Scania cuts jobs, investment as truck orders slow

Truck maker Scania is preparing for an uncertain year by cutting more staff and delaying investments after truck orders softened in the second half of 2011 and its quarterly earnings undershot.

Like other truck makers, Scania saw a boom in demand in 2010 and early 2011 as the global economy picked up, meaning that truck deliveries hit a record of 72,120 units last year.

But the European debt crisis, the Arab Spring and a shift to new engines in Brazil hit its performance in the latter part of last year.

"The outlook for 2012 is difficult to assess, especially in Europe in light of the economic policy problems in the euro zone," Chief Executive Leif Ostling said in a statement on Wednesday.

The Swedish group had already announced production cutbacks in anticipation of weaker demand.

It said on Wednesday that 1,900 temporary staff would not have their contracts extended, more than the 1,000 it had spoken of earlier.

"Scania is also deferring some investments and is more restrictive in recruitment and spending," it added. Scania shares were down 4.4 per cent after the statement.

Fourth-quarter operating profit was 2.74 billion crowns ($402.38 million), below a forecast 3.28bn crowns in a Reuters poll and last year's 3.73bn.

The operating margin came in at 12.0 per cent in the final quarter of 2011, below the 14.2 per cent forecast.

"Order bookings for trucks decelerated during the second half of 2011," Ostling added.

Southern Europe had a lower level of orders throughout the second half compared with the first half while northern Europe was "somewhat weaker" in the fourth quarter.

In the Middle East, where popular revolts have overturned some authoritarian governments, orders decelerated significantly during the second half, compared with the first half, to a very low level in the fourth quarter.