SCANIA 2000 INTERIM REPORT JANUARY–MARCH
R E S U LT S First quarter of 2000, compared to first quarter of 1999 • The number of trucks and buses sold increased by 1 percent to 13,006 (12,910) units. • Sales rose by 8 percent to SEK 12,675 m. (11,779) [USD 1,462 m. (1,359)] 1, including the contribution from acquired companies 2. • Operating income amounted to SEK 1,105 m. (1,240) [USD 127 m. (143)], equivalent to a margin of 8.7 (10.5) percent. • Earnings in European operations were in principle unchanged, excluding currency effects amounting to SEK –100 m. [USD –12 m.]. • In Latin American operations, operating income amounted to SEK –122 m. (–96) [USD –14 m. (–11)] including items affecting comparability of SEK –50 m. (+100) [USD –6 m. (+12)]. Underlying earnings improved. • Operating income in customer finance operations rose to SEK 38 m. (30) [USD 4 m. (3)]. • Net income: SEK 661 m. (770) [USD 76 m. (89)]. • Earnings per share: SEK 3.30 (3.85) [USD 0.38 (0.44)]. • Earnings per share according to U.S. GAAP: SEK 3.40 (4.15) [USD 0.39 (0.48)]. • Operating cash flows, excluding acquisitions of companies, improved to SEK 481 m. (–144) [USD 56 m. (–17)].
MARKET First quarter of 2000, compared to first quarter of 1999 • Order bookings for heavy trucks in western European markets rose by 24 percent. • Scania’s market share for heavy trucks in western Europe was 15.6 (15.2) percent, according to preliminary statistics. • Sales of service-related products rose by 19 percent, including the contribution from acquired companies. • Order bookings from markets in central and eastern Europe rose somewhat, while order bookings doubled from low levels in Asia. • Order bookings for heavy trucks in Latin America declined somewhat. 1
Translated solely for the convenience of the reader at an exchange rate of SEK 8.67 = USD 1.00.
2
The distributors in Finland, Norway and Latvia.
Unless otherwise stated, all comparisons refer to the same period of last year.
This report is also available at www.scania.com
SCANIA INTERIM REPORT JANUARY– MARCH 2000
European operations* showed largely unchanged earnings during the first quarter of 2000, excluding currency effects of about SEK –100 m., compared to the same quarter of last year. An improved internal cost situation partly offset the effect of continued depressed prices in the European heavy truck market. Due to fewer production days, sales volume in European operations was limited during the first quarter. Operating income in Latin American operations included costs for personnel cutbacks as part of the ongoing action programme, while the same quarter of last year was affected by a positive non-recurring effect related to the devaluation of the Brazilian currency. The truck market in western Europe remained very strong. This is also applicable for April. Scania’s truck order bookings in western Europe rose by 24 percent in the first quarter, compared to the same period of 1999. Demand was strong in most western European markets. In central and eastern Europe, demand rose somewhat. Order bookings from markets in Asia doubled. In both cases, volume was low. In Latin America, Scania’s truck order bookings declined somewhat during the first quarter, compared to the same period of last year. The total market in Latin America was somewhat larger than last year and is expected to improve further during 2000. In Brazil, Scania’s market share fell to 27.6 (35.8) percent. For the full year 1999, its share amounted to 31.7 percent. In Argentina, Scania’s market share rose to 27.6 (25.6) percent in a market that shrank by 13 percent. According to preliminary statistics, during the first quarter for 2000 a total of about 65,000 (62,000) heavy trucks were registered in western Europe, up 5 percent. Recalculated to a rolling twelve-month basis, this is equivalent to an annual rate of around 240,000 trucks. During the first quarter, about 10,300 (9,400) Scania trucks were registered, for a preliminary market share of 15.6 (15.2) percent.
