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UPDATE 1-European pre-buy drives surge in Scania orders
October 23, 2013 / 8:14 AM / 4 years ago

UPDATE 1-European pre-buy drives surge in Scania orders

* Q3 order intake +29 pct yr/yr vs forecast +20 pct

* European truck orders soar 84 percent

* Buying of older, cheaper trucks lifts orders

* EBIT 1.97 bln SEK vs forecast 2.03 bln (Adds quotes, detail, background, share)

STOCKHOLM, Oct 23 (Reuters) - Truck maker Scania posted a bigger than expected rise in third-quarter order bookings on Wednesday as European customers rushed to buy older models before sales are halted due to new emission rules coming into force at year-end.

Scania, majority owned by Germany’s Volkswagen, said its order intake surged 29 percent year-on-year in the quarter to 21,809 vehicles, easily topping the 20 percent gain seen in a Reuters poll of analysts.

Europe’s heavy truck makers have seen orders climb in recent quarters, if from low levels, due to a growing need to replace ageing fleets and a buying spree of so called Euro 5 trucks that typically cost roughly 10,000 euros less than their successors.

“Order bookings in Europe improved significantly, also compared to the second quarter even though the third quarter is normally seasonally weaker,” Scania said, though adding the pricing environment had remained competitive.

“In Scania’s assessment, demand was supported by customers that are investing in Euro 5 vehicles before year-end.”

Scania, which has hiked output due to the better activity, said order intake of trucks in Europe, which accounts for roughly half its business, soared 84 percent while they eased in Latin America in the face of strong year-ago comparisons.

Latin America has provided a boost over the past year as incentive schemes in mainly Brazil have helped drive up demand.

While truck makers are basking in good demand now, a hangover may to be in store heading into the new year.

European demand is likely to ease once sales of the Euro 5 trucks are halted while the Brazilian government is expected to scale back the generous subsidies that has swelled the truck market in Latin America’s biggest economy.

Operating profit at Scania, which at the behest of its German parent is strengthening ties with likewise VW-controlled MAN SE, rose to 1.97 billion crowns ($309.19 million) from a year-ago 1.88 billion, just short of the 2.03 billion seen by analysts.

Scania is the first of Europe’s major heavy-duty truck makers to report on the third quarter with Daimler due on Thursday, AB Volvo on Friday and Germany’s MAN SE on Tuesday next week.

Shares in the Swedish truck maker rose 1.6 percent by 0754 GMT while local rival Volvo gained 0.4 percent. ($1 = 6.3715 Swedish crowns) (Reporting by Niklas Pollard and Helena Soderpalm, editing by Alistair Scrutton)

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