Scania annual report 2003

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FINANCIAL REPORT Financial review REVENUE The sales revenue of the Scania Group in the Vehicles and Service segment totalled SEK 50,581 m., compared to SEK 47,285 m. in 2002. This was equivalent to an increase of 7 percent. Revenue was favourably affected by higher volume and adversely affected by currency rate changes. Overall, negative currency rate effects totalled about SEK 2,200 m. Revenue from vehicle sales increased by 11 percent in all, amounting to SEK 34,652 m. (31,175). Sales of service-related products amounted to SEK 10,759 m. (10,603), an increase of 1 percent. In local currencies, service-related sales rose by 5 percent. Net interest income in the Customer Finance segment rose by 11 percent, amounting to SEK 813 m. (730). Sales revenue by product SEK m. 2003 2002 Trucks 29,537 27,184 Buses 5,115 3,991 Engines 453 464 Service-related products 10,759 10,603 Used vehicles etc 7,123 6,218 Revenue deferral, vehicles 1 –2,406 –1,175 Total 50,581 47,285 1 Refers to the difference between sales recognised as revenue and sales value based on delivery. NUMBER OF VEHICLES During the year, the Scania Group’s deliveries of trucks totalled 45,045 (39,895) units, which represented an increase of 13 percent. Bus and coach deliveries totalled 4,910 (3,774) units, an increase of 30 percent. Vehicles delivered and financed 2003 2002 Number delivered Trucks 45,045 39,895 Buses 4,910 3,774 Total 49,955 43,669 Number financed (during the year) Trucks 13,468 11,742 Buses 326 407 Total 13,794 12,149 EARNINGS Operating income for Vehicles and Service amounted to SEK 4,759 m. (3,548), which represented an increase of 34 percent. Higher delivery volumes for both trucks and buses and higher general capacity utilisation in the production system contributed to higher earnings. Earnings were also positively affected by increased exports from production plants in Brazil and Argentina with a favourable cost situation. Scania’s restructured bus chassis production demonstrated clearly higher productivity. During 2002, earnings were adversely affected by production restructuring costs of about SEK 100 m. During 2003, capitalised development expenditures amounted to SEK 669 m. (573). During the latter part of the year, operating income was affected by a somewhat less favourable market mix. The operating margin rose to 9.4 percent, compared to 7.5 percent the previous year. Currency spot rate effects were about SEK –770 m. compared to 2002. This was offset by positive currency hedging income of SEK 620 m., resulting in a negative net effect of SEK 150 m. During 2002, currency hedging had a positive influence of SEK 500 m. on earnings. Compared to 2002, the total currency rate effect was thus SEK –650 m. Operating income in Customer Finance rose by 19 percent and amounted to SEK 366 m. (308). This was equivalent to an operating income of 1.43 (1.22) percent, expressed as a percentage of the average portfolio during the year. Overhead, expressed in relation to the average portfolio, rose from 1.05 to 1.17 percent. Actual losses written off during the year totalled SEK 100 m. (143). Actual credit losses were equivalent to 0.39 (0.55) percent of the average portfolio. At year-end, the reserve for probable but not actual credit losses was SEK 458 m. (409), equivalent to 1.8 (1.6) percent of the portfolio. At year-end, the portfolio amounted to SEK 25,926 m. (25,303), an increase of 6 (5) percent adjusted for currency rate effects. During 2003, SEK 13,095 m. (11,789) worth of new items was financed. Operating income for Scania products amounted to SEK 5,125 m. (3,856), which was equivalent to an operating margin of 10.1 (8.2) percent. Earnings 2003 2002 Operating income by segment, SEK m. Vehicles and Service 4,759 3,548 Customer Finance 366 308 Total Scania products 5,125 3,856 Car operations – 550 Total operating income 5,125 4,406 Operating margin, % Vehicles and Service 9.4 7.5 Scania products 10.1 8.2 Scania Group 10.1 9.3 Customer Finance 1 1.4 1.2 1 The operating margin of Customer Finance is calculated as operating income as a percentage of the average portfolio. The operating income of the Scania Group was SEK 5,125 m. (4,406), which represented an increase of 16 percent. Operating margin amounted to 10.1 (9.3) percent. In 2002, operating income included SEK 550 m. in capital gain on the divestment of Swedish car operations. ANNUAL REPORT 2003 50
