
on products and service. Vehicles are worked hard with round-the-clock operation, heavy transport and large volume as the norm. Each unplanned stoppage implies a loss of revenue for the customer. The hard-worked vehicles require swift access to service and parts, which Scania can offer, through both an extensive workshop network and mobile solutions.”
Regardless of continent, some common fea-tures exist in the forest product industry. Road transport services represent a large part of over-all cost and lower transport costs are therefore of great importance to companies.
Focus on the overall logistics fl owAnother common feature is that timber haulage is often performed by a number of smaller fi rms that work for the forest product company. In Europe, a typical haulage fi rm is a small family business that has between fi ve and 30 timber trucks.
Scania has a very strong position among these “traditional” customers, and the company is now taking steps to become an even better partner. Scania is now conducting discussions also with forest product companies about prof-itable logistics fl ows.
“We currently enjoy successful collaboration with a large Nordic forest product company,” says Larendius. “Together with that company and its timber truck hauliers, we looked at the overall logistics fl ow from felling to production
plants, not only road transport services. So far, everyone has been good at improving their part of the logistics chain but no one has optimised the overall process.”
This collaboration has resulted in some notable suggestions for improvements: ways of loading and unloading cargo in a shorter time, customising trucks to make them even better for their task and ensuring that drivers operate their vehicles more economically and carefully through training and coaching.
“I am convinced that we will also continue this approach by holding direct discussions with forest product companies in other mar-kets,” says Larendius.
Scania is also concentrating on collaboration with bodybuilders – companies that supply
FOCUS: LOGISTICS SOLUTIONS FOR THE FOREST PRODUCT INDUSTRY
From forest to paper. By taking a holistic approach to the entire logistics fl ow, forest product companies can optimise all parts of the chain and thereby boost profi tability.
EN04-05_focus.indd 4 2013-04-26 10:02:14
www.scania.com • SCANIA VALUE 5Q1/2013
purpose-built timber superstructures for the truck chassis that Scania manufactures.
“Through dialogue with bodybuilders we are strengthening our position in this segment,” says Mikael Lundqvist, Communications and Marketing Director at Scania Deutschland Österreich. “We are instructing them in Scania product knowledge so that they can optimise the technological possibilities that our trucks offer. Meanwhile, our sales people can utilise the bodybuilders’ sector knowledge to offer customers the best transport solutions for the timber and paper industry.”
The markets in Latin America, China and Russia differ to some extent from the mature markets in northern Europe. Haulage fi rms’ vehicle fl eets are often larger in these emerg-
ing markets where strong growth is also taking place in the forestry industry, with entirely new felling areas and production facilities.
“A number of international forest product companies are expanding in markets where we also see potential generally, such as Brazil, Chile, Uruguay, China and also Russia,” says Larendius.
In Latin American markets, there are very large procurements involving 300-500 vehicles. In such cases, the forest product company itself is often involved in setting standards for invest-ment decisions.
“Such procurement processes are good for us, since we can discuss profi table solutions directly with the forest product company,” says Larendius.
TEXT: PER-OLA KNUTAS ILLUSTRATION: KJELL THORSSON
3. The logs are driven to a paper mill, unloaded, weighed, measured and fed into production immediately or are taken to a timber warehouse.
2. Two hours later, a haulage fi rm arrives on-site to load the logs onto timber trucks.
1. The felled timber is driven to a reloading site near a forest road.
From forest to paper. By taking a holistic approach to the entire logistics fl ow, forest product companies can optimise all parts of the chain and thereby boost profi tability.
1. Streamlining the material fl ow (e.g.
positioning the timber for swift and smooth loading).
2. Regular analysis of wireless data from the vehicle (Fleet Management). Training and coaching of drivers in fuel-effi cient driving techniques. Timber trucks precisely customised for road conditions, load and driving distance.The right service at the right time in order to minimise stoppages.
3. Streamlining the material fl ow (such as just-in-time goods delivery to ensure production fl ow).
Scania’s contribution to the logistics flow
“We looked at the overall logistics flow from felling to production plants, not only road transport services.”
Andreas Larendius, head of Scania forestry sales
2.
3.
1.
