Despite fluctuations in demand and supply chain disruptions in 2020, Scania saw a rebound in truck orders in the latter part of the year.
The Swedish-based truckmaker recently reported its full year results for the 01 January to 31 December period in which it competed valiantly to support its customers with services and parts amid the global challenges caused by COVID-19.
Net sales decreased by 18 per cent across the board to $189.6 million while operating income, as to be expected, decreased by 49 per cent.
According to Henrik Henriksson, Scania President & CEO the priority for the company was to manage operational and financial impacts on the businesss. This involved limited costs and preserving cash ahead of impacts on its order intake and delivery capacity.
“The pandemic also accelerated the need for structural cost reductions in view of Scania’s long-term ambitions,” he said in a statement.
“To be able to continue making large-scale investments in new technologies that support the transformation to sustainable transport, painful but necessary decisions had to be taken, resulting in the closure of production facilities and staff reductions,” said Henriksson.
The number of employees at the end of 2020 totalled 50,011 compared to 51,278 on the same date in 2019.
During 2020, order intake for trucks increased by 9 per cent and the strongest upturns were seen regionally in Eurasia, Latin America and Asia.
Scania’s total truck deliveries increased by 3 per cent to 23,456 units during the fourth quarter compared to the year-earlier period.
In Africa and Oceania, order intake increased by 89 per cent compared to the fourth quarter of 2019. These numbers were mainly related to strong sales numbers reported in South Africa and New Zealand, where the combined order intake amounted to 1,644 trucks.
“In the fourth quarter of 2020, vehicle deliveries were almost back to the previous year’s level. Cash flow in Vehicles and Services was strong thanks to Scania’s demand-driven output principle in production and efficient inventory management,” said Henriksson.
“Our structural cost transformation efforts continued in the fourth quarter. In Financial Services, customers’ need of rescheduling their payments of financial contracts returned to more normal levels in the second half of 2020 and by the fourth quarter, the vast majority of our customers had returned to their previous payment plans,” he said.
Data gathered from connected Scania vehicles, according to the report, showed continued good transport activity, particularly in the long haulage, distribution and construction segments.
It also confirmed the investment need, which Henriksson said was reflected in Scania’s order books.
“Order intake for trucks increased by 55 per cent 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,” he said, noting a strained supply chain was likely to cause production disruptions and increase costs going forward.
“Throughout this turbulent year, we remained focused on our commitment to decarbonise our product portfolio. 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,” continued Henriksson.
“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 percent.”
Last year also marked the closing of a strategy that was put in place to increase Scania’s focus on growth. Increased market share, sales volume and service penetration confirmed the company had made strong progress in all three categories.
The introduction of digitalisation and sustainability has ensured Scania now has a foundation in place that it can leverage in future as it turns its attention to what Henriksson refers to as a ‘new strategy era’.
“We are in a period of transformative change – a time when the industry will experience some of the greatest shifts in its history,” he said.
“As electrification and autonomous technology disrupts our industry, exciting new business opportunities are emerging. We will reshape our business model in close cooperation with current and new customers to explore these opportunities and use them to drive growth.”
Henriksson acknowledged the company had shifted its focus away from developing products and services to developing solutions.
Scania, to wit, had reached a milestone whereupon more of its engineers at present work in software development than in hardware design.
It had also attracted some of the very best talent globally in the areas of electrification and autonomous solutions according to Henriksson.
“If not before, the pandemic has made it evident that transport really is the lifeblood of a functioning society. As the first wave of lockdowns began to take hold, our priority was to keep our customers on the road, and help ensure that critical supplies of medicine, equipment and food could get to hospitals and stores.
“The people at Scania have also shown incredible commitment to helping out society in many different ways.”