QUESTIONS AND ANSWERS ETC. * ANNUAL GENERAL MEETING OF SCANIA AB (publ), 5 May 2011

Transcription

1 QUESTIONS AND ANSWERS ETC. * ANNUAL GENERAL MEETING OF SCANIA AB (publ), 5 May 2011 Appendix 9 Claes Zettermarck May I ask the Secretary to report whether any written questions have been submitted for today s AGM? Secretary No, Mr Chairman, no written questions have been submitted. However, we have received advance notice of two questions. The first is from KG Lindvall of Swedbank Robur and the second is from Emelie Westholm of Folksam. KG Lindvall My name is KG Lindvall and I represent Swedbank Robur mutual funds at the AGM. In particular, I would like to direct my question to the Chairman of the Board, Martin Winterkorn. I would like to come back to what you said about the Board examining the possibilities of a merger between Scania and MAN. Volkswagen controls 70.9 percent of the votes in Scania and 29.9 percent of the votes in MAN, which in turn controls 17.3 percent of the votes in Scania. Volkswagen thus has significant holdings in both parties. However, we other shareholders, who constitute a minority with 11.7 percent of the votes in Scania represent as much as 41 percent of the share capital. I would like to emphasise that it is of the utmost importance to us that the work of the Board and its decisions should be based on Scania s interests above all, in other words, its customers and employees, and for the benefit of all shareholders, even those representing a very large minority in respect of the share capital. It would make us feel secure if the Chairman of the Board, Martin Winterkorn, could confirm to us here at the Annual Meeting that these are Volkswagen s intentions as regards a possible future deal between Scania and MAN. I would also like this statement from Swedbank Robur mutual funds and Martin Winterkorn s answer to be included in full in the minutes. Thank you for your attention. Thank you. Would Dr Winterkorn like to answer the question? Board member Hans Dieter Pötsch will answer the question. Mr Pötsch, please go ahead. * Transcript based on tape recording, which the Secretary has edited slightly for better readability.

2 2 (7) Hans Dieter Pötsch Based on the interpreter s translation from German: Well, I can also speak for VW, being a representative of that company, and as a member of Scania s Board. I would like to say that we are well acquainted with the situation. Of course, those of you at this AGM have seen the slide showed about Scania s share price performance. From that, it is difficult to see that there has been any negative influence from having us as a major shareholder in Scania, but I would like to assure everyone that we respect minority shareholders and we are doing our absolute best to ensure that we work in the interests of all shareholders. Thank you very much for that. Then we have a question submitted by Emelie Westholm of Folksam, please go ahead. Emelie Westholm, Folksam For our customers at Folksam, it is important that the companies we invest in take responsibility for sustainability issues. First, I would like to thank the CEO for his presentation, which genuinely focused on sustainability. Above all, I would like to thank him for showing that sustainability means profitability and that there is no conflict between the two. This year, we allowed our customers to vote via our website regarding what questions they think we should raise at the AGMs. Gender equality was a popular answer. I was here two years ago and asked a question concerning Scania s gender equality work and I don t think I need to quote what I asked then. I wonder if the CEO can now tell us what has happened in the company since then. That is my first question. My second question is about fuels. A number of alternative fuels are currently under development in order to replace oil. They all have different advantages and disadvantages and are suitable for different purposes. Scania actively participates in the development of engines for alternative fuels. I wonder if can now describe which of these different alternative fuels has the best potential to function in heavy transport services, and what are the greatest impediments to these types of engines being able to take over from the diesel engine. Thank you. Thank you very much. Yes, gender equality and fuels. Any comments from the CEO?