EN04-05_focus.indd 5 2013-04-26 10:02:19
6 SCANIA VALUE • Q1/2013 www.scania.com
During February 2013, fewer heavy vehicles paid road tolls on Germany’s Autobahn motor-way system than in January. These statistics from the MAUT toll system provide a small but important signal about the state of the truck market. But analysts who follow the truck industry also utilise a number of other indica-tors when they are going to estimate where the market is heading. Some of them provide a view of the short-term trend, others are more long-term.
Analyses are often based on the state of the global economy, especially trends in the industrial and construction sectors. This data includes a lot of official statistics, such as those issued by the European Union. Economic activ-ity determines transport volume, which is an important indicator.
“The connection between industrial activity and the heavy vehicle sector is especially strong. That’s why we follow industrial activity on a monthly basis,” says Björn Enarson, analyst at Danske Bank.
Statistics from Germany’s road toll sys-
FINANCE: INDICATORS
tem offer a pointer regarding activity in the transport industry. If a lot of trucks use the toll motorways, this will also mean increased demand for service and parts since transport activity and service levels are closely correlated.
There are also indicators in other markets. In Sweden, the Transport Indicator produced by the Transport Group (Transportgruppen) – an umbrella organisation for associations and companies in the transportation sector – points to optimism among Swedish hauliers. In the Netherlands there is the Transport en Logistiek Nederland index. There are huge transport flows connected to the major ports of Rotter-dam and Amsterdam.
But analysts also want to emphasise indicators such as the average age of the vehicle population, haulier capacity utilisation and profitability.
Older truck population In times of economic uncertainty, the average age of the truck population rises since hauli-ers operate their old trucks as long as pos-sible instead of investing in new equipment. Optimism and increased transport volume are required for hauliers to dare to order new trucks – although a replacement need may exist.
“Even though we have had reasonable market conditions in Europe and North America since 2010 and despite the relatively high age of truck populations, investments are not occurring at the rate we might have expected,” says Carl Hol-
Indicators take the pulse of the truck market
mquist, analyst at Rementum Research in Malmö, which specialises in the automotive sector.
Meanwhile, in a situation of reduced trans-port volume, some older trucks are taken out of service and hauliers only operate part of their vehicle fleet. Capacity utilisation thus falls, while giving the appearance of a younger vehi-cle fleet. Thus as an indicator, the average age of the vehicle population provides part of the picture, but not all of it.
“It is often a matter of looking at haulier prof-itability and the underlying reasons why they are making money, since when they do, then they also start to invest,” says Holmquist.
Impact of legislationLegislative changes, such as the impending shift from Euro 5 to Euro 6 emission standards at the end of 2013, can impact general indicators in the short-term. When new rules are going to be introduced, some hauliers can bring forward truck purchases. They buy old models before new rules enter into effect that require more expensive trucks. But this pattern is less explicit in European countries where emssion category affects how high a road toll a truck must pay. The cleaner the technology, the lower the toll.
Another important indicator for the vehicle market is fuel prices, or more correctly stated, the oil price trend.
“But in recent years, oil price data have been relatively difficult to interpret since the price has fluctuated and has been very high,” says Holmquist.
He points out that high fuel prices in recent years are one of the reasons why the market has been cautious.What can you do in this case to produce good forecasts?
“There is no ‘universal formula’ for predicting market trends. Instead, we form an opinion by combining the indicators that exist and compar-ing them over a long period,” says Holmquist.
Oil prices, industrial production, the age of the truck population and haulier capacity utilisation are among indicators analysts use when evaluating the European truck market.
“It is often is a matter of looking at haulier profitability and the
underlying reasons why they are making money.”
Carl Holmquist, analyst at Rementum Research
EN06-07_finance.indd 6 2013-04-26 10:01:50
www.scania.com • SCANIA VALUE 7Q1/2013
text: mats falck, per-ola knutas photo: getty images
* The Transport Indicator measures optimism in the Swedish transport industry. An index level above zero indicates positive sentiment, and one below zero indicates negative sentiment.
* MAUT statistics measure traffic intensity (thousands of kilometres driven by heavy vehicles) in the road toll system of Germany’s Autobahn network. The recurring downturn around Christmas and New Year is clearly visible.
More heavy vehicles paying road tolls in Germany (MAUT statistics):“This is a typical indicator we look at. It’s a good indicator but we have to be a bit careful about drawing conclusions based on specific geographical areas. Germany has been a strong economy in Europe in recent years, thanks to its export sector.”
