A MAGAZINE FOR SCANIA’S SHAREHOLDERSQUARTER 3 2013

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

Ready for extremesClimatic wind tunnel speeds adaptation to new markets >PAGES 4–5

Finance. Analysts on Scania’s Capital Markets Day. > PAGES 6–7

Interview. “China’s transport sector is facing major changes.”> PAGE 3

Report. Stronger SEK pulled down margin.> PAGE 2

FIGURE IN FOCUS:

14.1%Market share,

trucks in Europe, fi rst nine months of 2013.

0

4

8

12

16

20% Operating margin

-13 Q3

-11 Q3

-11 Q4

-12 Q1

-12 Q2

-12 Q3

-12 Q4

-13 Q1

-13 Q2

EN01_cover.indd 1 2013-10-28 14:14:34

2 SCANIA VALUE • Q3/2013 www.scania.com

EUROPA

Orderingång

6 329 -15%Leveranser

6 215 -9%

EURASIEN

Orderingång

1 756 -8%Leveranser

1 661 -6%

LATINMERIKA

Orderingång

5 791 +2%Leveranser

4 262 -19%

ASIEN

Orderingång

1 935 -31%Leveranser

1 782 -55%

AFRIKA OCH OCEANIEN

Orderingång

1 114 +10%Leveranser

927 0%

2012 i korthet:LEVERANSERNA minskade med 21 procent till 46 879 fordon.

RÖRELSERESULTATETminskade med 36 procent till MSEK 6 135

KASSAFLÖDETuppgick till MSEK 2 176

FIRST 9 MONTHS IN BRIEF:VEHICLE DELIVERIES rose by 20 percent to56,224 units

OPERATING MARGINamounted to 9.6% (10.7)

EARNINGS PER SHAREdecreased by 11 percentto SEK 5.30

(SEK m. unless otherwise noted) 2013, 9 mo. 2012, 9 mo. Change in %

Net sales, Scania Group 61,864 57,261 8

Operating income, Vehicles and Services 5,428 5,702 -5

Operating income, Financial Services 511 433 18

Operating income 5,939 6,135 -3

Income before taxes 5,925 6,156 -4

Net income for the period 4,233 4,750 -11

Operating margin, % 9.6 10.7

Return on equity, % 17.6 20.2

Return on capital employed, Vehicles and Services, % 21.0 25.2

Earnings per share, SEK 5.30 5.94 -11

Cash fl ow, Vehicles and Services 1,362 2,176 -37

Number of employees, 30 September 40 739 38 580

Order bookings (units, trucks and buses) 65,160 52,320 25

Deliveries (units, trucks and buses) 56,224 46,879 20

0

5,000

10,000

15,000

20,000

25,000

0

500

1,000

1,500

2,000

2,500

3,000

3,500

0

4

8

12

16

20

2013

Q3

2011

Q3

2011

Q4

2012

Q1

2012

Q2

2012

Q3

2012

Q4

2013

Q1

2011

Q3

2011

Q4

2012

Q1

2012

Q2

2012

Q3

2013

Q3

2012

Q4

2013

Q1

Trucks 63%

Other 2%Used vehicles 6%

Services 20%

Engines 1%

Buses and coaches 7%

%SEK m. SEK m.

2013

Q2

2013

Q2

Operating income, SEK m.Operating margin, percent

FIRST 9 MONTHS IN FIGURES

Order bookings and deliveries by region, Q3 (number of vehicles)

Net sales by product segment* Net sales Operating income and margin

Key fi gures

*Refers to fi rst nine months of 2013

EUROPE

Order bookings

11,454 +81%Deliveries

7,138 +15%

EURASIA

Order bookings

1,838 +5%Deliveries

1,932 +16%

LATIN AMERICA

Order bookings

4,557 -21%Deliveries

6,128 +44%

ASIA

Order bookings

2,808 +45%Deliveries

1,924 +8%

AFRICA AND OCEANIA

Order bookings

1,152 +3%Deliveries

1,122 +21%

EN02_rapporten.indd 2 2013-10-28 14:14:14

TEXT: CONNY HETTING PHOTO: DAN BOMAN

Scania China has grown rapidly in recent years. Its two large offi ces in Beijing and Shanghai have now been supplemented by the new facil-ity in Guangzhou, which is also the fi rst vehicle dealership to be wholly-owned by a Western manufacturer.

“For Scania China, this is a milestone and represents a fantastic opportunity to get even closer to our customers while gaining deeper knowledge about how the Chinese transport market operates,” says Harborn.How does the company’s own dealership in Guangzhou fi t into Scania’s plans for China?

“We will use it to develop and help our non-captive dealerships all over China to work according to Scania standards. Meanwhile, the facility will also serve as a home for Scania China. It houses a Pre-Delivery Centre where fi nal adaptation of vehicles is carried out for each customer as well as a training centre, which aims to supply Scania’s service network in China with professional service technicians – all aimed at supporting Scania’s continued growth in China.”

