A MAGAZINE FOR SCANIA’S SHAREHOLDERS

QUARTER 3 2010

% Operating margin
20

16

12

0
-08 -08 -09 -09 -09 -09 -10 -10 -10
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Report
Operating
margin record-
high 18%.
> PAGE 2

Interview
“We have maintained
cost discipline from
the financial crisis.”
> PAGE 3

Finance
Why growth will
continue in South
America.
> PAGES 6–7

Eco focus pays off

FIGURES IN FOCUS:

Scania helps hauliers become greener. > PAGES 4–5

110%
Increase in order bookings
first nine months 2010.
FIRST nine months IN FIGURES

Order bookings and deliveries by region, Q3 (number of vehicles)

CENTRAL AND
EASTERN EUROPE
Order bookings
western europe
Order bookings 2,338 +166%
5,251 +62% Deliveries

Deliveries 1,336 + 95%

4,758 +28%

LATIN AMERICA other markets ASIA

Order bookings Order bookings Order bookings

4,874 +16% 876 +29% 2,085 +26%

Deliveries Deliveries Deliveries

4,881 +109% 1,001 +23% 3,252 +121%

Net sales Net sales by product segment* Operating income and margin
SEK m.
Other 3% % SEK m.
25,000
20 4,000
Used vehicles 6% Operating income, SEK m.
Operating margin, percent 3,500
20,000
16
3,000

15,000 2,500
12
Services 22%
2,000

10,000 Trucks 57%

8
1,500

Engines 1%
1,000
5,000 4
500
Buses and
0 coaches 10% 0 0
3

3
3
3

20 Q2

Q
Q
Q

08

08

09

09

09

09

10

10

10
10
08

08

09

09

09

09

10

10

*Rolling 12 months
20

20

20

20

20

20

20

20

20
20

20

20

20

20

20

20

20

Key figures

(SEK m. unless otherwise noted)

Net sales, Scania Group
2010, 9 m
55,663
2009, 9 m
43,714
Change in, %
27
9 MONTHS
Operating income, Vehicles and Services
Operating income, Financial Services
8,930
91
1,124
-82
-
-
IN BRIEF:
Operating income 9,021 1,042 - Operating margin
Income before taxes
Net income for the period
8,757
6,103
366
307
-
-
rose to 16.2 percent (2.4).

Operating margin, % 16.2 2.4 Order bookings

Return on equity, % 28.1 8.3 increased by 110 percent
Return on capital employed, Vehicles and Services, % 32.3 11.5
to 52,452 vehicles.
Earnings per share, SEK 7.63 0.38
Cash flow, Vehicles and Services 8,388 3,017
Cash flow
Number of employees, 30 september 34,592 32,085
for Vehicles and Services
Order bookings (units, trucks and buses) 52,452 24,918 110 increased to SEK 8,388 m
Deliveries (units, trucks and buses) 43,549 29,690 47 (3,017).

2 SCANIA VALUE • Q3/2010 www.scania.com

interview text: göran lind photo: carl - erik andersson

Efficient meetings. The four-day

week showed that things can be
made more efficient, says Scania
CFO Jan Ytterberg.

cally, Brazil today is a much more stable mar-

ket than previously. And the increased role
of South America means that Scania has two
strong legs to stand on − Europe being the oth-
er one − and this reduces volatility. Europe and
South America don’t always follow exactly the
same economic cycle, as the most recent crisis
demonstrates well.

Scania has begun hiring again. Although

the world economy seems to be
rebounding, there are still many sourc-
es of concern, especially in southern
Europe. Are you expanding too fast?
During the financial crisis, essentially half our
market vanished during a one-year period. Cer-
tainly no one had thought it could happen. This
has made us cautious. Now that we are increas-
ing our staffing, we are doing so in a flexible
way: new hires in our production network have
short-term contracts. Not increasing capacity as
fast as demand is also a risk. It is bad for earn-
ings to lose a 1,000 truck order to a competitor
just because we can’t deliver in time.