The total number of Scania trucks sold was essentially unchanged. In European operations, the number of trucks sold rose by 3 percent. The number of buses sold increased somewhat and totalled 952 (897). In Latin America, bus sales rose significantly. Sales of service-related products during the first quarter rose by 19 percent, including the contribution from acquired companies, compared to the same period of last year. The customer finance portfolio increased by about SEK 400 m., compared to the end of 1999. On 27 March, Scania’s main owner Investor announced an agreement to sell 34.0 percent of the voting power and 18.7 percent of the share capital in Scania to Germany’s Volkswagen AG. After this transaction is completed, Investor’s ownership will amount to 15.3 percent of the votes and 9.1 percent of the capital in Scania. At the end of the quarter Volvo’s shareholding in Scania amounted to 30.6 percent of the votes and 45.5 percent of the capital.
Sales and earnings During the first quarter, the Scania Group sold 13,006 (12,910) trucks and buses, an increase of 1 percent. In monetary terms, the Scania Group’s sales rose by 8 percent to SEK 12,675 m. (11,779), including the contribution from acquired companies. Sales of Scania products rose by 7 percent. Excluding the contribution from acquired companies, sales rose by 1 percent. Operating income amounted to SEK 1,105 m. (1,240), equivalent to an operating margin of 8.7 (10.5) percent. In European operations, unit sales of trucks and buses increased by 2 percent. In monetary terms, sales rose by 7 percent, including the contribution from acquired companies. Operating income amounted to SEK 1,134 m. (1,244). Currency effects lowered earnings by about SEK 100 m. Continued depressed prices in the European truck market were partly offset by an improved internal cost situation. The operating margin decreased to 10.8 (12.7) percent.
* European operations are the portion of Scania’s operations that supply all markets except Latin American ones with the company’s products and services.
3
In Latin American operations, units sales of trucks and buses declined to 1,686 (1,827), mainly due to a shift in the holiday period during the first quarter of 1999. Operating income amounted to SEK –122 m. (–96). During the first quarter, earnings were lowered by about SEK 50 m. in costs for a planned personnel
Scania’s ten largest truck markets Registrations of Scania trucks during the first quarter * 2000
1990
Change in percent
1,792 1,486 1,368 1,069 994 873 757 539 528 352
1,308 1,460 1,403 960 1,174 779 601 518 585 314
37 2 –2 11 –15 12 26 4 –10 12
Western Europe 10,280
9,440
9
Great Britain France Germany Spain Brazil The Netherlands Italy Sweden Belgium Ireland
Scania’s market shares during the first quarter, percent * 2000
1999
Great Britain France Germany Spain Brazil The Netherlands Italy Sweden Belgium Ireland
21.9 10.6 9.4 15.0 27.6 22.7 12.1 52.0 19.1 28.3
17.8 11.8 9.3 16.1 35.8 19.8 10.8 48.5 21.3 30.5
Western Europe
15.6
15.2
* 2000: Preliminary figures.
4
reduction in accordance with the ongoing costcutting programme. Last year, operating income during the first quarter was boosted about SEK 100 m. by translation effects due to the Brazilian devaluation. Underlying earnings thus improved by about SEK 120 m., due to improved prices and a lower cost level. The operating income in European customer finance operations rose to SEK 38 m. (30) as a consequence of higher financing volume and lower administrative cost per contract. Operating income for Svenska Volkswagen products amounted to SEK 55 m. (62). Net financial items totalled SEK –150 m. (–130). In European operations, net financial items improved, compared to the first quarter of 1999. In Latin America, net financial items deteriorated, due to negative cash flows and higher interest rates. The Scania Group’s tax expenses were equivalent to 30.7 (30.5) percent of income after financial items.
Cash flows Scania’s operating cash flows, excluding customer finance operations, improved during the first quarter to SEK 468 m. (–804). Excluding acquired companies, cash flows amounted to SEK 481 m. (–144). Cash from operating activities amounted to SEK 1,143 m. Tied-up working capital rose by SEK 280 m. This increase was attributable to tax payments of more than SEK 300 m. related to 1999. Net investments amounted to SEK 395 m. (1,195). Excluding acquisitions, net investments amounted to SEK 382 m. (481). The number of employees totalled 25,906 at the end of the report period. This represented an increase of 92 persons since the beginning of the year. The increase was attributable to marketing companies in Europe as well as Swedish car operations. As a consequence of personnel reduction programmes, the number of employees in Latin American operations declined by 157.
