July 16, 2015  | 
Press release

Haldex interim report, January - June 2015

Record-high operating margin

Continuous efforts to improve our cost base is the main reason for the record-high operating margin. A positive market in North America and Europe is being offset by a negative trend in South America and China, leaving net sales unchanged overall. Weak cash flow due to increase in working capital. 

Net sales for Q2 totaled SEK 1,290 (1,124) m, equivalent to an increase of 15% compared with the same period of the previous year. However, net sales were impacted by major exchange rate fluctuations. After currency adjustments, net sales decreased by 1% in Q2. Currency-adjusted net sales were unchanged for the first six months of the year.

Operating income for Q2 excluding one-off items amounted to SEK 137 (110) m, which is equivalent to an operating margin of 10.6 (9.7)%. Including one-off items, operating income was SEK 134 (103) m and the operating margin was 10.4 (9.2)%. The operating margin excluding one-off items for the first six months of the year amounted to 9.9 (8.9)%.

The net income after tax for Q2 totaled SEK 86 (64) m and the earnings per share for Q2 totaled SEK 1.92 (1.44). The earnings per share for the first six months of the year came in at SEK 3.70 (2.47) per share.

Cash flow from operating activities totaled SEK -26 (116) m in Q2 and SEK -24 (119) m for the first six months of the year.

Åke Bengtsson is appointed new CFO of Haldex, starting January 1, 2016 at the latest. Lena Nordin has been promoted to SVP Human Resources. Both will be members of the Group management team.

Key figures for April - June 2015
(same period previous year in brackets)
 

  • Net sales, SEK m   1,290 (1,124)

  • Operating income, excl. one-off items, SEK m   137 (110)

  • Operating income, SEK m   134 (103)

  • Operating margin, excl. one-off items, %   10.6 (9.7)

  • Operating margin, %   10.4 (9.2)

  • Return on capital employed, excl. one-off items,%1    23.4 (18.1)

  • Return on capital employed,%1   14.8 (17.3)

  • Net income, SEK m   86 (64)

  • Earnings per share, SEK   1.92 (1.44)

  • Cash flow, operating activities, SEK m   -26 (116)

  1. Rolling twelve months


Key figures for January - June 2015
(same period previous year in brackets)

  • Net sales, SEK m   2,536 (2,165)

  • Operating income, excl. one-off items, SEK m   252 (194)

  • Operating income, SEK m   248 (186)

  • Operating margin, excl. one-off items, %   9.9 (8.9)

  • Operating margin, %   9.8 (8.6)

  • Return on capital employed, excl. one-off items,%1    23.4 (18.1)

  • Return on capital employed,%1   14.8 (17.3)

  • Net income, SEK m   165 (112)

  • Earnings per share, SEK   3.70 (2.47)

  • Cash flow, operating activities, SEK m   -24 (119)

1) Rolling twelve months


Comment from Bo Annvik, President and CEO:

“In Q2, we delivered the highest operating margin ever since Haldex became an independent company in 2011. We have created a stable platform over the past years, which has given us good cost control. Our net sales were stable in Q2, but we did not generate any growth. This is mainly a result of factors we have the ability to influence on our own and not a deterioration in the market situation. Profitable growth is at the top of our agenda, but if we have to prioritize, profitability comes before growth, which Q2 is an example of.

Operational excellence

There is still room for improvement in our internal processes. The field inspection of actuators that we initiated in North America in 2014 negatively impacted our sales in the short term. It is also taking much time and energy from our organization and running up inventory levels that have negatively impacted our cash flow. However, we can see that actuator sales have increased year-on-year, which is a good sign.

We also had delivery problems from subcontractors in China and India during the quarter. This led to a lower production volume and we were unable to fully meet the demand from the U.S. aftermarket.

We moved production from Germany to Hungary during the first two quarters. This relocation is a part of the restructuring program in progress since 2013. We are very pleased to be able to report that the relocation has gone better than planned and the production lines are back in full production. The process has been well-organized and we have high confidence in Hungary for the future. The remaining part of the restructuring program is the right-sizing of the number of employees in Germany, progressing throughout the year.

Success for disc brakes

Disc brake sales have continued to increase, making disc brakes our fastest-growing product. We completed the second winter test of our ModulT disc brake in Canada in Q2. This is an important milestone in the relaunch of our disc brake in the U.S. after being outside of the market due to a patent dispute. We will be permitted to resume active sales and marketing of disc brakes on the U.S. market in March 2016. Two successful winter tests are a prerequisite for success and we are now confidently moving into the next phase of the launch process.

Health and safety

We intensified our efforts to raise safety at work over the spring. A campaign called Safety #1 was developed late last year and has now been rolled out to all production plants. We have a vision zero policy for accidents. Fulfilling that policy will require a change in attitude – if you can’t do it safely, don’t do it – and understanding of how important it is to report minor incidents, which enables us to prevent accidents long before they occur.

Our code of conduct is another work environment aspect. We implemented a new training program in the spring involving ethics, morals and other relevant aspects of how we conduct ourselves in interactions with customers, suppliers and each other. Distinguishing right from wrong is not always easy due to differences in local customs, and so the program brought up good discussions that helped us fine-tune our guidelines.

Management team changes

I would like to extend a warm welcome to Åke Bengtsson as the new CFO of Haldex. Åke has a solid industry background and a winning personality which will make him a valuable employee and member of the Group management team. I am also pleased to welcome Lena Nordin to the Group management team. Lena started working for us a little over a year ago and has gone from strength to strength. She has been promoted to the position of SVP Human Resources.

Outlook for 2015

Our market position is positive overall. The number of trucks produced during the year is expected to increase in both North America and Europe. Following a round of tours of U.S. customers in late June, I estimate that the positive market situation in North America will persist throughout the year, which had been called into question previously. It is nice to see that the Indian economy is continuing to recover. Unfortunately, the forecasts have been further adjusted down in South America and we are getting conflicting forecasts of how much the market has backtracked in China. However, our sales from these regions are low, which means they will have a limited effect on our total net sales. It is still a positive market to operate on overall, which gives us good prospects for a solid year in 2015.”


Full interim report

The full interim report is available at http://www.haldex.com/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 Bo Annvik, President and CEO, and Andreas Ekberg, CFO. The presentation will also be webcasted live and you can participate with questions by telephone.

Date & Time: Thursday July 16 at 11.00 CEST

The press conference is broadcasted at: http://financialhearings.nu/150716/haldex/

To join the telephone conference:

Sweden: +46 8 566 426 69

UK: +44 20 342 814 33

US: +1 866 385 92 14

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

For further information visit www.haldex.com or contact:

Bo Annvik, President & CEO, 46 418 476000
Catharina Paulcén, SVP Corporate Communications, catharina.paulcen@haldex.com or 46 418-476157

Haldex AB (publ) is required to publish the above information under the Swedish Financial Instruments Trading Act. The information was submitted for publication on July 16, 2015 at 07.20 am CEST.

About Haldex

With more than 100 years of intensely focused innovation, Haldex holds unrivaled expertise in brake systems and air suspension systems for heavy trucks, trailers and buses. We live and breathe our business delivering robust, technically superior solutions born from deep insight into our customers’ reality. By concentrating on our core competencies and following our strengths and passions, we combine both the operating speed and flexibility required by the market. Collaborative innovation is not only the essence of our products – it is also our philosophy. Our 2,200 employees, spread on four continents, are constantly challenging the conventional and strive to ensure that the products we deliver create unique value for our customers and all end-users. We are listed on the Nasdaq Stockholm Stock Exchange and have net sales of approximately 4 billion SEK.