Freight volume in Europe:“If volume falls so does demand for trucks. But it’s important to remember that when volume falls a little bit, demand usually falls much more.”
Trucks registrations:“Registrations are a trailing indicator. It takes time from the day you decide to buy a truck until it’s rolling on the road.”
What various indicators tell us about the vehicle market
Source: Carl Holmquist, Rementum Research
Major seasonal variations on the Autobahn2 ,500 ,000
2 ,000 ,000
1 ,500 ,000
1 ,000 ,000
02/2013
11/2012
08/2012
05/2012
02/2012
11/2011
08/2011
05/2011
02/2011
11/2010
08/2010
05/2010
02/2010
Sou
rce:
Bu
nd
esam
t fü
r G
üte
rver
keh
r, F
ebru
ary
2013
1000 km*
Optimism increasing slowly
01020304050
-10-20-30-40-50-60-70
01/2010
01/2011
01/2012
01/2013
04/2010
04/2011
04/2012
07/2010
07/2011
07/2012
10/2010
10/2011
10/2012
Sou
rce:
Th
e T
ran
spor
t G
rou
p (
Tra
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ortg
rup
pen
), J
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ary
2013
Index*
EN06-07_finance.indd 7 2013-04-26 10:01:54
UPCOMING EVENTS19 July 2013Interim Report January-June 2013
23 October 2013Interim Report January-September 2013
29 January 2014Year-end Report 2013
IN BRIEF EDITOR: PER-OLA KNUTAS PHOTOS: PEGGY BERGMAN, SCANIA
Scania joins the United Nations Global Compact
Major bus order in Russia
Golaz Cruise is one of the three versions of the bus that GAZ Group has developed in close collaboration with Scania.
In March, Scania Streamline was launched. It is a new long-haulage truck concept featuring improved aerodynamics. Meanwhile, Scania is launching second-generation Euro 6 engines and is introducing a number of services that focus on maximising haulier uptime. The Scania Opticruise automated gearchanging system has also gained new features.
Scania – together with Russia-based com-mercial vehicle manufacturer GAZ Group – has received an order to deliver a total of 709 buses to the largest public transport operator in the Moscow region. Scania will deliver chas-sis modules and GAZ will be responsible for bodyworking.
“Developing and delivering buses for the Russian market in partnership with a well-known and respected domestic manufacturer such as GAZ Group has great value,” says Hans Tardell, Managing Director of Scania Russia. “This means that Scania’s brand will receive wide exposure in Russia. Even more signifi cant is the service potential that the deal provides for our workshops in the Moscow region.”
New truck range provides large fuel savings
By signing the United Nations Global Com-pact, Scania confi rms the company’s long-standing commitment to sustainability to its stakeholders.
The UN Global Compact is an initiative for businesses to commit to 10 universally accepted principles in the areas of human rights, labour relations, environment and anti-corruption. Scania has pledged to make the Global Com-pact and its principles a part of the way that the company is managed, and to make a clear state-ment about this commitment to the company’s stakeholders and the general public.
“For Scania, this is a way to express its sup-port for internationally recognised principles of sound business practices, and to apply clear and straightforward principles which can be communicated and applied throughout the company,” says Martin Lundstedt, President and CEO of Scania.
Taken together, the improvements offer potential fuel savings of up to eight percent for European long-haulage operators.
“All of Scania’s inventiveness and knowledge has been used to refi ne the truck range for Euro 6 and we are very satisfi ed with the results,” says Henrik Henriksson, Executive Vice President in charge of sales and marketing at Scania.
Scania Streamline is a new long-haulage truck concept. The exterior has been updated with better aerodynamics, but most innovations are in the powertrain.
Would you like to subscribe?For a free subscription, visitwww.scania.com/scaniavalue
Scania Value is published by Scaniaand targeted to Scania shareholders.
PublisherPer Hillström, [email protected]@scania.comProject [email protected] Art Director [email protected] Publishing Groupwww.appelberg.comPrinting: Trosa TryckeriCover photo: Lennart Ström
ContactScania Investor Relations SE-151 87 Södertälje, SwedenTel: +46 8 553 81 000E-mail: [email protected]
EN08_news.indd 8 2013-04-26 10:02:29
