Scania annual report 2001

Statement of the Chairman
In the first year of the new millennium the
world economy entered a clear slowdown
after a long period of good growth.
Over time, however, transport needs are
increasing in most countries. Improved
infrastructure and growing trade will
gradually lead to increased demand for
heavy transport vehicles.
The downturn has been more pronounced in the US
than has been the case in Europe. Increased uncertainty
after 11 September meant that the weakening of
general confidence in the economy accelerated. The
American economy has experienced negative growth
since the spring of 2001, a situation which is likely to
remain for a considerable part of this year. The world’s
major economies are simultaneously exhibiting very
weak economic performance, a rather unusual situation.
Scania has of course been adversely affected by
these developments and reduced sales volume, from
56,500 units in 2000 to 48,300 in 2001. This is still a
high volume for Scania historically, and in spite of a
certain loss in market penetration in western Europe,
Scania has a strong position in most of its important
markets.
Recovery in Europe will take time
Europe is trailing the American business cycle and
managed to show a certain economic growth throughout
2001 but is likely to slow down even further during
2002. A dull domestic market and a weak world economy
will probably make the recovery in Europe relatively
slow.
Downturn in Latin America
In 2000, the Scania markets in Latin America and Asia
had begun to recover from the economic difficulties
that began in Asia a few years earlier. The new downturn
in the world economy in 2001 again pushed many
countries into a recession. In Latin America, the problems
in Argentina have been dramatic with an overvalued
currency and significant negative growth.
The crisis in Argentina is far from over even though
tough measures are being taken to reverse the deterioration
of the economy. The uncertainty in the other
Latin American economies has been considerable but
not dramatic. Brazil – Scania’s most important market
in Latin America – has experienced economic difficulties
which are expected to continue. Elections in 2002
for a new President add to the uncertainty.
The Board has closely followed the developments
in Scania’s Latin American operations and approved a
programme aimed at restoring profitability.
Best margin in the industry
In spite of the weaker market and reduced volumes,
Scania’s operating margin of 4.6 percent was again
clearly higher than the industry average. Scania’s
leading position over the years in terms of profitability
shows that the company’s products continue to
meet and surpass customers’ expectations and that
Scania has an efficient structure and efficient working
methods.
During the past ten years, Scania has grown substantially
in volume. This has been achieved organically.
Successful working methods, product renewal,
far-reaching production improvements and strengthening
of the distribution structure have laid the groundwork
for long-term profitable growth.
Svenska Volkswagen
Scania is one of Volkswagen’s oldest business partners,
due to our joint distribution organisation in
Sweden since 1948. Our co-operation in Svenska
Volkswagen has been very successful. However, car
and truck distribution has diverged and the previous
synergies decreased. It is now natural for Scania to
specialise and to separate these businesses.
Strong brand and culture
The strength of its brand is a success factor for any
company, including manufacturers of capital goods,
such as heavy vehicles. The Scania brand name is
very strong and has a ‘‘King of the Road” image. The
strength of this brand name is the result of many years
of delivering vehicles and service-related products of
high quality to Scania’s customers.
Trust is a very important part of the Scania brand.
Customers rely on Scania every time they use its products.
All employees at Scania must therefore do their
utmost to fulfil the promises that are built into the
brand.
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