Scania reports operating margin of 11.7 per cent for Q1 2019

Swedish commercial vehicle manufacturer, Scania, has confirmed that net sales rose 36.1 billion SEK (€3.3 billion), and earnings for the period January-March 2019 amounted to an all-time high of 4.207 million SEK (€388.7 thousand).

Scania President and CEO, Henrik Henriksson, said higher vehicle and service volume, currency effects and the market mix contributed positively while higher production costs due to the changeover in Latin America and supply chain constructs impacted earnings negatively.

He added that Scania’s last PGR series truck rolled off the assembly line and only trucks from the new truck range are produced in the entire global production system.

“The final stage of the transition was completed during the quarter with the changeover of production in Latin America,” he said. “Some limitations remain in the flexibility and capacity of our global production system. There is still a higher than normal cost situation in general for products and production related to the new truck generation. The measures put in place to normalise cost levels are continuing.”

Order bookings for Scania trucks reportedly fell by nine per cent in Q1 2019 compared to the high level during the year-earlier period.

“Demand for trucks in Europe remains strong due to the positive economic situation,” said Henriksson. “In Latin America, the trend in demand is positive thanks to the recovery in Brazil. Demand in Eurasia was impacted negatively by a slowdown in Russia. In Asia, order bookings fell in comparison with the previous year due to the Middle East, while demand in other parts of Asia remained strong.”

Scania sees an ever-increasing interest in gas vehicles. The manufacturer is set to deliver 100 gas trucks to a customer in the food retail sector in Germany.

“Regardless of whether they are powered by biogas or natural gas, Scania’s gas engines have essentially the same technical solution,” said Henriksson. “From a sustainability perspective, biogas is preferable since this fuel reduces CO2 emissions by up to 90 per cent (20 per cent with natural gas). However, the use of biogas is hampered by a shortage of fuel. For this reason, Scania is working actively in various partnerships to secure the production of biogas and thereby enable a broader penetration for sustainable gas solutions to reduce carbon footprint.”

In related news, parent company, Volkswagen Group, is progressing with plans to invest in a battery cell production facility in Lower Saxony as part of its electrification efforts.

The Volkswagen Group Supervisory Board has approved just under a billion euros for this project.

Scania has reportedly signed a battery supply deal with Swedish business, Northvolt.

Henriksson told news organisation, Reuters, that there will be a shortage of batteries for the automotive sector globally in the coming five-to-six years because there is not enough capacity, which is why it is investing in battery production.

In March, Henriksson said that companies including those in Australia that did not fall into line with sustainability targets either mandated by government or levied in the private sector would not survive.