The Scania Group’s net financial items amounted to SEK –521 m. (–684). The improvement was attributable to lower net debt as well as lower borrowing in Latin American currencies. Income after financial items amounted to SEK 4,604 m. (3,722). Earnings, Scania Group SEK m. 2003 2002 Operating income 5,125 4,406 Income after financial items 4,604 3,722 Net income 3,034 2,739 Earnings per share, SEK 15.17 13.70 Return on equity 17.4% 17.2% Tax expenses for the year amounted to SEK 1,565 m. (985), equivalent to 34.0 (26.5) percent of income after financial items. The higher tax rate compared to the previous year was mainly due the taxexempt capital gain related to Swedish car operations reported in 2002. Excluding this capital gain, the tax rate in 2002 amounted to 31.1 percent. During 2003, tax expenses rose due to higher taxes outside Sweden. The Swedish local tax authority has denied Scania’s claim for a deduction due to a loss of SEK 2.9 billion. Scania will appeal this decision. The overall effect on Scania’s income can reach a maximum of SEK 575 m. if the deduction is not approved in its entirety. No provision has been made. Net income for the year amounted to SEK 3,034 m. (2,739), equivalent to earnings per share of SEK 15.17 (13.70). CASH FLOW The Scania Group’s cash flow, excluding Customer Finance as well as divestments and acquisitions of businesses, amounted to SEK 2,476 m. (2,418). Cash flow including divestments and acquisitions totalled SEK 2,450 m. (3,583). Tied-up working capital declined by SEK 270 m. (772). Positive cash flow from increased non-interest-bearing liabilities and provisions were partly offset by higher tied-up inventories and increased receivables. Net investments excluding divestments and acquisitions of businesses had an adverse effect on cash flow and amounted to SEK 3,285 m. (2,921), including capitalised development expenditures totalling SEK 669 m. (573). The effects of divestments and acquisitions of businesses totalled SEK –26 m. (1,165). FINANCIAL POSITION During the year, gross investments totalled SEK 3,196 m. (3,025), including capitalised development expenditures of SEK 669 m. (573). Financial ratios related to the balance sheet SEK m. 2003 2002 Equity/assets ratio, % 27.7% 25.6% Equity per share, SEK 91.26 84.66 Net debt, excluding provisions for pensions, SEK m. 24,291 25,108 Net debt, Vehicles and Service, excluding provisions for pensions, SEK m. 2,647 4,308 Return on capital employed, Vehicles and Service, % 22.0% 17.4% During 2003, the shareholders’ equity of the Scania Group increased by SEK 1,320 m. and totalled SEK 18,251 m. (16,931) at year-end. Net income for the year added SEK 3,034 m. (2,739), while the dividend to the shareholders decreased shareholders’ equity by SEK 1,100 m. (700). Beyond this, shareholders’ equity declined by SEK 614 m. (1,103) because of exchange rate differences that arose when translating net assets outside Sweden, due to the appreciation of the krona mainly against the American dollar and the British pound. The dividend for the financial year 2003 proposed by the Board of Directors is SEK 6.00 (5.50). The net debt of Vehicles and Service, excluding provisions for pensions, amounted to SEK 2,647 m. (4,308), which was equivalent to a net debt/equity ratio of 0.17 (0.31). Including Customer Finance, net debt was SEK 24,291 m. (25,108). NUMBER OF EMPLOYEES The number of employees at year-end was 29,112 (28,230), an increase of 882. In the sales and service organisation, the number of employees rose by more than 350. Of these, about 180 employees were attributable to acquired businesses in western Europe and about 200 were attributable to expansion in eastern Europe, Asia and Africa. In Latin America, however, the number of employees in the sales and service organisation declined by about 140. In European industrial operations, the number of employees rose by 570, while the number fell by 60 in Latin American industrial operations. FINANCIAL RISKS Borrowing and refinancing risk Scania’s borrowing consists of a committed credit facility in the international market, capital market programmes, private bond issues and public bonds, plus certain other borrowing. At year-end 2003, borrowing amounted to SEK 26 billion. In addition to utilised borrowing, Scania has an unutilised committed credit facility equivalent to SEK 13 billion plus unutilised capital market programmes equivalent to SEK 18 billion. Of utilised borrowing, about SEK 5 billion falls due during 2004, SEK 4 billion during 2005, SEK 4 billion during 2006 and SEK 13 billion during 2007 or later. 51 ANNUAL REPORT 2003
Page 1 and 2: ANNUAL REPORT 2003
Page 3 and 4: NOMINEE SHARES To be entitled to pa
Page 5 and 6: Deliveries by market area, 2003 THE
Page 7: Road safety conference in Brussels.
