Heavy-vehicle maker Scania's Q4 profit drops 29 per cent

Feb 1, 2012, 11:26 GMT

Stockholm - Swedish heavy-vehicle maker Scania on Wednesday said fourth quarter net profit in 2011 had dropped 29 per cent year-on-year, blaming higher costs and the strong Swedish currency.

The net profit of 2.1 billion kronor (311 million dollars) compared with 3 billion kronor in the corresponding business period 2010.

Chief executive Leif Ostling said the outlook for 2012 was 'difficult to assess, especially in Europe in light of the economic policy problems in the eurozone.'

Demand also decreased in several markets during the quarter, with a fourth quarter decrease in bookings from Western Europe, Russia, Brazil and the Middle East.

To tackle the lower demand, the group said it had lowered its daily production rate - most recently by 15 per cent in January - and would not extend temporary contracts for 1,900 employees.

The group had about 37,500 employees at the end of the year, compared to about 35,500 at the end of 2010.

But full-year net sales increased 12 per cent year-on-year to 87.6 billion kronor while net income was up 4 per cent to 9.4 billion kronor, Scania said.

An older truck fleet in Europe meant more service hours, which was good for the vehicle-maker's service business, Ostling said.

Fourth quarter net sales were up 2 per cent year-on-year to 22.8 billion kronor.

Scania truck deliveries for 2011 increased 27 per cent to 72,120 units, while order bookings increased 3 per cent.

Bookings for buses rose 12 per cent to 7,707 units during 2011, but declined by a fifth in the fourth quarter.