Scania Annual Report 2011

2 Statement of the President and CEO
Partnering with customers
Scania showed strong earnings in 2011. Meanwhile demand slowed in the final months of the year, and we
are entering 2012 with lower demand. We are, however, well prepared because of our strong balance sheet
and product and service portfolio. Our focus is on continuing to develop Scania’s business model and
brand – we will ensure long-term growth by strengthening the product and service offering to customers.
In 2011, Scania achieved record high sales and deliveries of
vehicles and services. Earnings per share were the best in the
company’s history. However, profitability weakened compared
to our very strong performance in 2010. The Swedish krona
appreciated and our operating costs increased, compared to
a low level in 2009 and 2010. The upturn that dominated the
market in recent years also ended in 2011. During the second
half of 2011, we noticed that the demand for vehicles was
slowing, while service deliveries continued to rise.
Growing service demand
We adjusted our production rate during the final months of
2011 and in early 2012 in response to lower demand. As a
consequence of this adjustment, we could not extend the
fixed term temporary contracts of about 1,900 employees.
We have become restrictive about recruitment and are focusing
increasingly on cost trends.
Our service operations are continuing to develop favourably.
The average age of the truck population in Europe is
rising and this impacts demand for workshop hours and parts
positively. It also means that there is an increasing need for
transport companies to invest in new vehicles.
We are continuing to invest in and develop our service
operations – being close to customers is crucial. It is not just
about workshops, but also about mobile solutions where we
perform service out among our customers. Meanwhile we
are introducing the same thinking and methods from the wellknown
Scania Production System in our sales and services
operations in order to become more efficient and to reduce
lead times for our customers.
Further development of Scania’s business model
and brand
Like other companies in the transport industry, Scania is
facing major challenges. Demographic changes, urbanisation,
economic growth and increased trade are driving the demand
for transport services. Meanwhile there are increasing calls
for sustainable and efficient transport systems.
For our customers, it is ultimately a matter of meeting their
day-to-day needs by having vehicles with the best possible
uptime. The more hours the customer’s transport equipment
is available, the more revenue for the customer. However,
each customer is unique and has specific needs. In partnership
with customers, we develop packages of products and
services that deliver high efficiency, profitability and sustainability.
As a leading actor in the industry, we can achieve good results
in cooperation with various stakeholders. We are developing
better, more sustainable components together with our
sub-contractors. Through an active dialogue with legislators,
we can improve knowledge about longer vehicle combinations,
which provide significant reductions in emissions per tonne
transported.
Cooperation with MAN
In November 2011, Volkswagen completed its acquisition of
55.9 percent of the voting rights in MAN, after the approval of
competition authorities around the world. This removed impediments
against deeper cooperation between Scania and MAN.
A number of working groups are currently reviewing the
potential for synergies in procurement, development and
production. This is taking place in line with Volkswagen’s
well- established strategy of independent brands, in which
competition between brands has high priority. The strategy
means developing and strengthening each brand with its
customer base.
100th anniversary of Scania buses and coaches
– tomorrow’s mode of transport
Scania’s bus and coach operations have performed very well
in recent years. Bus chassis and trucks are assembled in the
same production units, using a large number of common components.
This has boosted productivity considerably.
Scania delivered its first bus 100 years ago. Buses and
coaches are playing a key role in the establishment of sustainable
transport systems. As global urbanisation continues and
major cities expand, Bus Rapid Transit (BRT) systems will be a
cost-effective investment for solving congestion and environmental
problems. These systems offer public transport that
combines the advantages of rail-bound traffic with the flexibility
of buses. There are many advantages if passenger traffic can
be shifted from cars to buses: reduced climate impact, better
health and improved traffic flow.
Long-term growth
Another interesting product in our bus and coach operations is
Scania Touring, which is strengthening our position in the market
for intercity services and tourist coaches. Our new Scania
Citywide model, which was launched during 2011, supplements
our product range in the city bus segment.
We foresee good growth in our industrial and marine engine
operations. As early as 2009, we launched industrial engines
that met the emission standards introduced in 2011.
Operations Scania 2011