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UPDATE 2-Scania orders defy European market gloom
July 20, 2012 / 8:09 AM / 5 years ago

UPDATE 2-Scania orders defy European market gloom

* Q2 order intake down 14 pct, vs forecast 21 pct fall

* Says order levels recovered from Q1

* Operating profit 1.93 bln euros, missing 2.35 bln forecast

* Shares up 6 percent (Adds analyst comment, detail, background)

By Niklas Pollard and Helena Soderpalm

STOCKHOLM, July 20 (Reuters) - Truck maker Scania eased the slide in orders in the second quarter, defying a steep fall in demand in Europe and sending its shares up 6 percent on Friday.

The highly cyclical market for commercial vehicles has been losing steam fast in recent months on both sides of the Atlantic, though Europe has been slammed by economic downturn and a credit squeeze.

Industry data from the European Automobile Manufacturer’s Association showed registered sales of new vehicles plunged 17.8 percent in May, the sharpest fall since 2009, as weakness spread from the indebted south into big markets such as Germany.

Volkswagen-controlled Scania, which sells roughly half its trucks in Europe, said orders for trucks and buses slumped 14 percent year-on-year in the second quarter.

This compared with the 21 percent fall expected by analysts and the 19 percent tumble in the first three months of the year.

“The comment that Europe is suffering, but maybe not as much as feared, is actually...a very positive comment,” Sydbank analyst Morten Imsgaard said.

“They are able to navigate through a difficult environment in Europe at the moment.”

Operating profit at Scania fell to 1.93 billion crowns ($278.26 million) versus a year-ago 3.31 billion to come in below a mean forecast of 2.35 billion seen in Reuters poll of analysts.

Shares were up 6 percent to 122.60 crowns by 0858 GMT, easily outperforming the broader market.

“Order bookings in Europe improved somewhat compared to the first quarter of 2012 but remain at a low level,” Chief Executive Leif Ostling said in a statement.

“Despite improved order bookings for trucks compared to the previous quarters, the market outlook is difficult to judge.”

Ostling is in his final months as chief executive of Scania, a company he led to a level of profitability envied by most other truck makers and which he is leaving in September for a post at Volkswagen.

The German auto giant has in recent months renewed its push to forge a commercial vehicles group to take on market leader Daimler, tightening its grip on German truck maker MAN SE and appointing Ostling to spearhead closer ties with Scania and its own trucks business.

Ostling, who has often scorned the idea of large-scale mergers in the industry, has been loath to discuss the integration though MAN CEO Georg Pachta-Reyhofen has said a tie-up could create annual synergies of more than 200 million euros. ($1 = 6.9360 Swedish crowns) (Additional reporting by Johan Ahlander; Editing by David Cowell)

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