Scania eyes COVID rebound

Scania AB has released its year-end report for 2020, and while there's no shortage of red ink the company says there are already green shoots and much cause for optimism for the future.

While orders across the firm's truck and bus business were actually up by five per cent from 2019, with a total of 92,940 units, deliveries plunged by 28 per cent, as the impact of the COVID-19 pandemic and its associated supply chain disruption and business turmoil made its presence felt.

Net sales across the Scania Group were down 18 per cent while operating income nearly halved (down 49 per cent), while net income fell by 56 per cent.

"The year 2020 was dominated by the pandemic and we fought hard to support our customers with services and parts to ensure that they could keep their businesses going," said Scania President and CEO, Henrik Henriksson.

"Naturally, our priority was also to manage the operational and financial impacts on our own business as we faced fluctuations in demand and disruptions in the supply chain as a result of COVID-19. We quickly managed to hit the brakes on costs and preserve cash as the pandemic started to impact order intake and delivery capacity.

"The pandemic also accelerated the need for structural cost reductions in view of Scania's long-term ambitions. To be able to continue making large-scale investments in new technologies that support the transformation to sustainable transport, painful but necessary decision had to be taken, resulting in the closure of production facilities and staff reductions."

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However, Mr Henriksson said the company's fortunes shifted in the second half of last year.

"Towards the second half of 2020, demand for trucks started to rebound strongly, while it remained weak for buses and coaches," he said.

"In the fourth quarter of 2020, vehicle deliveries were almost back to the previous year's level. Data gathered from connected Scania vehicles show that there is continued good transport activity, particularly in the long haulage, distribution and construction segments but also for city buses.

"Order intake for trucks increased by 55 percent in the fourth quarter compared to the year earlier period. After a tough start of last year we are now in a position of strength with a good cost structure ready to leverage the rising demand. However, the situation in the supply chain is strained in many areas, which is causing production disruptions and increased costs. The ongoing COVID-19 pandemic also adds uncertainty."

Positioning itself as a proactive player in the shift to sustainable transport, Mr Henriksson said Scania was pushing ahead with its transformational programme.

"Throughout this turbulent year, we remained focused on our commitment to decarbonise our product portfolio," he said.

"Scania's ability to deliver in the present moment, while at the same time developing tomorrow's fossil-free transport system, was put to the test during 2020. In September, we launched our first fully electric truck range, which will play a key role in reaching Scania's science based climate targets.

"We have also committed to bringing our customers at least one new electric product application in the bus and truck segment every year. By 2025, Scania expects that electrified vehicles will account for around 10 per cent of its total vehicle sales volume in Europe and by 2030 that figure is expected to be 50 per cent."