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UPDATE 1-Scania to raise output as European markets speed up
July 19, 2013 / 8:06 AM / 4 years ago

UPDATE 1-Scania to raise output as European markets speed up

* Says to raise production in Q3, again in Q4

* Q2 order intake +15 pct yr/yr vs forecast +5 pct

* European orders up 25 pct yr/yr

* Q2 profit 2.0 bln SEK vs forecast 2.3 bln (Adds detail, background)

By Niklas Pollard and Helena Soderpalm

STOCKHOLM, July 19 (Reuters) - Truck maker Scania said on Friday it will raise production in the coming months as an upturn in demand in the long-suffering European market gathered pace, lifting its order intake in the second quarter.

While a smaller than expected rise in earnings, dented by a strong Swedish currency and price pressure, weighed on Scania shares, the company’s upbeat stance on demand is a positive sign for a hard-hit truck industry across Europe.

The truck maker, majority owned by Volkswagen, said a pick-up in orders of heavy-duty commercial vehicles seen in the early months of the year had carried into the second quarter as the European market edged further into recovery.

Scania, which at the behest of its German parent is strengthening ties with VW-controlled MAN SE, said orders bookings of its trucks and buses rose 15 percent year-on-year in the second quarter versus a 5 rise seen by analysts.

In Europe alone, truck orders were up 25 percent year-on-year while in Latin America, where government incentive schemes have underpinned a boom in sales in regional heavyweights Brazil and Argentina in recent quarters, orders rose 54 percent.

“In light of improved order bookings in Europe, Scania will increase its daily production rate during the third quarter in order to maintain short delivery times,” it said in a statement.

“A further increase is planned, starting in the fourth quarter.”

Europe’s heavy truck makers are emerging from an extended slump in demand due to the euro zone debt crisis and related recession with a growing body of evidence that the need to replace ageing fleets is finally prompting truckers to invest.

Only this week, bearings maker SKF singled out growing business from the truck industry as a driver in a rebound for its automotive business and forecast a further rise in demand in the sector in the third quarter.

Scania is the first of Europe’s major heavy-duty truck makers to report on the second quarter with local rival Volvo and Germany’s Daimler both due on Wednesday and MAN SE the following week.

Operating profit at Scania rose to 2.04 billion crowns ($309.15 million) from a year-ago 1.93 billion to come in short of a mean forecast of 2.31 billion in a Reuters poll of analysts. ($1 = 6.5988 Swedish crowns) (Reporting by Niklas Pollard and Helena Soderpalm; Editing by Alistair Scrutton)

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