Scania Tumbles 95 Per Cent

The slump in pre-tax earnings from SKr706 million to just SKr40 million ($6 million), caused mainly by unexpected delays to Scanias new 4-series model, came without warning and prompted a 5 per cent slide in its shares.

Its most-traded A share fell SKr9.00 to SKr167, their lowest level since the SKr19.8 billion initial public offering in April of a 55 per cent stake at SKr180 a share by Investor, the main Wallenberg empire holding company which previously owned Scania.

The market does not like to see a development like this so soon after an IPO, said John Lawson, motor industry analyst at Salomon Brothers in London.

 

It seems the overall costs of the product changeover are substantially more than had been foreseen.

The third-quarter setback left profits in the first nine months down from SKr3.5 billion to SKr2.1 billion almost 20 per cent below analysts average expectations. Earnings per share fell from SKr11.57 to SKr7.65 SKr0.09 in the third quarter.

With marked understatement, Leif Ostling, chief executive, said the third quarter was not normal for Scania.

In recent years it has had an average profit margin of 14 per cent, easily the best among the worlds heavy truckmakers such as Mercedes and Swedish rival Volvo.

Although Scania was hit by the recent strength of the Swedish krona, Ostling blamed unanticipated delays in building up production of the 4-series truck as the biggest factor in the profits slide. As a result, the company effectively lost production of 2,200 trucks up to the end of October.