One year after a deep crisis, Scania is

enjoying record-high profitability. The
operating margin was 18.3 percent dur-
ing the third quarter. How is this possible?
A combination of stronger demand and high

The crisis made

cost consciousness pays off. Mentally, Scania
is still in the crisis. Everyone in the company
has become more cost-conscious. The last time
our industry underwent such a trial by fire was

Scania more efficient

in the early 1990s. After a long period of good
earnings, all companies become a bit lazy and
there is potential to improve efficiency. We have
cut costs in all parts of our operations, and the
Scania’s profit margin is at a record-high level, largely thanks to last four-day week showed that things can be made
year’s efficiency-raising measures. The company has also succeeded in more efficient.
maintaining much of its cost discipline from the financial crisis. As a
consequence, profitability has risen rapidly as demand has returned, says Is it possible to improve efficiency else-
Chief Financial Officer Jan Ytterberg in an interview with Scania Value. where in the company, aside from the pro-
duction network, where Scania has been
In 2010 the third quarter was stronger than months of costs but only two months of rev- successful in such efforts for many years?
usual for Scania. What is the reason? enue. In South America, the summer holiday Absolutely. One example is service operations.
Before the financial crisis, Europe accounted period is around Christmas. There are still major differences in how service
for 65-75 percent of our sales. Today its share is provided around the world. By applying
is down to around 50 percent, mainly because Brazil, the company’s biggest market good practice and Scania Production System
South America represents a larger slice of the today, has a history of economic and politi- principles in our sales and service network,
pie. As a result, we are not as strongly affected cal instability. Does this mean that Scania we can become even more efficient. None of
by the European summer holiday period as in is also more unstable? our competitors are using this proactive
previous years, when we essentially had three No, I don’t think so. Politically and economi- approach today. ■

www.scania.com Q3/2010 • SCANIA VALUE 3

FOCUS: Ecolution

A new greener
transport
concept
Today many transport companies are grappling with environmen-
tal issues and demands that they should provide “green transport”
services. This is why Ecolution by Scania is now being launched. It is
a new business concept that helps transport companies reduce carbon
dioxide emissions and operating costs.

The idea behind Ecolution by Scania is for
transport companies to partner with Scania’s
experts and put together a transport solution
that includes products and services with the
smallest possible environmental impact. This is
basically a matter of combining existing tried
and tested, commercially viable solutions that
each help to lower fuel consumption and there-
by lower environmental impact.
“Ecolution by Scania makes our extensive green
product portfolio visible to customers,” says Martin
Lundstedt, Head of Franchise and Factory sales in
charge of sales and marketing. He continues:
“There is a lot we can do here and now. In
close cooperation with our customers, we can
help to optimise their operations, reducing both
fuel costs and carbon dioxide emissions, while
boosting life-time profitability.”
Driver training courses operated by Scania
reduce fuel consumption by an average of 10
percent for customers in long-haulage, even
with a skilled driver behind the wheel. The
training courses focus on economy driving,
which may also lead to a reduction in wear and
tear as well as the risk of accidents.
Driver follow-up at agreed intervals helps
to ensure sustained savings. After the initial
driver training course, Scania staff maintain
contact with the drivers and provide personal
feedback on their performance. The customer
also receives help in monitoring and analysing
fuel consumption data.
An extended maintenance programme is
designed to keep carbon dioxide emissions and
fuel consumption at their new, lower level. ■

Unique solution for each customer

Because the needs and circumstances of custom-
ers vary, each solution is unique − individually
adapted to specific transport tasks. For urban
traffic, for example, Ecolution by Scania offers a
solution using ethanol trucks, which significantly
helps to lower carbon dioxide emission. For forest
and construction haulage, the solution involves
robust vehicles fuelled with biodiesel. For most
types of long-distance haulage, diesel is still the
only realistic alternative. But with the right vehicle
specification, services and maintenance, carbon Josefien Dusseljee of
Scania in the Netherlands
dioxide emissions can be reduced while keeping
Customers who choose the entire offering works at a haulier to
fuel costs down. receive an Ecolution by Scania certificate. follow up its drivers and
Common to all these solutions is the opportuni- The individual elements can also be pur- vehicles.
ty to add a number of green options, for example: chased separately.