Annual General Meeting The Annual General Meeting of Shareholders in Scania will be held at 5.30 p.m. on Wednesday, 24 May 2000 at Scaniarinken, Södertälje, Sweden.
Dividend The Board of Directors of Scania has decided to propose to the Annual General Meeting an increase in the dividend for the 1999 financial year to SEK 7.00 per share (6.50). Södertälje, 27 April 2000
Scania Group Quarterly sales and operating margin Sales SEK m.
Operating margin %
14,000
14.0
12,000
12.0
10,000
10.0
8,000
8.0
6,000
6.0
4,000
4.0
2,000
2.0
0
0.0 Q1 1999
Sales
Q2 1999
Q3 1999
Q4 1999
Q1 2000
Operating margin
Leif Östling President and CEO
This Interim Report has not been subject to special review by the company’s auditors. The next Interim Report will be published on 19 July 2000.
5
INCOME STATEMENT Amounts in SEK m. unless otherwise stated
USD m.*
Sales Cost of goods sold Gross income Research and development expenses Selling expenses 1 Administrative expenses 2 Income from customer finance operations Share of income of associated companies
First quarter 2000
1999
Change in %
April 99– March 00
47,110 –34,351 12,759 –1,267 –6,047 –866 140 326
48,006 –35,059 12,947 –1,263 –6,406 –837 148 321
1,462 –1,097 365 – 41 –189 –20 4 8
12,675 –9,510 3,165 –353 –1,644 –173 38 72
11,779 –8,802 2,977 –357 –1,285 –202 30 77
Operating income 3 Financial income and expenses
127 –17
1,105 –150
1,240 –130
–11
5,045 –545
4,910 –565
Income after financial items Taxes Minority interests
110 –34 0
955 –293 –1
1,110 –340 0
–14
4,500 –1,353 –1
4,345 –1,306 –2
76
661
770
–14
3,146
3,037
8.7 23.4
10.5 23.3
10.7 25.1
10.2 23.4
0.38 0.39
20.2 13.9 3.30 3.40
19.6 14.0 3.85 4.15
21.4 14.8 15.75 16.40
20.2 13.9 15.20 15.60
–58
–507
– 469
–1,948
–1,986
Net income Number of shares: 200 million Operating margin, percent Return on equity, percent Return on capital employed, excluding customer finance operations, percent Return on capital employed, percent Earnings per share, SEK Earnings per share according to U.S. GAAP, SEK
8
1999
6
3
Includes depreciation of
1
Selling expenses: Are defined as the costs of corporate market resources, plus all overhead in marketing companies, including goodwill and warranty payments. Comparative periods have been adjusted for the fact that parts distribution costs were previously included but are now reported under “Cost of goods sold”. Compared to the first quarter of last year, selling expenses increased by SEK 187 m. due to the acquisition of marketing companies.
2
Administrative expenses: Are defined as Group-wide costs for management and for the staff units in European and Latin American operations.
EARNINGS BY QUARTER Amounts in SEK m. unless otherwise stated
2000 Q1 USD m.*
Q1
Full year
Q4
1999 Q3
Q2
Q1
Sales European operations Latin American operations Less intra-Group sales
1,210 129 –35
10,494 1,120 –305
38,210 4,560 –1,042
10,664 1,266 –318
8,561 1,193 –292
9,218 1,139 –249
9,767 962 –183
Total Scania products Svenska Volkswagen products
1,304 158
11,309 1,366
41,728 5,382
11,612 1,432
9,462 1,185
10,108 1,532
10,546 1,233
Scania Group total
1,462
12,675
47,110
13,044
10,647
11,640
11,779
Operating income European operations Latin American operations Customer finance operations
131 –14 4
1,134 –122 38
4,983 –328 140
1,303 –6 39
1,123 –68 32
1,313 –158 39
1,244 –96 30
Total Scania products Svenska Volkswagen products
121 6
1,050 55
4,795 250
1,336 67
1,087 52
1,194 69
1,178 62
Scania Group total Income after financial items Net income Earnings per share, SEK
127 110 76 0.38
1,105 955 661 3.30
5,045 4,500 3,146 15.75
1,403 1,276 883 4.40
1,139 984 709 3.55
1,263 1,130 784 3.90
1,240 1,110 770 3.85
10.8 –10.9
13.0 –7.2
12.2 –0.5
13.1 –5.7
14.2 –13.9
12.7 –10.0
Total Scania products Svenska Volkswagen products
9.3 4.0
11.5 4.6
11.5 4.7
11.5 4.4
11.8 4.5
11.2 5.0
Scania Group total
8.7
10.7
10.8
10.7
10.9
10.5
Operating margin, percent European operations Latin American operations
* Translated solely for the convenience of the reader at an exchange rate of SEK 8.67 = USD 1.00.