Page 10 and 11: STATEMENT OF THE PRESIDENT AND CEO
Page 12 and 13: THE WORK OF THE BOARD The Board and
Page 14 and 15: GOALS AND STRATEGIES Strategy for p
Page 16 and 17: EMPLOYEES Scania grows with its emp
Page 18 and 19: SCANIA’S ROLE IN SOCIETY Long-ter
Page 20 and 21: CUSTOMERS Customer demands shape ne
Page 22 and 23: CUTOMERS AND PRODUCTS Tailor-made v
Page 24 and 25: CUSTOMERS AND SERVICE Maximum uptim
Page 26 and 27: RESEARCH AND DEVELOPMENT The art of
Page 28 and 29: DEVELOPMENT OF TESTING METHODS Incr
Page 30 and 31: DEVELOPMENT OF A NEW TRUCK A truck
Page 32 and 33: PRODUCTION Investments for increase
Page 34 and 35: THE PRODUCTION SYSTEM The same work
Page 36 and 37: TRENDS AND INDUSTRY DEVELOPMENTS Ec
Page 38 and 39: EUROPE Strong sales in several mark
Page 40 and 41: Deliveries of Scania trucks in west
Page 42 and 43: OTHER MARKETS Record sales in sever
Page 44 and 45: REGISTRATIONS OF TRUCKS above 16 to
Page 46 and 47: ENVIRONMENTAL WORK Integrated envir
Page 48 and 49: ENVIRONMENT AND ECONOMICS Scania’
Page 50 and 51: SCANIA SHARE DATA Continued low tra
Page 54 and 55: Interest rate risk Scania’s polic
Page 56 and 57: Consolidated balance sheet 31 Decem
Page 58 and 59: Parent Company financial statements
Page 60 and 61: value, the recoverable amount of th
Page 62 and 63: NOTE 1 Segment reporting BUSINESS S
Page 64 and 65: Note 4, continued Financial receiva
Page 66 and 67: NOTE 9 Tangible fixed assets Machin
Page 68 and 69: NOTE 17 Other provisions During 200
Page 70 and 71: NOTE 26 Wages, salaries and other r
Page 72 and 73: Note 28 continued The other members
Page 74 and 75: Note 33 continued Interest rate ref
Page 76 and 77: LIST OF SUBSIDIARIES Corporate ID n
Page 78 and 79: Notes - Parent Company All amounts
Page 80: Auditors’ report To the Annual Ge
Page 83 and 84: Key financial ratios 1 and definiti
Page 85 and 86: 2003 2002 2001 2000 1999 1998 1997
Page 87 and 88: Leif Östling Born 1945. Member sin
Page 89 and 90: Corporate Units 7. Håkan Ericsson
Page 91 and 92: Scania Romania S.R.L. Alfred Bussma

Scania annual report 2003

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