Scania said it will invest to increase capacity as orders for fleet replacements increased 31% in the first quarter.
During the first quarter sales contracts increased to 20,787 buses and trucks, compared with 15,809 units during the same period last year, and deliveries were up 4%. Net income dropped 22% to $212 million (1.4 billion kronor) and sales fell 4% to 19.3 billion kronor.
“In the longer term, there are good growth opportunities,” Chief Executive Officer Martin Lundstedt said in the statement. “Scania will therefore continue to prioritize investments in core development projects and will extend technical production capacity, as well as expanding the sales and services organization in emerging markets.”
Scania tries to promote new fuel-efficient models to increase sales in an effort to make up for the loss in Europe, where demand for commercial vehicles has dropped for the 14th month in row in February, according to ACEA. This is the second recession in four years for the 17 nations sharing the euro.
At the beginning of this year Scania announced its plans to cut production and jobs in the European market, as sluggish demand here made the company miss its quarterly profit forecast. Scania, majority owned by VW, announced it will cut daily production in Europe by 15% during the first quarter and around 700 jobs.