MercoPress. South Atlantic News Agency

Slower truck sales in Brazil hit Sweden’s Scania second quarter profit

CEO Leif Oestling: disruptions in the supply chain resulted in higher costs

Swedish truck-maker Scania controlled by Germany’s Volkswagen, reported second-quarter profit that missed analysts’ estimates as orders in Brazil slowed. Net income in the quarter rose to 2.43 billion kronor (380 million USD) from 2.37 billion kronor a year earlier, the company said in a statement.

Order bookings declined “significantly” in Latin America, mainly because of a weakening in Brazil, Scania’s largest market.

Scania, based in Soedertaelje, Sweden, has the best operating margin in the business and is considering a merger with MAN SE in Germany to create Europe’s largest manufacturer of commercial vehicles.

Sales climbed 12% to 23 billion kronor while the operating margin declined to 14.4% from 17% a year earlier. Total orders rose 8% to 22,646 trucks and buses.

Scania experienced disruptions in its supply chain in the first half of the year, Chief Executive Officer Leif Oestling said. This “impacted the manufacturing and resulted in higher costs in order to ensure quality and delivery precision,” he said in the statement. “There is a continued risk of bottlenecks”.

Squeezed supply include lack of enough tires after manufacturers such as Michelin & Cie scaled back production in 2009, Oestling said in an interview in Stockholm.

“We can’t send out the vehicles with any tires,” he said. “Customers are very specific about the brands and the dimensions they want.”

Registrations of heavy commercial vehicles in the European Union rose 62% this year through May compared with the same period last year, to 100,089 units, the European Automobile Manufacturers Association said last month.

Scania was first among European truck-makers to publish second-quarter figures. Swedish rival Volvo AB will report earnings Friday. Daimler AG, the world’s largest truck-maker, is scheduled to publish figures July 27, while MAN on July 28.