4 SCANIA VALUE • Q3/2010 www.scania.com

 text: conny hetting photos: erik bakker

Coaching the
customer
Josefien Dusseljee is employed
by Scania in the Netherlands but
spends all her working hours
at the transport company Post-
Kogeko in order to help it become
greener and more efficient.

Her business card says Team Leader Technical

Support Programme, but Josefien Duseljee is
equally often called a coach or project manager.
She has the overall responsibility for a pilot
project that, within a few years, may set the pat-
tern for how Scania will establish close working
relationships with major customers.
Eight months ago, Dusseljee was offered a
job as a coach and head of a three-year project
in collaboration with Post-Kogeko, one of
Scania’s largest customers in the Netherlands.
This family-owned transport company has
400 trucks, 80 percent of them from Scania.
Over the next three years, 114 new trucks will be
delivered. Scania’s agreement with Post-Kogeko
includes carrying out a continuous follow-up
of both drivers and vehicles, aimed at achieving
continuous improvements. The goal is to reduce
fuel consumption, environmental impact and
maintenance costs as well as improve efficiency.
During the early months of the project, Dus-
seljee has devoted a lot of time to documenting
and measuring how Post-Kogeko’s drivers work.
“Right now we are measuring 17 different
parameters, for example how hard the drivers
brake and accelerate. Once all the figures are
in place, Post-Kogeko and I will put together a
training and activity package that will reduce
the company’s fuel consumption and carbon
dioxide emissions.”
Dusseljee often rides with the drivers to
study in detail how driving style and fuel con-
sumption go hand in hand.
“It is important to see what is behind the
enormous quantity of figures we collect. The
very knowledge that the work of the drivers is
being measured causes them to improve their
driving.”
The key individuals in the project are Post-
Kogeko’s “mentor drivers”. These are experi-
enced drivers who, among other things, help
train newly hired drivers.
“After driver training, we will work a lot with
the right vehicle configurations and service
programmes as additional ways of reducing fuel
consumption.” ■

www.scania.com Q3/2010 • SCANIA VALUE 5

finance
Continued robust
growth in Brazil
The conditions are good for
continued growth in Latin
America. That was the message
when Scania held its Investor
Day in Brazil.
In mid-September around 60 investors and
analysts as well as a number of journalists from
Europe, the United States and Latin America
attended Scania’s Investor Day in São Paulo,
Brazil. Scania presented its strategy for profit-
able growth in Latin America, in which both
service operations and the company’s flexible
production system are important components.
“The fact that Scania has had a presence for
more than 50 years, is a leader in the biggest
markets − Brazil and Argentina − and has a
far-flung service network, along with a flexible
6 SCANIA VALUE • Q3/2010
production system, means that the company
is well-positioned for profitable growth,” Sven
Antonsson, President of Scania’s Latin Ameri-
can Operations, told the Investor Day audience.
The Brazilian truck market bounced back
quickly after the financial crisis, and since
the third quarter of 2009 its growth has been
very strong. Robust demand in Latin America,
especially Brazil, is one important reason why
Scania emerged quickly from the crisis and has
shown good profitability so far during 2010.
“Brazil has a very strong economy. GDP is
expected to increase by over 7 percent this year
and unemployment is low,” said Christopher
Podgorski, Vice President Franchise and Factory
Sales Latin America.
In financial markets, there has thus been
great interest in Brazil. Analysts and investors
“We are well-positioned for con-
tinued growth,” Sven Antonsson,
President, Latin American Opera-
tions told the audience at Scania’s
Investor Day in Brazil.
are wondering how long demand can remain at
its current high level.
“The market has enjoyed support from sub-
sidies, both through lower taxes and favourable
financing, but there is a risk that demand will
be lower if these subsidies disappear at the end
of this year,” Antonsson said. At the same time,
he added that owing to new emission rules that
enter into force in 2012, the market may take the
opportunity to buy trucks in 2011 before the
new rules go into effect.
Improved productivity
Scania is aiming at a global production capacity
of 150,000 vehicles per year at the next peak in
the economic cycle, which would imply 30,000
vehicles in the Latin American system. One key
factor behind the company’s ability to increase
www.scania.com