6
EARNINGS BY AREA OF OPERATIONS Amounts in SEK m. unless otherwise stated Number of trucks and buses sold European operations Latin American operations Total Scania vehicles sold
USD m.*
First quarter 2000
1999
Change in %
1999
April 99 – March 00
11,320 1,686 13,006
11,083 1,827 12,910
2 –8 1
42,919 7,495 50,414
43,156 7,354 50,510
Sales European operations Latin American operations Less intra-Group sales Total Scania products Svenska Volkswagen products Scania Group total
1,210 129 –35 1,304 158 1,462
10,494 1,120 –305 11,309 1,366 12,675
9,767 962 –183 10,546 1,233 11,779
7 16 67 7 11 8
38,210 4,560 –1,042 41,728 5,382 47,110
38,937 4,718 –1,164 42,491 5,515 48,006
Operating income European operations Latin American operations Customer finance operations Total Scania products Svenska Volkswagen products Scania Group total
131 –14 4 121 6 127
1,134 –122 38 1,050 55 1,105
1,244 –96 30 1,178 62 1,240
–9 27 27 –11 –11 –11
4,983 –328 140 4,795 250 5,045
4,873 –354 148 4,667 243 4,910
10.8 –10.9 9.3 4.0 8.7
12.7 –10.0 11.2 5.0 10.5
13.0 –7.2 11.5 4.6 10.7
12.5 –7.5 11.0 4.4 10.2
Operating margin in percent European operations Latin American operations Total Scania products Svenska Volkswagen products Scania Group total
SALES BY PRODUCT CATEGORY Amounts in SEK m. unless otherwise stated
USD m.*
First quarter 2000
1999
Change in %
1999
April 99– March 00
Trucks
827
7,174
7,070
1
27,888
27,992
Buses
91
785
895
–12
3,601
3,491
Engines
11
98
99
–1
444
443
Service-related products
237
2,052
1,719
19
6,945
7,343
Used vehicles etc.
138
1,200
763
57
2,850
3,222
1,304
11,309
10,546
7
41,728
42,491
Total Scania products Svenska Volkswagen products Total
158
1,366
1,233
11
5,382
5,515
1,462
12,675
11,779
8
47,110
48,006
* Translated solely for the convenience of the reader at an exchange rate of SEK 8.67 = USD 1.00.
