The period was strongly dominated by the coronavirus outbreak and its consequences in the form of lower demand and decreased production.
Summary of the first six months of 2020
- Net sales decreased by 24 percent to SEK 58,469 m. (77,271)
- Operating income decreased by 70 percent to SEK 2,813 m. (9,444)
- Cash flow amounted to SEK 1,867 m. (3,638) in Vehicles and Services
- In the second quarter of 2020, net sales fell by 38 percent to SEK 25,418 m. (41,179) and operating income decreased to SEK -192 m. (5,237)
Comments by Henrik Henriksson, President and CEO
“The period was strongly dominated by the coronavirus outbreak and its consequences in the form of lower demand and decreased production. Both sales and profitability were thus impacted negatively. Forceful actions taken by the company mitigated the negative impact. In the second quarter of 2020, net sales fell by 38 percent to SEK 25.4 billion and operating income was negative at SEK -192 million. In the first half of 2020, net sales fell to SEK 58.5 billion and earnings to SEK 2.8 billion, giving an operating margin of 4.8 percent.
During the first half of 2020, vehicle deliveries fell by 41 percent with lower volume in essentially all regions. Scania’s service revenue fell by 5 percent to SEK 13.5 billion during the first half of 2020. Financial Services reported lower operating income of SEK 476 million (737), due to increased bad debt provisions, reflecting the financial impact from the coronavirus on our customers.
After a complete stop in Scania’s global production during the spring when all production was closed down due to component shortages and disruptions in the supply and logistics chain, a cautious restart began at low levels. The order book that was built up due to the stoppage, caused by the pandemic, has still not been worked through. Therefore planning is now underway to compensate for this production loss through an increased production rate.
Looking ahead, the demand situation remains uncertain. Order bookings for new trucks were impacted by economic developments in general which vary in different parts of the world. A recovery in Asia is noticeable and in certain parts of Europe, while it is going more slowly in Latin America. The global bus and coach market has been severely affected by the pandemic, particularly demand for coaches and tourist buses. However, in Engines, demand is strong and order bookings even exceed the previous year’s levels.
Scania has so far coped well with the challenges of the coronavirus outbreak. With quick and decisive actions, the brakes were hit on a large number of projects and activities, in order to reduce cost and preserve cash. Estimating the long-term effects of this crisis is difficult and it will take a long time before demand returns to pre-crisis levels. In light of this, and to ensure a continued profitable Scania that can contribute to driving the shift towards a sustainable transport system, intensive and comprehensive work is also underway to adapt Scania’s cost structure longer term. As announced during the quarter, we now face the tough measure of reducing the organisation by around 5,000 employees globally.”