Haldex Interim Report, January - September 2019

STOCKHOLM, Oct. 24, 2019 /PRNewswire/ -- The currency-adjusted net sales for Q3 decreased by 4 per cent compared to the same period the previous year. In North America, Haldex increased its net sales by 2 per cent during the quarter despite signs that the market is weakening. In Europe, net sales decreased by 7 percent due to a weaker market, primarily in the Trailer segment. Net sales also decreased in China primarily due to lower sales of brake adjusters compared to an unusually strong comparison quarter.

The operating income excluding one-off items increased 7 per cent compared to the previous year. This increase is largely due to higher sales to the more profitable aftermarket. Cash flow from operating activities was somewhat stronger compared to the previous year.

Forecast adjustment

Due to the weaker market conditions, the forecast for the full year has been adjusted slightly downward. The new assessment is that net sales and the operating margin excluding one-off items will be somewhat lower than the previous year. The assessment had been made earlier that net sales would be in line with the previous year and that the operating margin excluding one-off items would be in line with or higher than the previous year. The long-term target of an operating margin of 10 per cent, excluding investments in new technology, by 2022 is still in place.

Relocation of production

After the end of the quarter, two major production changes were announced that will result in annual savings of SEK 75 m once the relocation of production has been completed.

Key figures for July - September 2019

(same period previous year in brackets)

• Net sales, SEK m   1,283 (1,270)
• Operating income, SEK m    68 (79)
• Operating income, excl. one-off items, SEK m    85 (79)
• Operating margin, %   5.3 (6.3)
• Operating margin, excl. one-off items, %   6.6 (6.3)
• Operating margin, excl. investments in new technology, % 7.4 (-)
• Return on capital employed,% 1    7.5 (12.5)
• Return on capital employed, excl. one-off items,%1     10.5 (13.8)
• Net income, SEK m    37 (58)
• Earnings per share, SEK   0.83 (1.30)
• Cash flow, operating activities, SEK m   76 (74)

1)   Rolling twelve months

Key figures for January - September 2019

(same period previous year in brackets)

• Net sales, SEK m   4,010 (3,894)
• Operating income, SEK m    238 (267)
• Operating income, excl. one-off items, SEK m    273 (267)
• Operating margin, %   5.9 (6.9)
• Operating margin, excl. one-off items, %   6.8 (6.9)
• Operating margin, excl. investments in new technology, % 7.5 (-)
• Return on capital employed,% 1    7.5 (12.5)
• Return on capital employed, excl. one-off items,%1     10.5 (13.8)
• Net income, SEK m    154 (177)
• Earnings per share, SEK   3.48 (3.95)
• Cash flow, operating activities, SEK m   89 (75)

2)   Rolling twelve months

Comment from Helene Svahn, President & CEO:

"The third quarter for Haldex was also my first quarter as CEO of the company. For me, both the opportunities and the challenges are beginning to come more into focus the more I learn about the operations. After having met colleagues, customers, suppliers, investors and potential new partners, I can see that Haldex holds a unique position. 

Through our business mix of development, production and sales of established components, and a large percentage of the non-cyclical aftermarket, we are standing on solid ground. We also have leading technological solutions for the vehicles of the future, which is a good sign as we approach the exciting and most likely steep developmental curve that awaits the industry in the near future. The stable core business provides the financing for the journey we have embarked upon as we transition from being a component supplier to a system provider within brake, suspension and other related systems. 

Despite favourable conditions, the work that lies ahead will be demanding. Improved cash flows from the core business are necessary to be able to finance the development of new systems. To reach our target margin of 10 per cent (EBIT margin, excluding new technology) by 2022, we need to shift up a gear, particularly within three identified main areas: 

• Streamlining market and customer excellence to ensure that we are choosing the right customers, offering the right products, and selling at the right price. 
• Improvement of internal processes and workflows to ensure that we are adapting our costs, improving our logistics flows, and reducing the number of suppliers. 
• Reduction in the number of production facilities to enable economies of scale in other facilities and reduce complexity and administrative costs. 