How does Scania’s position in China look today?

“We have ten successful years behind us dur-ing which we have built up a strong position among the more advanced Western transport companies in the country, based on organic growth. Scania’s business model in the heavy truck segment works well in the Chinese market and we don’t need to change our concept since the focus is increasingly shifting from purchase price to vehicle uptime and fuel effi ciency. This is where we differ from other Western vehicle manufacturers that instead concentrate on locally-adapted vehicles produced in collabo-ration with Chinese manufacturers.”Scania conducts a very active dialogue with customers and decision-makers in China in order to modernise the country’s transport and logistics industry. What kind of feedback have you received?

“Our strategy is gaining respect among the Chinese authorities. They are fully aware that high transport and logistics costs point to an ineffi cient transport system, which is hurting the growth potential of the Chinese economy. In China, transport and logistics costs total about 18 percent of overall GDP. Reducing this fi gure by one percentage point would save USD 73 billion. Pressure for a more effi cient logis-tics system is also coming from multinational companies that have established production in China. They have higher logistics demands when it comes to uptime, fuel effi ciency and environmental impact.”How can Scania benefi t from improving the effi ciency of China’s transport services?

“In general cargo, there are now 800,000 transport companies, with an average of 1.7 trucks each. So the market is very fragmented and characterised by limited knowledge about transport and logistics. Companies often have poor profi tability. We can thus expect substantial consolidation; some analysts are talking about a reduction to 80,000 transport companies. In order to survive, you have to be better than the others and have higher profi tability. The advan-tages of having such a strong partner as Scania will thus become more evident every day.”

INTERVIEW

• SCANIA VALUE 3Q3/2013www.scania.com

“A milestone for Scania in China”

“The advantages of having such a strong partner as Scania will thus become more evident every day.”

Mats Harborn, Executive Director, Scania China Strategic Centre

The newly constructed dealer-ship facility in Guangzhou will play an important part in boost-ing Scania’s presence in China. Mats Harborn, Executive Direc-tor of the Scania China Strategic Centre, now sees great opportu-nities as the country’s transport industry is modernised and consolidated.

EN03_intervju.indd 3 2013-10-28 09:27:47

4 SCANIA VALUE • Q3/2013 www.scania.com

From Siberian ice to Saharan heatHere is Scania’s latest investment in innovation. Vehicles are tested in the new climatic wind tun-nel to ensure they can cope with extreme weather conditions in future markets.

An arctic storm is raging on top of “The Mountain”, as the Scania Technical Centre in Södertälje, Sweden is familiarly known. But sub-zero temperatures (-35 degrees Celsius) can swiftly shift into a hot desert storm. All possible climatic and weather conditions can be simulated in Scania’s climatic wind tun-nel. After years of intensive engineering work, the SEK 400 million investment is now ready to challenge each test vehicle with extreme weather conditions.

Now that Scania is planning for growth in markets such as China, India, Indonesia and Africa, the climatic wind tunnel is an impor-tant tool for developing vehicles and services adapted for special customer needs and local conditions.

“This is the first climatic wind tunnel in Europe adapted for full-size trucks and buses and probably the only one in the world,” says Project Manager Lars Hult.

This offers several advantages: Winter tests can be carried out in the middle of summer without needing to transport prototypes to a location with the right climate. The company also avoids having to rely on unpredictable natural weather conditions.

Shorter lead times The facility will play an important part in opti-mising future vehicles when it comes to fuel efficiency, improved uptime as well as lower noise and emissions. These parameters can be measured and analysed in widely differing climatic conditions. Comprehensive tests will mean even higher quality. Lead times for devel-opment of new products can also be shortened.

“Repeatability is a great benefit,” says Hult. “We can test again and again under exactly the same conditions until we have the answers we need. This isn’t possible in reality.”

Another advantage is that the company can conduct vehicle tests which focus on various types of applications. It is important for Scania to test the performance not only of the chassis but also of different superstructures, such as tipper trucks for construction and mining operations, concrete mixers and timber trucks. Fully-built buses are another area where testing possibilities were previously limited to field tests.

Each test run in the tunnel takes at least a day and up to a week to complete. Next to the test cell is a large hall where the vehicle is prepared before being driven in. Once inside the test cell, it is parked on rollers – one for each set of wheels, enabling simulation of speeds of up 100 km/h, the maximum for many trucks and buses. At the front end of the cell is a huge air nozzle, with a surface area of 13 square metres, from which air is forced over the vehicle. Snow or rain is also pumped through the nozzle when required.

Developed in-house The software used to communicate with the vehicle in the tunnel was developed in-house,

“We can test again and again under exactly the same conditions

until we have the answers we need.”

