July 21 (Bloomberg) -- Scania AB, the Swedish truckmaker controlled by Volkswagen AG, reported second-quarter profit that missed analysts’ estimates as orders in Brazil slowed.
Scania fell as much as 7.4 percent in Stockholm trading. Net income in the quarter rose to 2.43 billion kronor ($380 million) from 2.37 billion kronor a year earlier, the company said in a statement. Profit had been estimated at 2.73 billion kronor in a Bloomberg survey of 11 analysts. Order bookings declined “significantly” in Latin America, mainly because of a weakening in Brazil, Scania’s largest market.
“Brazil is really cooling down, which may be a bit earlier than we had feared,” Carl Holmquist, an analyst at Danske Bank who recommends investors buy the shares, said by telephone. “This is having a negative impact on the operating margin and will push down the share today.”
Scania, based in Soedertaelje, Sweden, has the best operating margin in the business and is considering a merger with MAN SE in Germany to create Europe’s largest manufacturer of commercial vehicles.
Scania dropped 5.5 percent, or 7.3 kronor, to 126 kronor as of 2:13 p.m.
Sales climbed 12 percent to 23 billion kronor. Scania’s operating margin declined to 14.4 percent from 17 percent a year earlier. Holmquist said he had expected the margin to remain at 17 percent. Total orders rose 8 percent to 22,646 trucks and buses.
Scania experienced disruptions in its supply chain in the first half of the year, Chief Executive Officer Leif Oestling said. This “impacted the manufacturing and resulted in higher costs in order to ensure quality and delivery precision,” he said in the statement. “There is a continued risk of bottlenecks.”
Squeezed supply include lack of enough tires after manufacturers such as Michelin & Cie scaled back production in 2009, Oestling said in an interview in Stockholm today.
“We can’t send out the vehicles with any tires,” he said. “Customers are very specific about the brands and the dimensions they want.”
Registrations of heavy commercial vehicles in the European Union rose 62 percent this year through May compared with the same period last year, to 100,089 units, the European Automobile Manufacturers Association said last month.
Scania was first among European truckmakers to publish second-quarter figures. Swedish rival Volvo AB will report earnings tomorrow. Daimler AG, the world’s largest truckmaker, is scheduled to publish figures July 27, while MAN is scheduled to report July 28.
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