These initiatives will incur one-time costs, but the costs will prove to be necessary to achieve our overarching goals. In accordance with the decision to reduce the number of production facilities, we recently announced the closure of the factories in Blue Springs and Heidelberg, which will result in annual savings of SEK 75 million.

Within components, we are active in a large number of customer segments. In order to streamline our work with markets and customers, we should increase our market shares in attractive segments and actively step away from less attractive segments. The potential for Haldex in Asia means that this market will be key moving forward.

In terms of our products for the aftermarket, which represents a large part of our profit, we must ensure that we are taking the share of the spare parts market that our sales to vehicle manufacturers make possible. This requires proactive management of logistics companies and a greater focus on, for example, Eastern Europe. These initiatives will become particularly important when the signals indicating weaker demand on the market become stronger, now, even in North America, which had good growth during the year. The quarter shows, for example, reduced order intake from the Trailer market in Europe.

At the same time as we have begun to take serious steps to clarify our long-term focus, I can point to several successes in the right direction, which shows that our goals are ambitious but realistic. 

We are actively advancing our positions within new technology. During the quarter, we extended our framework agreement with one of the world's largest truck manufacturers for the development of brake and suspension systems for self-driving and electric vehicles. 

We also reached significant milestones during the quarter in our development of the electromechanical disc brake with the approval by the Chinese authorities and the successful test installation in several customers' vehicles. 

We are seeing the benefits of working in partnerships. One example is our cooperation with Daimler, where we together successfully developed disc brakes for their trucks. Based on this background, Daimler decided during the quarter to begin serial production of disc brakes together with Haldex for their vehicles. 

Another noteworthy event during the third quarter is that Haldex's ownership structure changed following ZF's divestment of its entire ownership stake of 20 per cent. We are very positive about this divestment, since it leads to improved competition and greater possibilities for large transactions with vehicle manufacturers. Work is also under way to further improve the long-term ownership structure.

In conclusion, I can say that the third quarter has been positive, both for me as the new CEO and for the company. A final challenging quarter awaits, as well as several exciting years during which the vehicle industry will undergo a radical transformation and existing competitive advantages will change. It is on this constantly changing market that there is true potential, uncharted territory, where Haldex, by being fast, innovative, curious and resolute, will be able to take a leading position. I am looking forward to equipping Haldex to meet challenges and freeing its potential and possibilities, both in the short term and the long term."

Full interim report

The full interim report is available at http://corporate.haldex.com/en/investors/financialreports or at http://news.cision.com/haldex  

Press and analyst meeting

Media and analysts are invited to a telephone conference at which the report will be presented with comments by Helene Svahn, President & CEO and Andreas Larsson, CFO. The presentation will also be webcasted live and you can participate with questions by telephone.

Date & Time: Thursday, October 24, 2019 at 11.00 CEST

The press conference is broadcasted at: 

https://tv.streamfabriken.com/haldex-q3-2019     

To join the telephone conference: 
SE: +46-8566-426-93
UK: +44-3333-009-263
US: +1-833-526-83-84

The webcast will also be available afterwards and you can download the Interim report and the presentation from Haldex website: http://corporate.haldex.com/en/investors  

For further information visit http://corporate.haldex.com or contact:

Helene Svahn
President & CEO
+46-418-476000

Andreas Larsson
CFO
+46-418-476000

Catharina Paulcén
SVP Corporate Communications
[email protected] 
+46-418-476157

Haldex AB (publ) is required to publish the above information under the EU Market Abuse Regulation. The information was submitted for publication by the Haldex media contact stated in the release on October 24, 2019 at 7.20 CEST.

This document is essentially a translation of Swedish language original thereof. In the event of any discrepancies between this translation and the original Swedish document the latter shall be deemed correct.

This information was brought to you by Cision http://news.cision.com

https://news.cision.com/haldex/r/haldex-interim-report--january---september-2019,c2939971

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SOURCE Haldex