Some 60 investors and analysts heard Visitors received a guided factory tour and had an
Scania’s management team for Latin opportunity to test-drive Scania trucks.
America present the company’s ope-
rations.
production quickly when demand took off is
Scania’s leadership philosophy that involves
striving for continuous improvement, coupled
with its global product and production system.
“We strengthened our efficiency during the
downturn, among other things by means of
employee training, and we are now focusing on
maintaining short lead times. Today we are more
efficient than before the crisis, so we don’t need
to build new factories to be able to grow,” said
Stefan Palskog, head of production and devel-
opment in Latin America.
Major potential in mining
In many Latin American countries, the mining
business is important. Scania sees major poten-
tial here.
“There are a number of advantages in using
Scania trucks instead of traditional heavy
dumpers. For example, the customer achieves
greater flexibility, lower repair costs and lower
investment costs,” Antonsson maintained.
www.scania.com
text: göran lind photos: wagner menezes and celso luiz gonçalves
“Because a growing number of trucks operate in
the mining industry, Scania can also increase its
parts sales.”
Scania has an extensive service network. In
Brazil it consists of 99 workshops, which sell
more than just parts.
“Customers are requesting fleet management
services, driver training and servicing of trailers
as well as other superstructures. We have major
potential to boost our sales. The transport sector
is becoming increasingly advanced, with just-in-
time thinking, and this means greater demands for
fast, high-quality service,” Podgorski said.
Aside from Scania’s focus on vehicles for the
mining sector, its product range in Latin Amer-
ica is being broadened to include trucks with 9-
and 11-litre engines.
“We have previously focused on the very
heaviest trucks, but within the framework of
our existing engine range and modular product
system, we can reach a bigger market in a cost-
effective way,” Podgorski explained. ■
“Scania
impressive”
Scania has major potential for
continued strong growth in Bra-
zil, though competition will prob-
ably get tougher, say analysts
after Scania’s Investor Day in São
Paulo.
“Scania has an impressively strong market posi-
tion. Although MAN is now launching a truck
in the same segment (the heaviest), it will take
time for the company to establish itself in the
market,” says Kenneth Toll Johansson, analyst
at the Swedish investment bank Carnegie.
There are various short-term factors that
might slow growth, including the expiration of
government subsidies during 2011 and the new
emission standards that take effect in 2012.
“But it is a fantastic market right now and
appears set to remain so for the next 5-10 years.
GDP growth looks strong and there will be
major infrastructure investments, which benefit
Scania specifically. As you know, Brazil will be
organising both the 2014 football World Cup
and the 2016 Olympics,” says Anders Trapp,
analyst at SEB Enskilda.
“On the demand side it is difficult to foresee
any serious threats. It is more a question of
whether Scania can expand its production
capacity at the same pace as market growth,”
Johansson says. He adds that today there is a
broad economic base in Brazil, with numerous
commodities and a growing middle class that is
boosting domestic demand.
Brazil is attracting additional challeng-
ers, though. Trapp points out that not only is
MAN moving into the market, but Mercedes is
launching a new model and Paccar-DAF is also
on the offensive. “But if the market grows by
10 per cent a year, which seems to be the con-
sensus, there will be room for everyone. Next
year will be an exception, however. We expect
essentially zero growth, as a reaction to the
rapid increase of recent years and the phase-out
of subsidies.” ■
Q3/2010 • SCANIA VALUE 7
IN BRIEF photos: dan boman and doosan infracore

