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UPDATE 1-Scania sees weak Europe market but is "muddling through"
September 26, 2012 / 2:00 PM / 5 years ago

UPDATE 1-Scania sees weak Europe market but is "muddling through"

* CFO says sees same weak trend in Q3 as in H1

* Says global economy and Scania "muddling through"

* CEO sees deliveries of 150,000 vehicles in next demand peak

By Niklas Pollard and Helena Soderpalm

SODERTALJE, Sweden, Sept 26 (Reuters) - Swedish truck maker Scania said on Wednesday market conditions in Europe looked weak for the third quarter and uncertainty over demand had never been greater, but that the company was "muddling through".

The firm, controlled by Volkswagen AG, sells roughly half its trucks in Europe. It said there had been slowing demand in the first and second quarters, with customers short on credit amid the euro zone debt crisis.

"We see this trend continuing in the third quarter," Chief Financial Officer Jan Ytterberg said at a company presentation. "The global economy is muddling through and Scania is doing the same thing."

Activity in South America has also tumbled due to an economic slowdown and new emission rules in Brazil.

Truck markets are highly cyclical and sensitive to swings in the economic climate, leaving much uncertainty about what kind of market manufacturers will encounter as they come out of the customary lull of the European summer vacation period.

"It remains pretty stable, but we need to add the question mark that we have just come back from the vacations and decision-makers at transport companies have not made a decision on capacity," Ytterberg told Reuters on the sidelines of the event.

"As of today, it is stable ... but it is too early to say how the rest of the autumn will look," he said of the European market.

Chief Executive Martin Lundstedt said uncertainty over market demand had never been greater.

Domestic Scania rival Volvo, global No.2 after market leader Daimler, this week painted a bleak picture of the European market, saying demand was slowing across the region while prices were under pressure.

Lundstedt, who has been at Scania for 20 years, took the helm of the company this month from Leif Ostling, who during nearly two decades as CEO led the Sodertalje-based manufacturer to a level of profitability envied by rivals.

Lundstedt said Scania was looking to nearly double its deliveries to 150,000 vehicles a year when the truck market reached its next peak in demand and that the group also expected to grow its service business as a proportion of sales.

Scania delivered about 80,000 vehicles last year. The company said it expected a total global market of 2.36 million vehicles at the next demand peak. ($1 = 0.7715 euros) (Reporting by Niklas Pollard and Helena Soderpalm; Editing by Pravin Char)

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