Lars Hult, Project Manager for Scania’s climatic wind tunnel

FOCUS: INNOVATION

EN04-5_tema.indd 4 2013-10-28 09:27:30

www.scania.com • SCANIA VALUE 5Q3/2013

Scania’s Technology Road Map (TRM) describes the knowledge that the company will need over the next 20 years in order to ensure that the necessary competencies are in place.

Looking ahead towards 2030, the TRM lays the groundwork for developing technologies as diverse as inter-vehicle communication, alternative fuels and new composite materials.

“It has forced us to define what goals we want to aim for. It’s not about what exact customer solutions we should develop, but rather what we feel is needed so we can develop these in the future,” says Tony Sandberg, Head of Scania’s Research Support Office.

Here are some of the innovations and technological solutions that Scania is working on in the short and long term:

Automated queue assistance – an autopilot in trucks that can take over operation in traffic jams and follow surrounding trucks in a motorway queue. The driver can then take care of adminstrative work in the cab, for example.

Platooning – truck driving in convoys – is a system featuring computers, advanced radar and Wi-Fi systems that allows trucks to operate in a tight formation. This enables them to reduce air resistance, thereby saving fuel.

Electrification – Scania has initiated collaboration with various partners on electrically powered vehicles and is focusing on two different methods of power supply – either from electrified roadways or from overhead cables.

TEXT: HANNAH KIRSEBOM, PER-OLA KNUTAS, PETER MATHSSON PHOTOS: DAN BOMAN, PEGGY BERGMAN, KJELL OLAUSSON

allowing Scania to adapt the facility as the test vehicles change.

Erik Söderberg, Senior Engineer at Scania, has been involved in the project since the early pilot studies in 2008. He points out that Scania can now test secret prototypes in realistic envi-ronments, or as close to reality as you can get.

“Many of the tests are completely new in the truck world,” says Söderberg. “For instance, now for the first time we can measure emissions under realistic operating conditions. And above all, it’s quite novel and incredibly efficient to be able to carry out all kinds of tests in the same rig.”

Test Cell Operator Per-Arne Brodd is inside the test cell,

where the lowest possible temperature is minus 35

degrees Celsius – cold enough to enable frost to build up.

Looking towards 2030

1

2

3

The new climatic wind tunnel offers the possibility of testing the vehicles of the future. The comprehensive tests will mean even higher quality and shorter lead times.

EN04-5_tema.indd 5 2013-10-28 09:27:41

6 SCANIA VALUE • Q3/2013 www.scania.com

FINANCE: CAPITAL MARKETS DAY 2013

Scania’s path towards 2020

“To succeed we must move more towards being an integrated part of our customers’ business. We must continue to develop our business model and find various ways of affecting and improving customer profitability,” said Presi-dent and CEO Martin Lundstedt at Scania’s Capital Markets Day on 19 September, which focused on growth opportunities up to 2020.

A number of analysts appreciated the Scania’s management’s clarity regarding the future direction of the company.

“The messages regarding objectives and

direction were very clear,” said Olof Larsham-mar, equity analyst at the Swedish private bank Erik Penser.

A common denominator for all Scania mar-kets is that volume is gradually shifting to the heavy truck segment, in which Scania operates.

Henrik Henriksson, Head of Sales and Mar-keting, said Scania expects that the European markets will start to recover, which implies higher volume.

In growth markets such as Asia, Eurasia, India and Africa, it’s about building a presence

to gain market shares when higher standards for transport efficiency take effect.

Christian Levin, Head of Commercial Opera-tions, explained that Scania will boost its mar-ket share on the service side while broadening its services portfolio. This will boost growth.

“Fuel efficiency and uptime are extremely important for our customers, and services are becoming increasingly important in enabling us to deliver this,” he said.

Lundstedt emphasised the importance of adopting a holistic approach and of working together with both transport companies and buyers of transport services.

Building sustainable transport solutions requires close collaboration in order to work on continuous improvements. Here, he empha-sised the “Ecolution by Scania” product and

Scania is well-positioned for growth up to 2020. There is global potential to deliver 120,000 trucks per year by 2020 and an ambition to increase service-related products to 25–30 percent of total sales, said Scania’s President and CEO Martin Lundstedt at the company’s Capital Markets Day in Södertälje, Sweden.

During the afternoon, participants had the opportunity to take part in four differ-ent activities: presentations of Scania’s China strategy, the Climatic Wind Tunnel and Scania Streamline and a chance to test-drive Scania Streamline trucks. Jens Hedar and Johan Leteus, analysts from Svensk Exportkredit, in discussion during the coffee break.

“The afternoon provided a fantastic opportunity to get a deeper understanding and a better insight into Scania’s operations and products,” said Leteus.

