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Scania to Invest in Capacity Growth After Orders Jump 31%

April 23 (Bloomberg) -- Scania AB, the Swedish truckmaker controlled by Volkswagen AG, said it will focus investments on adding capacity as European fleet replacements contributed to a 31 percent jump in first-quarter orders.

Sales contracts rose to 20,787 trucks and buses from 15,809 vehicles a year earlier, while deliveries increased 4 percent, Soedertaelje, Sweden-based Scania said today in a statement. Net income fell 22 percent to 1.4 billion kronor ($212 million) as sales declined 4 percent to 19.3 billion kronor.

“In the longer term, there are good growth opportunities,” Chief Executive Officer Martin Lundstedt said in the statement. “Scania will therefore continue to prioritize investments in core development projects and will extend technical production capacity, as well as expanding the sales and services organization in emerging markets.”

Scania is promoting new models that meet tighter emissions standards to boost sales in an effort to counter an economic decline in Europe. Demand for commercial vehicles in the region fell for a 14th consecutive month in February, industry association ACEA said on March 27. The economy of the 17 nations sharing the euro is in the second recession in four years.

Scania rose as much as 5.3 percent to 134.5 kronor, the biggest intraday gain since Sept. 14, and was trading up 4.9 percent at 10:08 a.m. in Stockholm. That pared the shares’ decline this year to 0.3 percent, valuing the company at 105.1 billion kronor.

The company said it will raise production capacity “in coming years” to 120,000 vehicles from 100,000 units currently.

To contact the reporter on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.net

To contact the editors responsible for this story: David Risser at drisser@bloomberg.net; Chad Thomas at cthomas16@bloomberg.net

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