Scania AB, the Swedish maker of heavy
trucks and buses reported a 26 per cent increase in first-quarter
operating income at its financial services division but a drop in
vehicle orders and economic uncertainty suggests slower portfolio
growth ahead.

Operating income compared with a year ago rose to SEK152m (€16m)
as it delivered 8 per cent more trucks and buses during the
quarter. At the end of March, its financial services portfolio
amounted to about SEK38.5bn (€4.1bn), rising by SEK160m (€17m)
since end 2007.

In the first quarter, financing volume rose by 7 per cent to
SEK5.2bn (€557m), equivalent to a penetration rate of 34 per cent
on a rolling 12-month basis in markets where it offers financing to
customers, the company said. Intense competition in markets outside
the EU, however has caused penetration rates to fall.

Total assets at the financial services unit amounted to
SEK39.9bn (€4.2bn) while total equity amounted to SEK4bn (€430m) at
the end of March.

Overall the group enjoyed a 21 per cent rise in net profit to
SEK2.5bn (€268m) and an operating margin of 16.4 per cent but the
company reported a 27 per cent decline in order bookings to 20,226
units at the end of the quarter from the exceptionally strong
27,637 units reported a year ago.

Order bookings however, are still outstripping deliveries,
Scania said. Delivery lead times have increased to between 9 and 12
months compared to the normal 3 to 4 months.

“This, in combination with uncertainty about economic
developments, is causing customers in Europe to hold off on
submitting orders. Demand remains strong in Russia and other CIS
countries, Latin America and the Middle East. Our plan remains to
increase production to an annual rate of 90,000 vehicles by
year-end 2008 and to have an installed technical capacity of
100,000 vehicles by the end of 2009,” president and CEO, Leif
Ostling said in a statement.

Scania is forecasting an average annual sales increase of over
10 per cent up to 2009.