EN06-7_finans.indd 6 2013-10-28 09:27:19

www.scania.com • SCANIA VALUE 7Q3/2013

TEXT: SUSANNA HJERTONSSON PHOTO: PETTER MAGNUSSON

service package and presented an example from Spain where Scania, working together with the customer, reduced fuel consumption and carbon dioxide emissions by 16 percent over a nine-month period.

Lundstedt also addressed the issue of how the cooperation in the Volkswagen group is proceeding. A number of feasibility stud-

ies have shown attractive synergy opportuni-ties for Scania, in areas such as axles, gear-boxes, common components and hybrid drive components.

During the afternoon, participants were given the opportunity to take part in four differ-ent activities: presentations of Scania’s China strategy, the Climate Wind Tunnel and Scania

“The management’s messages regarding objectives and

direction were very clear.” Olof Larshammar, equity analyst at Erik Penser

Streamline and a chance to test-drive Scania Streamline trucks.

“This provided a fantastic opportunity to get a deeper understanding and a better insight into Scania’s operations and products,” said Johan Leteus, credit analyst at Svensk Exportkredit.

“The Climatic Wind Tunnel made it obvi-ous that Scania is well ahead of its competitors when it comes to developing trucks,” comment-ed Olof Larshammar of Erik Penser.

Mats Harborn, Executive Director of the Scania China Strategic Centre, said that Scania sees good opportunities for the company’s brand and premium trucks in the Chinese market (see interview, page 3). “As the market is consolidated and logistics and transport solutions are con-centrated towards fewer players, demand for our premium trucks will grow,” said Harborn.

During the morning, presentations were given by Scania’s management. From the left: Christian Levin, Head of Com-mercial Operations; Henrik Henriks-son, Head of Sales and Marketing; Jan Ytterberg, CFO; and Martin Lundstedt, President and CEO.

“The new management team has done its homework and seems to work very well together,” commented one analyst.

EN06-7_finans.indd 7 2013-10-28 09:27:26

Arne Karlsson, President of Bring Frigo Åkeri.

UPCOMING EVENTS29 January 2014Year-end Report 2013

25 April 2014Interim Report January–March 2014

18 July 2014Interim Report January–June 2014

IN BRIEF EDITOR: PER-OLA KNUTAS PHOTOS: KASPER DUDZIK, WAGNER MENEZES, SCANIA

The world’s first Euro 6 gas truck

Kicking off the World Cup

The Arena Corinthians stadium in São Paulo.

During the autumn of 2013, Scania is introducing Eco-roll, an advanced system with the potential to lower customer fuel costs by up to two per-cent. The system calculates when a truck should use gravity to roll in neutral gear on descents.

Customers in Europe who now order a truck with Scania Opticruise and Active Prediction

The Brazilian construction firm Concreserv uses Scania trucks to deliver concrete for one of the 2014 football World Cup venues in Brazil: the Arena Corinthians in São Paulo. The opening cer-emony will take place at the Arena, which will then become the home stadium of the Corinthians Paulista team, five-time Brazilian champions.

To handle the assignment, Concreserv has invested in 15 new Scania P 310 8×4 concrete mix-ers. Márcio Pardini, commercial director of the company, says that the payload, torque, high reli-ability and low maintenance costs of the Scania vehicles were the decisive factors behind choosing them: “Other manufacturers’ vehicles ena-bled us to carry up to 17.5 tonnes per trip. With Scania it’s nearly 25 tonnes, which allows us to boost our productivity.”

Scania utilises gravity to save fuels

Scania has now delivered the first gas-powered truck complying with the new Euro 6 emission legislation that will take effect in the EU from 2014. The world’s first such truck has been put into service in Sweden by Bring Frigo.

“We are keen to give our customers access to the latest in environmental technology,” says Arne Karlsson, President of Bring Frigo Åkeri AB. “The new distribution truck from Scania displays impressive performance and, running on biogas, emissions of harmful substances and CO2 are very low.”

Bring Frigo, which is part of Norway Post (Posten Norge), is the Nordic region’s largest supplier of food transport services, with opera-tions all over the world.

will be able to save fuel and money from the first quarter of 2014 by using the new Scania Eco-roll feature. The truck itself calculates what is most fuel efficient: rolling down large hills with the transmission in neutral and the engine idling, or using engine braking with the fuel supply switched off.

Scania Eco-roll allows more fuel-efficient driving.

Scania Value is published by Scaniaand targeted to Scania shareholders.

PublisherPer Hillström, ir@scania.comEditor-in-Chiefanneli.volden@scania.comProject Managerper-ola.knutas@appelberg.com Art Director karin.soderlind@appelberg.comProductionAppelberg Publishing Groupwww.appelberg.comPrinting: Trosa TryckeriCover photo: Dan Boman

ContactScania Investor Relations SE-151 87 Södertälje, SwedenTel: +46 8 553 81 000E-mail: ir@scania.com

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

EN08_notiser.indd 8 2013-10-28 14:14:19