Scania 3Q Net Pft Slumps, Sees Some Recovery In Mkts

(chinatrucks.com, Oct. 27, 2009)Swedish truck maker Scania AB (SCV-A.SK) Monday said the downturn in Western European demand has levelled off as it reported a better-than-expected profit in the third quarter.

"The European truck market is characterised by low economic activity, but in Scania's judgement the downturn in western European demand has now levelled off," Chief Executive Leif Oestling said, adding that Latin America demand remains relatively good and a certain recovery is under way in Asia.

Truck companies like Scania and Swedish peer AB Volvo (VOLV-B.SK) have reduced production in response to plummeting orders in the last year as customers cut back on new purchases. Scania introduced a four-day week in June for about 12,000 employees in Sweden, in a bid to save more than 300 million Swedish kronor ($43.57 million) during 2009.

Scania's orders for trucks and buses dropped 6% in the quarter to 10,634 vehicles from a year earlier, but rose from the 8,223 orders it booked in the second quarter.

Scania reported a net profit for the three months to Sept. 30 of SEK278 million, after a net profit of SEK1.82 billion in the same period a year earlier, beating forecasts of SEK14.7 million.

Revenue fell 34% to SEK13.43 billion from SEK20.43 billion, in line with an average forecast of SEK13.49 billion. Operating profit was SEK519 million, down from SEK2.82 billion but ahead of estimates of SEK236.7 million.

Nordea analyst Johan Trocme said the report was very good, with strength in earnings and operating margin, which rose to 3.9% from 0.1% in the second quarter.

"There's not much to dislike, and it's obviously positive that the decline in demand in Europe, by far Scania's biggest market, is levelling off, as well the fact that they're seeing good demand in Latin America and recovery in Asia," Trocme said.

Volvo said Friday it planned to cut a further 2,500 jobs by the end of the year in response to subdued demand despite a slight uptick in orders from the second quarter.

Scania shares opened higher on the news and at 0813 GMT, they were trading up SEK0.95, or 1%, at SEK97.20, beating a 0.5% rise in the broader Stockholm market and valuing the company at around SEK77 billion. The stock has gained nearly 20% in the last three months.

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