European truck builder Scania hit a wall as component shortages affected their production keeping flat sales for the first six months of 2022.
This however did not mean there was no demand for its products, which be design has been shifting from internal combustion engines to electric motors to meet both company carbon footprint targets and meeting European sustainability goals. Though its operating income decreased by 42 percent to SEK 5,651 m. (9,733), the operating margin remained steady at 7.6 percent (13.0) while net sales in total were unchanged compared to the previous year and amounted to SEK 74,690 m. (74,776).
“With already large order books and long delivery times due to component shortages and the production transition to our new powertrain range, we have continued to be restrictive in the placing of orders. The global component shortage has persisted but eased somewhat towards the end of the second quarter. Our efforts to find solutions throughout the supply chain to stabilize the flow, have gradually improved production output, although outbound transport capacity has been increasingly challenging in the second quarter,” Christian Levin, Scania President, and CEO said.
External factors also prevented Scania from maximizing its operations.
“With both war in Ukraine and an ongoing pandemic, the turbulent external environment is continuing. Rising inflation and increased interest rates are also adding to the uncertainty. Despite this, economic activity is still high. We see this both in demand for our solutions but also in the utilization of the existing vehicle fleet,” Levin added.
In the second quarter of 2022, net sales increased by 2 percent to SEK 39,933 m. (39,068), operating income decreased to SEK 3,044 m. (5,076) and operating margin amounted to 7.6 percent (13.0)
During the second quarter, truck deliveries decreased by 25 percent while bus and coach deliveries increased by 36 percent. Within Power Solutions, deliveries increased by 13 percent. The service business is still strong and revenue in local currency increased by 13 percent. In Financial Services, the underlying business is strong. Both our vehicle-related and financial services help to balance profitability in periods of lower vehicle deliveries.
Scania’s earnings were negatively affected by lower vehicle volume and increased cost of input goods, weaker capacity utilization in production due to component shortage and by revalued assets and provisions for bad debt made due to the developments in Ukraine and Russia.
“In Ukraine, our operations are in full swing with all workshops, except for two, open for customers. Recently, a new Scania workshop was inaugurated outside of Kyiv. The fact that we are present locally to support the Ukrainian society with transport services and logistics is of course incredibly important,” Levin clarified.
Despite the difficult circumstances, Scania pushed through with its electrification plan, where at least one new electric vehicle application will be introduced annually. It recently launched complete BEV-based solutions for regional long-haul operations which opens up opportunities to operate electric trucks for a vast number of different customers in the transport industry ecosystem.
“The lessons we are learning through the development collaborations with some of our most innovative customers are paving the way for the upcoming introductions in our electrification plan. In Boliden’s mines, the 74-tonne battery electric truck for heavy transports is now in operation, as well as SCA’s battery-powered truck for timber transports with capacity of up to 80 tons total weight,” Levin mentioned.
The second quarter was also the starting point for a collaborative product development partnership with Einride, the Swedish freight technology company, a leading provider of digital, electric and autonomous shipping solutions. Involving 110 trucks, it is the largest order of heavy-duty electric vehicles to date for Scania in Europe.
For the transport tasks where the combustion engine is still the best or the only solution, our new Scania Super has proved itself — both by being named “Green Truck 2022”, and also as the winner in Germany’s 1000 points comparison test. These are excellent proof points of Scania’s position of strength and the customer benefit we deliver with our solutions.”