3 3 (7) Well, we can start with gender equality. We have had an equality plan in place for a very, very long time at Scania. We work on the basis of this, together with our union representatives, with regard to both career opportunities and pay issues. If we first look at the breakdown between men and women in different parts of the company, we can state that we have a different gender distribution in our administration than in other areas, with 60 percent men and 40 percent women, while R&D has a distribution of 80 percent men and 20 percent women. In production and sales, the distribution is 85 percent men and 15 percent women. This is a normal pattern at a very large number of Swedish engineering companies. This is the way it looks, due to the recruitment base we have. In production and sales, there are a lot of technical jobs, so you have to be interested in technology and have technical training, either in practical areas or academically. As regards the more practical aspects of production and service, we can only state that too few young people in the nine-year compulsory school or upper secondary school are studying in technical fields. This is the greatest problem we have. The second problem is that there is a very distorted gender distribution within technical training. The breakdown is 80/20. This makes our recruitment base very distorted as regards gender distribution. This is reflected directly in the gender distribution at our company. It is a little different when we look at research and development. There are more women in this field, and significantly more women when we look at administration. To a very large extent, this reflects our recruitment base from universities, institutes of technology and various kinds of vocational training schools. I can only appeal to everyone here to help in getting more girls to apply for technical training generally. That is where it begins. It begins with the educational system, and it begins with the attitudes of parents and society at large when children enter nine-year compulsory school and when they later go on to various forms of upper secondary school education. We are nothing other than a reflection of the preferences in our society. Looking at female managers, we can say that the majority of our female managers are found in administration. The number of female managers falls when we look at the development side, but out in our markets slightly more women are found at various managerial levels. This is because there are a number of administrative jobs in the sales organisation, such as finance, where there are significantly more women. If we look at the trend in Sweden during the past few years, things are moving in the right direction. There are more and more female managers. Globally, the picture is not as good, but the trend is also in the right direction. If we go back 20 years, the picture was completely different. Over time, there will be more women at higher and higher levels, including the Executive Board. At Scania, we use the principle of internal recruitment a lot. We believe that it is important that you work in an organisation and work your way through an organisation that you develop a network and that you acquire skills from many different jobs on your way up. It is interesting that on the academic side we accept a number of trainees every year from universities and institutes of technology: engineering and business administration graduates. There, we have a totally even breakdown between the sexes, that is, 50/50, and we have seen this over the past 6-7 years. These men and above all women are now entering advanced positions, and within years they

4 4 (7) will naturally be promoted to higher positions. But this takes time. However, our greatest concern is that generally speaking, far too few girls are applying for technical training programmes. This is a major problem. Let me now turn to engines. We have talked quite a lot about this. It is not possible to say what type of fuel will be used in the future. We will have to work with many different types of fuels in our engines. We can say and we usually say, without joking that we can put anything in liquid or solid form that is combustible into our engines. Today, with the help of electronics, we also have very good potential to programme our engines for different types of fuels without needing to mechanically adjust them too much. So it is very much a question of what is available out in the market from different fuel producers and suppliers we adapt our engines to these fuels and also how the existing tax subsidies for various fuels impact the situation in different markets. Thank you very much. Are there any other questions? There was someone down there who wanted to ask a question. Åsa Wesshagen, Swedish Shareholders Association Hello everyone. My name is Åsa Wesshagen and I represent the Swedish Shareholders Association here at the AGM. In good times, when the Management receives variable remuneration, when the Nomination Committee is on good terms with each other, when the Board is working as diligently as it should, when profits are good and when the dividend is enough for half an ice cream in short, when Scania is performing well we shareholders set aside SEK 3.5 billion in 2010 for research. This is a dizzying amount and may lead the visionary-minded to believe that we shall soon be travelling to the moon in a Scania truck. Here at the AGM and in the Annual Meeting, the nature of this research has been described, but not why it is so costly. New legal requirements force Scania to conduct research, and today the focus is on the Euro 6 standards. But there were also emission standards ten years ago. Over the past five years, Scania has invested over SEK 17 billion in research. During the preceding five-year period, the costs totalled just over SEK 9 billion. It seems as if these costs are permanently stuck at a high level, over SEK 3 billion annually, 4 percent of revenue, which is a lot for an engineering company. Has Scania been building up fat in the research organisation? Does it have to be so expensive? That is my first question. My second question relates to financial aspects. A large portion of Scania s interesting-bearing liabilities are attributable to Financial Services. In actual fact, Scania has a net cash position if you just consider Vehicles and Services operations. Is it good not to be indebted? Shouldn t Scania borrow more in order to expand more rapidly and capture market share? You have very good returns on the investments you make. Shouldn t you put your foot down harder on the accelerator, with the help of borrowed funds, in good times like these?

