Interview. Xxxx xxx xxxxxx xxx xx xxxxxx xxxx xxxx xxx xxxxxx xxx. > SID 3

Stock market. Xxxx xxx xxxxxx xxx xx xxxxxx xxxx xxxx xxx xxxxxx.> SID 6–7

Report. Xxxx xxx xxx xxx xxx xxx xxx xx xxx.> SID 2

FIGURES IN FOCUS:

XXXXxxxxx xxx xx

xxxx xxxx xxxxx xxx xxxx xxxxx xx.

8

11

14

17

20% Rörelsemarginal

-06Kv4

-07Kv1

-07Kv2

-07Kv3

-07Kv4

-08Kv1

-08Kv2

-08Kv3

-08Kv4

Xxxxx xxxx xxxxxxxx xx x xxxxxx xxxxx. > SID 4–5

Interview. Klas Dahlberg wants growth in the bus market.> PAGE 3

Focus. R&D creates better customer relations.> PAGE 4–5

Report. Lower deliver-ies and capaci-ty utilisation pulled down the margin. >PAGE 2

A mAgAzine for scAniA’s shAreholders quarter 1 2012

FIGURES IN FOCUS:

1,763Cash flow (SEK m) in

Vehicles and Services.

Investment in IndiaA huge economy with strong growth. > PAGES 6–7

0

4

8

12

16

20%

-10 Q1

-10 Q2

-10 Q3

-10 Q4

-11 Q1

-11 Q2

-11 Q3

-11 Q4

Operating margin

-12 Q1

12SCV1_01_omslag_6063.indd 1 2012-05-03 16:42:52

2 SCANIA VALUE • Q1/2012 www.scania.com

(SEK m. unless otherwise noted) 2012, 3 mo 2011, 3 mo Change in %

Net sales, Scania Group 20,127 20,692 -3

Operating income, Vehicles and Services 2,192 3,232 -32

Operating income, Financial Services 131 107 22

Operating income 2,323 3,339 -30

Income before taxes 2,395 3,482 -31

Net income for the period 1,794 2,514 -29

Operating margin, % 11.5 16.1

Return on equity, % 26.2 36.4

Return on capital employed, Vehicles and Services, % 33.5 43.9

Earnings per share, SEK 2.24 3.14 -29

Cash fl ow, Vehicles and Services 1,763 1,129 56

Number of employees, 31 March 37,366 36,253

Order bookings (units, trucks and buses) 15,809 19,457 -19

Deliveries (units, trucks and buses) 16,238 19,065 -15

Order bookings and deliveries by region, Q1 (number of vehicles)

Net sales by product segment Net sales Operating income and margin

Key fi gures

EUROPE

Order bookings

7,430 -8%Deliveries

7,134 -17%

EURASIA

Order bookings

1,468 +29%Deliveries

1,175 -12%

LATIN AMERICA

Order bookings

3,404 -37%Deliveries

4,302 -3%

ASIA

Order bookings

2,674 -33%Deliveries

2,743 -30%

AFRICA AND OCEANIA

Order bookings

833 +1%Deliveries

884 +6%

Q1 IN BRIEF:OPERATING INCOME decreased by 30% to SEK 2,323 m.

NET SALES decreased by 3%to SEK 20,127 m.

CASH FLOWincreased by 56% to SEK 1,763 m in Vehicles and Services.

FIRST 3 MONTHS IN FIGURES

0

5000

10,000

15,000

20,000

25,000

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

0

4

8

12

16

20

Trucks 62%

Other 2%

Used vehicles 5%

Services 22%

Engines 2%

Buses and coaches 7%

%SEK m. SEK m.Operating income, SEK m.Operating margin, percent

2010

Q1

2010

Q2

2010

Q3

2010

Q4

2011

Q1

2011

Q2

2011

Q3

2011

Q4

2010

Q1

2010

Q2

2010

Q3

2010

Q4

2011

Q1

2011

Q2

2011

Q3

2011

Q4

2012

Q1

2012

Q1

12SCV1_02_rapporten_6064.indd 2 2012-05-03 16:42:57

www.scania.com • SCANIA VALUE 3Q1/2012

“Think rail, see bus”Scania is investing strongly in expanded participation in the growing global market for bus systems, with a focus on the bus passenger.

To be a traffic planner in any of the world’s multi-million cities is a major challenge. The global urbanisation trend means that their population and thus traffic is constantly increasing, while the climate is under threat from growing carbon dioxide emissions and fossil fuels resources will probably become scarcer and scarcer.

Klas Dahlberg, who has just taken over as head of Scania Buses and Coaches, believes that these problems represent great opportunities for Scania.

“Public transport systems will have to play a larger role. In the long term, it will not be pos-sible to continue using private cars for transport in the same way as today,” he says.

