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Scania 2012 Profit Drops on European Truck-Price Decline

Scania AB, the Swedish truckmaker controlled by Volkswagen AG, said profit dropped 29 percent in 2012 because of pricing pressure and lower production rates amid an economic decline in its main market of Europe.

Net income fell to 6.65 billion kronor ($1.04 billion) from 9.42 billion kronor a year earlier, Soedertaelje, Sweden-based Scania said today in a statement. Revenue declined 9.2 percent to 79.6 billion kronor.

“Customers are hesitant about investing in new vehicles in view of the uncertain economic climate,” Chief Executive Officer Martin Lundstedt said in the statement. At the same time, truck and bus orders rose 24 percent in the fourth quarter amid a “replacement need,” while new emissions standards may also add to demand, he said.

Europe accounted for 45 percent of Scania’s truck deliveries last year, an increase from 44 percent in 2011. The economy of the 17 nations sharing the euro went into recession in the third quarter, and the European Central Bank is forecasting a 0.3 percent contraction in 2013. Scania said it has reduced first-quarter production in Europe by 15 percent from the previous three-month period because of declining sales.

Scania fell as much as 3.3 percent and was trading down 0.1 percent at 137.9 kronor as of 10:02 a.m. in Stockholm. That pared the shares’ gain in the past 12 months to 18 percent.

Capacity Plans

The manufacturer plans to increase annual production capacity to 120,000 trucks and buses by 2015 from 100,000 vehicles in 2012, according to a year-old plan that Lundstedt reiterated on Sept. 26. Under that strategy, Scania’s capacity would rise to 150,000 commercial vehicles at the next peak of the business cycle.

Demand for commercial vehicles in December fell to the lowest level since October 2009 in Europe, industry association ACEA said yesterday. Registrations of new heavy trucks in Europe declined in all major markets, plunging 16 percent in France, 20 percent in Italy, 21 percent in the U.K., 27 percent in Germany and almost 40 percent in Spain.

Volkswagen, Europe’s biggest carmaker, wants to forge a European truck alliance between Scania and its second truck unit, Munich-based MAN SE, to reap cost savings and take on global market leader Daimler AG. Wolfsburg, Germany-based VW owns 75.03 percent of MAN and said Jan. 9 that it plans to make an offer for full control.

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