Wind tunnel will

simulate climates
Scania has decided to build a wind tunnel at its re­-
search and development centre in Södertälje, Sweden.
The wind tunnel will be used for testing such vehicle
characteristics as comfort, road safety and environ-
mental performance in different climates.
The facility, the only one of its kind in Europe, will
be completed in 2013. It represents a further strength-
ening of the research and development department in
Södertälje, which employs 2,700 people today.
It is time-consuming and requires large resources
to carry out testing of trucks and buses in different
climates, among other things for planning and vehicle
transport. A wind tunnel that can simulate realistic
environments, ranging from dry Arctic cold to humid
tropical heat as well as various wind conditions, will
thus make Scania’s development work more efficient
and flexible. ■
According to the agreement between Scania and Doosan Infracore, Doosan Moxy dumpers
will be fitted with Scania engines.

New opening for engines in Asia

A joyful Andreas Söderström with the winner’s
trophy. His first prize will be a new R-series truck.
Young Swedish driver
best in Europe
Scania and Doosan Infracore, one of the
world’s largest manufacturers of construction
equipment, have signed a memorandum of
understanding which means that Scania will
deliver engines for Doosan’s products for the
global market.
Deliveries to Doosan Infracore will total
an estimated 1,000 engines during the next
few years. The agreement gives Scania access
to the growing Asian market for construction
equipment.
The Scania engines being supplied are
equipped with SCR (Selective Catalytic
Reduction) emission control technology.
The engines satisfy the requirements of
emission legislation that comes into force
2011, and are prepared for the 2014 legislation,
Stage IV and Tier 4 Final.
Doosan Infracore is expected to require
about a thousand engines over the next few
years.
In January, Scania also signed an agree-
ment to supply engines to Terex Corpora-
tion, a leading manufacturer of construction
and industrial equipment based in North
America. As a result, Scania has a compre-
hensive global presence in the market for
construction equipment.■

Europe’s most talented young truck drivers faced off

during two tough days in October. The 18 finalists in
Scania Value is published by Scania and
Scania’s Young European Truck Driver competition
were tested in fuel-efficient driving, adapting their
UPCOMING distributed to Scania shareholders.

driving style to different situations, securing their FINANCIAL EVENTS Publisher

Per Hillström, ir@scania.com
cargo and checking the vehicle before driving. The final Editor-in-chief
Conny Hetting, conny.hetting@scania.com
event, precision manoeuvring, took place before thou- Project Manager
sands of enthusiastic spectators on a course outside 2 December 2010 per-ola.knutas@appelberg.com
Scania’s chassis assembly workshop in Södertälje, Swe- Capital Market Day, Art Director
magdalena.taubert@appelberg.com
den. After a dramatic final round, 26-year-old Swedish Södertälje, Sweden Production
Appelberg Publishing Group
driver Andreas Söderström emerged as the clear win- www.appelberg.com
ner. Aside from being able to call himself Europe’s best
2 February 2011 Print: Trosa Tryckeri
Cover photo: Eric Bakker
young truck driver, as his first prize he won a brand-
new Scania R-series truck, worth around a million kro-
Year-end report,
Address
nor (over EUR 100,000). January-December 2010 Scania
Investor Relations
The Scania Driver Competitions, which were organ- SE-151 87 Södertälje, Sweden
ised for the fourth time in 2010, are not only European. 27 April 2011 Tel: 08-553 81 000
Since they began in 2003, more than 110,000 drivers Interim report,
from five continents have participated, making it the January–March 2011
world’s largest heavy vehicle driving competition. ■
See a video from the final: www.scania.com/yetd/live