Scania annual report 2002

Statement of the President and CEO
Economic uncertainty increased gradually
during the year, adversely affecting the
need for transport services. Despite lower
sales volume, Scania improved its earnings
and was once again among the companies
with the strongest earnings in
its industry.
The expected recovery in the American economy did
not materialise during the year. Continued low interest
rates and increased indebtedness among households,
for example by means of major rebates on loan-financed
car purchases, kept up the level of consumption. In
Europe, the economic growth rate decreased gradually
during the year. Especially in Germany and neighbouring
countries, growth stalled completely during the
fourth quarter, while a clear slowing trend was apparent
in France, Spain and Italy. In South America, the
Argentine economy collapsed, while uncertainty in the
Brazilian economy increased.
Obviously Scania was adversely affected by these
developments, and sales volume fell from 48,300
trucks and buses in 2001 to 43,700 vehicles last year.
Historically, this is a rather high level for Scania, but
the total decline from the peak year of 2000 was
nearly 13,000 units.
For Scania, 2002 turned out better than expected.
The strategy of keeping price levels up and increasing
the company’s presence in the most powerful engine
segments above 450 horsepower improved earnings.
Also the changes of recent years in our production
structure contributed to substantially better earnings.
No recovery in Europe
Demand in western Europe did not fall to as low a level
as we had previously projected, but ended up at
210,000 heavy trucks. In historical terms, this was a
good year, following the record years of 1999, 2000
and 2001 with 235,000, 245,000 and 235,000 heavy
truck registrations, respectively.
During 2002, price levels stabilised and a number
of large customers came back. Our market share
stabilised.
The downturn in the European economic growth
rate continued during the year. The economy will
probably slow further during 2003.
Owing to the relatively good economic growth
rate in central and eastern Europe, these markets
developed favourably. Volume is growing rapidly, and
considering the strong position that Scania enjoys in
the region, this bodes well for the future, especially in
light of the existing growth potential, since a number
of these countries are on the threshold of EU membership.
For every new Scania truck that is sold in central
and eastern Europe, five to six used Scania trucks find
their way into the region. This has a very positive effect
on our service business in central and eastern Europe.
Slow recovery in Latin America
The Argentine economic crisis struck with full intensity
during the year and the economy deteriorated significantly.
Brazil was affected and economic growth in
Brazil was slower than in many years.
Due to Scania’s action programme, including
streamlining of production, adjustment of price levels
and increased exports to countries outside Latin
America of both components and vehicles, in combination
with the weakening of the Argentine and
Brazilian currencies in particular, earnings in Scania’s
Latin American operations improved sharply.
Strong growth in Asia
In Asia, a number of markets developed favourably for
Scania. In South Korea, Scania is back at the record-
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