A number of terms are used to describe the bus industry’s solution to traffic problems, such as BRT (Bus Rapid Transit) or BRS (Bus Rapid System). Scania has chosen the name “Bus sys-tems by Scania”, which implies that the bus itself is just one of the elements. The motto is “think rail – see bus”.

It is a matter of developing route networks where buses have priority over other traffic, either by running on their own streets or in dedicated bus lanes. Boarding and disembar-kation are facilitated either by using low-floor buses or by building bus stops at the same level as the floor of the bus. An infrastructure is built around this for payment and ticket manage-ment outside the vehicles, which shortens waiting time at the bus stop or station. All this results in higher average speed and faster trans-port than travel by car.

More cost effictive “A well-developed system has a very large capacity. For example, in Bogotá, Colombia, there is a solution which can carry 50,000 pas-sengers per hour, says Dahlberg.

Meanwhile, there is another important aspect for the public transport user to consider – namely the cost.

A bus system costs no more than half as much or in many cases just 10-15 percent of what a light rail system costs. It also takes many times longer to construct a light rail system compared to a bus system, which can be built in 1-3 years.

A market that gets what it’s all about is Latin America. Brazil is investing in expanded public transport systems ahead of the football World

Cup in 2014 and the Olympic Games in 2016 and this will predominantly take the form of bus systems.

“In roughly a dozen of the cities where the arenas are found, they are now carrying out extensions and renovations or are introducing entirely new systems which are dedicated to bus traffic,” says Dahlberg.

Aside from Latin America, the market for bus systems is growing mainly in Asian countries such as China, India and Indonesia, but also in Africa and Australia.

“We are now concentrating on expanding our participation in this growing niche. Last year, we had a record high delivery of buses, almost 8,000, and our goal is to reach 15,000 buses by the next peak in demand. Therefore, this is an important market for us,” says Klas Dahlberg.

An important strategy in reaching this goal is to focus on the bus passenger.

“Each time someone chooses to take the bus, it is a small victory for us. To win many such victories, we must help to make it easy and con-venient to take the bus. This means, for instance, using modern IT so that passengers can have a constant connection for their mobile devices throughout the entire system. Time is money but if their time can be used, the trip pays for itself,” he says.

interview text: erik aronsson photo: mark bean

Klas Dahlberg, who has just taken over as Head of

Scania Buses and Coaches.

12SCV1_03_intervju_6065.indd 3 2012-05-03 16:43:01

4 SCANIA VALUE • Q1/2012 www.scania.com

On site where it happensTo boost Scania’s knowledge about how products are used by customers, some employees have left the research and development centre in Södertälje in order to work close to customers in their day-to-day businesses.

Scania wants to continue growing in the future, among other ways by entering new markets and new customer segments. Meanwhile its offering to existing customers must be con-stantly strengthened. The task of Scania’s R&D operations is to effectively develop new prod-ucts and services. A good understanding of the customer’s business is essential if you want to develop products that really match the cus-tomer’s needs. For this reason, there are cur-rently about ten employees from Research and Development placed in local markets around the world.

“We have two aims with this. One is to devel-op our employees’ skills and knowledge, and the other is to develop products that genuinely meet market needs,” says Sven-Åke Edström, Senior Vice President, Truck, Cab and Bus Chas-sis Development.

In the past, the stationing of R&D employ-ees in the field has been partly determined by demand – when a given market asked for such a resource, it then received it. Today, Scania is

focus: R&D in the fielD

working in a more strategic way by choosing the markets it wants to focus on. Employees are currently stationed in Germany, Italy, Latin America, Singapore, Malaysia, India, Indonesia and China, among other places.

“We want to have quite a broad pres-ence out there and gather knowledge from new markets. It is about new geography, for instance the impact of climate and topogra-phy, but it is also about new customer seg-

We want to develop our employees’ skills and knowledge, and develop products that genuinely meet market needs.

Sven-Åke Edström, Senior Vice President, Truck, Cab and Bus Chassis Development.

12SCV1_04_tema___r_d_pa_f_ltet_6066.indd 4 2012-05-03 16:43:06

www.scania.com • SCANIA VALUE 5Q1/2012

TEXT: ERIK ARONSSON PHOTOS: DAN BOMAN, VINAYAK DAS, CARL-ERIK ANDERSSON

Voices from the markets:

“The biggest difference between being on site here in Brazil compared to being at the Scania Technical Centre in Södertälje is all the opportunities to actu-

ally meet customers and work closely with them. Just meeting customers regularly makes me aware of their situation and what their needs are.”

“The absolute best visits are when you get a phone call in the morning and then can visit the customer already that afternoon.

Because if you get there when the problem has already been solved, you miss a big part of your chance to learn something.”

