Scania posts strong earnings, but flags difficulties ahead
Swedish truckmaker Scania, which is majority-owned by Volkswagen, reported strong second-quarter profits on Friday, beating expectations but warning that 2009 could offer a bumpier ride.
For the April to June period, the company posted a net profit of 3.03 billion kronor (321 million euros, 503 million dollars), up 51.3 percent from the year-ago quarter.
The lorrymaker also said its net sales swelled 14.2 percent to 23.89 billion kronor, while its operating income leapt 41.4 percent tp 4.25 billion kronor.
The results far exceeded analyst expectations of a net profit f 2.5 billion kronor and an operating income of 3.64 billion, according to a poll conducted by the Down Jones financial news agency.
"Scania's earnings reached new record levels in the first half and in the second quarter of 2008, primarily driven by higher vehicle and service volume and increased prices," company chief executive Leif Oestling said in the earnings statement.
By region, Scania's sales ballooned 18.5 percent in its main market of western Europe, by 13.3 percent in central and eastern Europe, and by 14.5 percent in Latin America.
In Asia however, its sales slipped 1.1 percent and in remaining markets they were down 6.5 percent.
Up until June 30 this year, Scania said it had delivered 39,574 vehicles, up five percent from the 37,578 it had delivered a year earlier.
For the full-year 2008, the company said it expected to increase its annual production capacity to 90,000 vehicles, and that by the end of 2009 it should be able to make 100,000 trucks a year.
Scania however said uncertain market conditions, especially in Europe, made it difficult to provide a financial outlook for the rest of 2008 and for 2009, hinting only that its earnings this year should be higher than last year.
The company's reluctance to offer up a forecast was "something new and quite negative," according to Evli Bank analyst Michael Andersson.
"In the first quarter they were talking about normalisation from high levels, but now they are talking about greater economic uncertainties," he told AFP .
The company had previously had forecast a sales increase of more than 10 percent between 2007 and 2009 and operating margins of between 12 and 15 percent.
Like its Swedish competitor Volvo, Scania said its order bookings had declined significantly, with truck orders across all markets falling 25 percent on average, pulled down especially by western Europe, where they plunged 48 percent.
Following its report, Scania saw its stock price swell 4.6 percent to 90.50 kronor in afternoon trading on the Stockholm stock exchange, which on average was down 0.2 percent.
"Scania has a strong balance sheet and great cash flow compared to other competitors (and) they beat expectations, so that lifts the shares," Andersson said.