7
BALANCE SHEET WITH CUSTOMER FINANCE OPERATIONS REPORTED ACCORDING TO THE EQUITY ACCOUNTING METHOD
Amounts in SEK m. unless otherwise stated
31 March 2000 2000 USD m.* 31 March
31 Dec
1999 30 Sep 30 June
31 March
ASSETS Intangible fixed assets Tangible fixed assets Shares and participations Inventories Other receivables Interest-bearing receivables Liquid investments Total assets
63 1,600 307 906 1,175 161 207 4,419
550 13,868 2,663 7,852 10,190 1,393 1,794 38,310
555 13,975 2,616 7,279 10,477 1,361 2,543 38,806
417 13,659 2,421 6,945 9,318 1,153 3,637 37,550
404 13,841 2,262 7,217 8,406 1,405 3,865 37,400
412 13,975 2,279 7,090 8,214 1,500 2,452 35,922
SHAREHOLDERS’ EQUITY AND LIABILITIES Shareholders’ equity Provisions for pensions Other provisions Other liabilities Borrowings Total shareholders’ equity and liabilities
1,635 216 418 1,054 1,096 4,419
14,179 1,874 3,622 9,134 9,501 38,310
13,548 1,839 3,623 9,021 10,775 38,806
12,605 1,835 3,361 8,741 11,008 37,550
12,009 1,839 3,309 8,295 11,948 37,400
12,538 1,832 3,134 8,503 9,915 35,922
889
7,707
8,232
7,371
8,083
7,463
8.17
0.54 70.80
0.61 67.75
0.58 63.05
0.67 60.05
0.60 62.70
Net indebtedness, excluding pension liabilities Net indebtedness as ratio of shareholders’ equity (debt/equity ratio) Equity per share, SEK
Reporting of deferred gains on sales with guaranteed residual values in operating leases has been changed in the above balance sheet from being subtracted from “Tangible fixed assets” to being part of “Other liabilities”. The comparative periods have been changed accordingly. In the balance sheet including customer finance operations, this deferred gain is still subtracted from operating leases that are part of “tangible fixed assets”.
BALANCE SHEET CUSTOMER FINANCE OPERATIONS
Amounts in SEK m. unless otherwise stated
31 March 2000 2000 USD m.* 31 March
31 Dec
1999 30 Sep 30 June
31 March
ASSETS Leasing assets Financial receivables Other assets Cash and bank balances Total assets
738 1,077 41 11 1,867
6,399 9,340 356 94 16,189
6,164 9,175 668 167 16,174
5,325 8,915 449 95 14,784
4,917 8,203 422 80 13,622
4,759 7,735 456 93 13,043
SHAREHOLDERS’ EQUITY AND LIABILITIES Shareholders’ equity Borrowings Other liabilities and provisions Total shareholders’ equity and liabilities
144 1,581 142 1,867
1,251 13,703 1,235 16,189
1,229 13,612 1,333 16,174
1,008 12,543 1,233 14,784
880 11,649 1,093 13,622
843 11,071 1,129 13,043
* Translated solely for the convenience of the reader at an exchange rate of SEK 8.67 = USD 1.00.
8
BALANCE SHEET INCLUDING CUSTOMER FINANCE OPERATIONS
Amounts in SEK m. unless otherwise stated
31 March 2000 2000 USD m.* 31 March
31 Dec
1999 30 Sep 30 June
31 March
ASSETS Intangible fixed assets Tangible fixed assets Shares and participations Inventories Other receivables Interest-bearing receivables Liquid investments Total assets
63 2,181 163 918 1,183 1,238 218 5,964
550 18,908 1,411 7,959 10,257 10,733 1,888 51,706
555 18,860 1,388 7,437 10,702 10,537 2,710 52,189
417 17,776 1,410 7,126 9,262 10,069 3,733 49,793
404 17,634 1,382 7,382 8,400 9,608 3,946 48,756
412 17,712 1,437 7,260 8,265 9,234 2,545 46,865
SHAREHOLDERS’ EQUITY AND LIABILITIES Shareholders’ equity Provisions for pensions Other provisions Other liabilities Borrowings Total shareholders’ equity and liabilities
1,635 217 482 954 2,676 5,964
14,179 1,877 4,175 8,271 23,204 51,706
13,548 1,842 4,159 8,253 24,387 52,189
12,605 1,838 3,817 7,981 23,552 49,793
12,009 1,841 3,768 7,542 23,596 48,756
12,538 1,834 3,580 7,927 20,986 46,865
27.4
26.0
25.3
24.6
26.8
Equity/assets ratio, %
STATEMENT OF CASH FLOWS Amounts in SEK m. unless otherwise stated
Q1 2000 USD m.*
2000 Q1
1999 Q4
Q3
Q2
Q1
Cash from operating activities
132
1,143
1,358
1,240
1,477
1,281
Change in working capital, etc.