Jörgen Andersson, Product Development Manager, India:

Fatima El Itabi, Development Engineer Exhaust Gas Aftertreatment Systems, Engine Development, Brazil:

Fredrik Swartling, Field Test Engineer, Technical Product Planning & Vehicle Validation, Italy:

“In order to understand the customer’s demands and needs, we must fi rst understand the customer’s business: what are their transport tasks? How much do they use the vehicle? How

often do they perform main-tenance? We have to gain an insight into the customer’s day-to-day business and in this way design the right product for exactly that type of transport service.”

Jörgen Andersson clocks up many kilometres every week by working

with customers out in the fi eld. Here at Kadia O.C.P. (NCI)

in Singrauli he talks to drivers Balram Prasad and Vibo Agarwaj.

Research and Development employees are locally stationed in both mature European markets and emerging markets.

ments, where our products and services face new demands with regard to loads, ranges and capacity utilisation, among other things. Half of our products are sold outside Europe, so it is important that we bear this in mind when choosing where to station R&D employees,” says Edström.

The people who are selected to be local rep-resentatives are those who Scania wants to give an opportunity for professional development, but some years of previous job experience are also required.

“You need to have specifi c knowledge in order to be respected in the markets,” says Edström and adds that the clear majority of those who work in a different market regard the experience as very positive.

“They have gained broader experience and a better understanding of the customer’s day-to-day business and needs. This has also given them a much better foundation for their future career at Scania. And when they come back, we try to fi nd the right challenges so that they can bring what they learned to their new role at Scania.”

Presence on three continents

12SCV1_04_tema___r_d_pa_f_ltet_6066.indd 5 2012-05-03 16:43:09

6 SCANIA VALUE • www.scania.com

Finance: scania in india

Q1/2012

India – a huge, fast-growing economy

12SCV1_05_finans___indien_6067.indd 6 2012-05-03 16:43:14

www.scania.com • SCANIA VALUE 7Q1/2012

text: erik aronsson photos: scanpix, erik ljungberg, istockphoto

Scania’s President & CEO Leif Östling and Henrik Fagrenius (furthest to the right) visit the site of the planned industrial facility in India.

Scania has been represented in the Indian

market since 2007, when a partnership was

initiated with the industrial group Larsen &

Toubro (L&T). L&T has successfully estab-

lished sales of Scania’s trucks and services

and has developed a close partnership with

customers in the mining industry.

In 2011, Scania established the company

Scania Commercial Vehicles India in order to

boost its presence through sales to additional

segments of the Indian commercial vehicles

market.

In early 2012, Scania announced plans to

build an industrial facility near Bengaluru

(Bangalore) during the coming year. The Sca-

nia Regional Product Centre, India will also be

the centre of Scania’s commercial operations

in India.

The industrial operations will consist of

final assembly of truck and bus chassis as

well as bodywork and fitting out of complete

vehicles. The head office of Scania’s Indian

company, complete with a service workshop

and a central parts warehouse, is also being

built at the same site.

“The manufacturing of complete trucks

locally in the country means that we can cut

Scania present in India since 2007

From an economic standpoint, India really is a land of contrasts. With a population of about 1.2 billion people, India is the world’s second most populous country after China and almost one third of its population is estimated to live in poverty. But it also includes a large and growing modern middle class of several hundred million people who have the means to buy cars, TVs, mobile phones, Internet tablets and all kinds of other modern products. According to the OECD, income per capita doubled in India dur-ing the past 11 years.

This in turn means that the Indian econ-omy is undergoing rapid growth – in 2010, India’s GDP increased by more than 10 per-

cent. Admittedly, growth is expected to decel-erate during the next few years as a result of the general deterioration in the world econ-omy, but GDP is still predicted to increase by about 7 percent annually during the period 2011-2013.

In the long term, there are also good pros-pects for continued strong growth in India. According to the OECD, a sustainable growth rate of about 10 percent annually is quite possible.

Continued economic growthThe downside of rapid growth is that is goes hand-in-hand with a high inflation rate and in 2010 Indian inflation was more than 10 percent. To curb this trend, the Reserve Bank of India has raised its key interest rate by 4.75 percentage points to 8.5 percent over a period of almost two years, which also had a moder-ating effect on growth.

“They have had an inflation problem but there is also reason to view their growth positively. There is no doubt that the Indian economy will continue to expand rapidly,” says Mauro Gozzo, Chief Economist at the Swedish Trade Council.

Large investmentsOne factor contributing to this growth is the enormous investments that are planned in India’s infrastructure. When the eleventh Indian five-year plan was unveiled in early 2011, it doubled infrastructure investments to USD 1,000 billion in all.

“They probably need this level of investment, since infrastructural deficiencies are a real problem in India,” says Gozzo.

In other words, there are good reasons to expect strong demand for trucks, buses and coaches and engines in India for many years to come.