5 5 (7) Thank you very much. Questions about Euro 6 costs and financing of operations. Well, now you will get to learn something you didn t know. The fact is that in the engineering industry, an average of 4 percent goes to research and development over time, and this cost then rises with revenue. When I started here in 1972, research and development costs were also at 4 percent. The level has been constant over a 40-year period. In some years, the level has even been at 4.5 percent. You have to set aside money for development of the company s products, but you must also make other capital investments: machinery, buildings and so on, which adds a further 4 percent, bringing you up to 8 percent. This is very constant in the manufacturing sector. If you look at other successful engineering companies, they are at this level. If you cut back research and development by half, well, then it is not a good company for the shareholders. You will not notice so much in the short term, but you will in the medium or long term. In addition, we have to develop our products not only to meet environmental standards but also to meet customers expectations of us as a good supplier. Customers invest in a Scania so that we can develop our products in the future. That is why they pay a lot for our trucks. That is just the way it is. So I am sorry, it is 4 percent and it will continue to be 4 percent. This is absolutely not a waste. It is money that is very well invested, in order to increase the value of this company. You just have to look at our share price performance over the past ten years. Question 2 concerned the company's indebtedness. Yes, it is totally correct that financial services for our vehicles should be bankable and should be usable as collateral for bank loans. If you look beyond that and consider the industrial side, the fact is we have no indebtedness today, just a net cash position. We have just gone through a period, , when there was no money to borrow at all. At that time we would have been very happy if we had had more cash holdings and less debt, which we of course incurred in 2007/2008 because of really high dividends to the shareholders. I think that most executive management teams in industrial companies feel that it is good to have a solid balance sheet going forward, since this also enables them to maintain long-term development programmes. It has become very common for development programmes to extend over five, six or seven years. These are not weathervanes that shift direction in the short term, from one season to the next. Furthermore, we grew in the region of 7-8 percent annually during this period. Looking ahead towards the goal of producing 150,000 units a year, this implies growth of almost 10 percent annually. A company like Scania cannot grow organically much faster than this while remaining profitable over time. Of course, it is different if you carry out new share issues, which some other companies do. But organically, this company is growing very well.

6 6 (7) Åsa Wesshagen, Swedish Shareholders Association I have a follow-up question. A large proportion of Scania s loans mature this year and next year. What does the rising interest rate situation imply for your financial costs and profitability in Financial Services? Well, it implies very little because in the event of rising interest costs, the price that Financial Services charges its customers will also be higher. So they move in the same direction. In fact, during periods of rising interest rates, the spread between our borrowing cost and the price to the customer usually widens. This increases our chances of earning more money. That is how the financial market operates. Åsa Wesshagen, Swedish Shareholders Association Thank you for your answer. Chairman, Claes Zettermarck Thank you very much. Are there any more questions? Let me also say that there are hostesses with microphones available, so you don t need to come all the way up to the front. We have a question there. Gunnar Tjellström I have a couple of questions. One is a question about how the crisis in the so-called PIGS countries has impacted the company, and then a more general question what does the Executive Board consider to be the advantages of merging Scania with MAN. Thank you. Thank you very much. The first question was about the so-called PIGS countries. Well, there are of course problems with low demand in these markets at present. But other parts of Europe are doing better and better. We also have rather strong sales outside of Europe. Somehow or other, the debt burden will probably be adjusted, and then demand will recover somewhat, but a lot of the demand in Portugal and Spain has been related to construction of roads, buildings and holiday camps. There is not such great demand for this work any longer. They are more or less built out now, but this situation will undoubtedly change. Then as regards the question about MAN, I cannot make any comment in this context. I cannot do that.

7 7 (7) Thank you. So let s see if there are any other questions. That appears not to be the case. So having heard these questions and answers, can we now declare an end to the question period? Yes.