–32
–280
–1,098
85
–148
–944
Cash flows from operating activities
100
863
260
1,325
1,329
337
Net investments excluding acquired companies
– 44
–382
–354
–341
–478
–481
Operating cash flows excluding acquired companies
56
481
–94
984
851
–144
Net investments in acquired companies
–1
–13
–214
–221
–26
–660
Operating cash flows excluding customer finance operations Expansion of customer finance operations Change in net indebtedness including customer finance operations Change in indebtedness from financing activities Dividend to shareholders Net change in cash and short-term investments Effect of exchange rate fluctuations on cash and short-term investments
54
468
–308
763
825
–804
–35
–301
–1,125
–621
–668
–294
19
167
–1,433
142
157
–1,098
–115
–999
372
–312
2,519
1,852
0
0
–96
–832
–1,061
–170
1,376
754
–1,300
1
10
38
–43
25
17
Cash and short-term investments at beginning of period
313
2,710
3,733
3,946
2,545
1,774
Cash and short-term investments at end of period
218
1,888
2,710
3,733
3,946
2,545
* Translated solely for the convenience of the reader at an exchange rate of SEK 8.67 = USD 1.00.
9
UNITS BY QUARTER 2000 Q1
Full year
Q4
1999 Q3
Q2
Q1
Order bookings, trucks Western Europe Central and eastern Europe Latin America Asia Other markets Total
10,222 462 1,463 695 360 13,202
36,194 1,783 6,122 1,548 1,030 46,677
11,036 538 1,715 434 299 14,022
8,065 396 1,348 462 161 10,432
8,842 465 1,509 335 355 11,506
8,251 384 1,550 317 215 10,717
Trucks sold Western Europe Central and eastern Europe Latin America Asia Other markets Total
9,625 349 1,313 467 300 12,054
36,106 1,551 6,253 1,481 1,260 46,651
10,389 563 1,593 541 290 13,376
7,821 330 1,523 232 317 10,223
8,448 363 1,549 374 305 11,039
9,448 295 1,588 334 348 12,013
411 378 223 1,012
1,704 1,219 628 3,551
531 300 163 994
367 340 73 780
360 397 195 952
446 182 197 825
446 368 138 952
2,002 1,237 524 3,763
450 381 158 989
441 365 151 957
551 255 114 920
560 236 101 897
Order bookings, buses Europe Latin America Other markets Total Buses sold Europe Latin America Other markets Total
Sales of industrial and marine engines totalled 712 (639) units during the first quarter of 2000.
NUMBER OF EMPLOYEES 2000 31 March
31 Dec
1999 30 Sep 30 June
13,365
13,346
13,314
13,215
13,331
Marketing companies
8,859
8,642
7,704
6,668
6,503
European operations
22,224
21,988
21,018
19,883
19,834
3,503
3,660
3,620
3,625
3,664
179
166
162
150
141
25,906
25,814
24,800
23,658
23,639
Production companies etc.
Latin American operations Customer finance operations Total number of employees
10
31 March
Annual General Meeting The Annual General Meeting of Shareholders in Scania will be held at 5.30 p.m. on Wednesday, 24 May 2000 at Scaniarinken, Södertälje, Sweden.
Financial information from Scania The next Interim Report will be published on 19 July 2000. Information about Scania is available on www.scania.com
For further information, please contact • Magnus Hahn, Corporate Communications Tel. +46-8 5538 3510, mobile tel. +46-70 551 79 03 • Ulf Söderström, Corporate Communications Tel. +46-8 5538 1044, mobile tel. +46-70 680 95 95 • Cecilia Edström, Investor Relations Tel. +46-8 5538 3557, mobile tel. +46-70 588 35 57 • Oscar Stjerngren, Investor Relations Tel. +46-8 5538 3657, mobile tel. +46-70 598 36 58
1592629/6/KREAB/Thomas Linder AB/Trosa Tryckeri AB, 2000
Scania AB (publ) SE-151 87 Södertälje, Sweden www.scania.com