With a population of more than 1 billion people and annual economic growth potential of 10 percent, India is a market that offers great opportunities for Scania.

India – a huge, fast-growing economy

lead times further and broaden our product

offering. Our service to customers will also

be improved by having a parts depot in the

country,” says Henrik Fagrenius, Managing

Director of Scania Commercial Vehicles India.

Scania’s ambition is to sell about 2,000 trucks,

1,000 buses and 1,500 engines per year in the

Indian market within the next five years.

Facts on India:ArEA: 3,287,590 km², the

world’s seventh largest country

POPuLAtIOn: About 1.2 billion

(2011), the world’s second most

populous country

GrOSS dOmEStIC PrOduCt: USD 1,632 billion (2010, source

IMF), the world’s ninth largest

economy

CurrEnCy: Rupee (100 rupees

= about 13 Swedish kronor or

1.50 euros)

GdP FOrECASt: 7.3% in 2011,

6.7% in 2012, 7.0% in 2013

(source Swedbank)

CAPItAL: New Delhi

(Sources: ImF, OECd, Swedbank)

12SCV1_05_finans___indien_6067.indd 7 2012-05-04 10:53:00

IN BRIEF editor: erik aronsson photos: dan boman, scania

Scania to invest in more efficient parts distribution

Scania has taken yet another step in its efforts to reduce the climate impact from its own oper-ations. For internal goods transport, Scania has put eight ethanol trucks into service reducing climate-impacting carbon dioxide emissions from transport services in Södertälje by about 70 percent. This is equivalent to the annual carbon dioxide emissions from 12 normal houses that are heated by fossil-based electri-cal energy.

“As a supplier of transport solutions, it is important that we ourselves are in the forefront of sustainable alternatives and demonstrate that sustainability and efficiency go hand in hand,” says Anders Nielsen, Executive Vice President and Head of Production and Logistics at Scania.

Today Scania offers a range of climate- and energy-efficient products and services – Ecolu-tion by Scania – that helps transport companies reduce their carbon dioxide emissions and max-imise earnings in their truck and bus businesses. Ecolution by Scania is a comprehensive solution including optimised vehicles, driver training and continuous monitoring of both vehicles and drivers. Switching to vehicles powered by biofu-els in distribution services will deliver a substan-tial reduction in climate impact.

Fossil-free internal transport services

Major British order

Scania will invest a total of about SEK 400 million in Europe and South America.

Scania has decided to boost its parts distribu-tion capacity. The central warehouse in Europe will be extended and an entirely new parts warehouse will be constructed in South Ameri-ca. A total of SEK 400 million will be invested in these facilities, which will go into service during the first quarter of 2013.

Since 2007, Scania’s central warehouse in Opglabbeek, Belgium has served as the parts distribution hub for the company’s 1,000 or so European dealerships and to the regional

warehouses that supply Scania’s dealerships in the rest of the world. The existing facility will be supplemented with a new 36,500 square metre building.

In South America, the parts supply operation will be moved from São Paulo to the municipal-ity of Vinhedo in the Campinas region, which has developed into a logistics centre for road and air transport services. The new 16,000 square metre building will represent a 60 per-cent increase in capacity.

The British-based companies Eddie Stobart and A.W. Jenkinson Forest Products have signed a joint procurement agreement with Scania in Great Britain totalling 1,000 trucks. They are thus repeating an order for 1,000 trucks made in 2010, which at that time was Scania’s largest single order in the British market.

The deliveries commenced in March this year and will be completed in December 2013. About 300 of the trucks will be delivered during 2012. Most of the vehicles will consist of tractor units from Scania’s R-series, but a large number of G-series trucks will also be delivered.

“The agreement reflects our satisfaction with the high level of support provided by Scania’s dealer network. Scania’s focus on continuous development will allow Eddie Stobart to continue to offer its customers sustainable distribution and a high level of service,” says William Stobart, Chief Operating Officer of the Stobart Group.

COMING EVENTS12 June 2012Capital Markets Day

20 July 2012Interim report, Jan-June 2012

Week of July 30Scania Value Quarter 2, 2012 (on www.scania.com and as a printed version)

Would you like to subscribe?For a free subscription, visit www.scania.com/scaniavalue

Scania Value is published by Scaniaand targeted to Scania shareholders.

PublisherPer Hillström, ir@scania.comEditor-in-chiefanneli.volden@scania.comProject Managererik.aronsson@appelberg.com Art Director karin.soderlind@appelberg.comProductionAppelberg Publishing Groupwww.appelberg.comPrinting: Trosa TryckeriCover photo: Getty Images

ContactScania Investor Relations 151 87 Södertälje, SwedenTel: 08-553 81 000E-mail: ir@scania.com

12SCV1_06_notiser_6068.indd 8 2012-05-04 10:53:05