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April 26, 2001 | Interim Report
Haldex - 1st Q 2001

Haldex - 1st Q 2001 Key figures 2001 2000 MSEK 1st 1st Change Q Q Order intake 1,69 1,70 0% 9 1 Net invoicing 1,64 1,61 + 2% 8 8 Operating 76 107 -28% earnings Earnings before 60 92 -35% tax Net income 40 58 -32% Earnings per 1:77 2:62 -32% share, SEK Profit margin 4.7% 6.7% Key business events Breakthrough on the US market for Haldex AWD system. Nomination Letter received, where one of the three leading American car manufacturers specifies Haldex as supplier of the AWD system for a new model based on a global platform. Serial delivers expected to start at the end of 2003. The order value is estimated to 1-1.5 BSEK over a 5-year period. Freightliner, North America's largest manufacturer of commercial vehicles, has nominated Haldex as standard supplier of long stroke brake chambers, including spring brake actuators and service chambers. Deliveries to start June 2001. This business adds yearly sales of approximately 50 MSEK. Haldex has been awarded two, new important US contracts for Haldex valve spring wire products. One for ovate-shaped valve spring wire for engines within the GM Group. The other one is a breakthrough for deliveries of valve spring wire to Japanese car manufacturers (Toyota) in the US. Both contracts run for a 4-year period with a possibility of extension and expansion. The combined yearly order value is about 50 MSEK. At the end of April 2001, Haldex established a strategic alliance with the American company Altra Technologies Inc., which has developed an electronic anti-collision system for commercial vehicles. The alliance includes a 3 MUSD minority investment by Haldex in Altra, and a development and marketing agreement whereby Haldex Brake Systems will market the Altra system. The parties will cooperatively develop anti-collision systems for integration in Haldex electronic brake systems. Anti-collision systems for commercial vehicles is a rapidly growing segment and the total market potential in 5 years time is expected to exceed 5 BSEK. The Haldex/Altra alliance aims at capturing at least 15% of that market. cont. Haldex 1st Q 2001 2. Market development During the last quarter of 2000, a substantial drop in vehicle production occurred in North America in order to reduce excessive inventories of new vehicles and adjust the operations to lower sales. The significantly lower production rate has continued during the first quarter of 2001. The North American production of heavy vehicles during the first quarter amounted to some 39,000 units, which was a decrease of 54% compared to the same period previous year. The production of heavy trailers decreased by 50%. Sales of heavy vehicles declined by some 43%, which means that inventories continued to decrease. It is estimated that the North American production of heavy vehicles will remain on the same low level for the rest of the year with a slight increase towards the end of the year. The North American production of light vehicles decreased by 17% compared to the first quarter previous year. Sales declined by 6%. Thus, inventories of new cars decreased from about 87 days at year-end to about 65 days after the first quarter. Further inventory reductions are expected, after which the production might increase somewhat during the second half year. Sales of construction vehicles in North America declined by some 5%. The development for forklift trucks was similar. In Europe, the demand for heavy vehicles has began to decrease and the production rate has been adjusted down by some 5% compared to the corresponding period previous year. For the full year the production is estimated to be some 10% lower than the peak year 2000. Sales and production of light vehicles in Europe declined during the first quarter by some 6% compared to corresponding period previous year. For the full year the decrease is estimated to some 3%. The European sales of construction vehicles declined by some 10%, while the development for forklift trucks was continued positive. On the markets in South America and Asia, the development of vehicle production was positive. In Brazil, production of heavy vehicles increased by some 30%. Profit development The group's order intake amounted to 1,699 MSEK, which was unchanged compared to previous year. Net sales increased by 2% to 1,648 MSEK. The weakening of the Swedish Krona against the USD and Euro affects, however, the comparison between the two quarters to a relatively large degree. Adjusted for currency effects, the order intake and sales were 10% and 8% respectively lower compared to the fourth quarter of 2000. On the significantly weakened North American market, sales amounted to 875 MSEK, which currency adjusted was 18% lower than corresponding period previous year. In Europe and the rest of the world, sales amounted to 773 MSEK, an increase by 6% currency adjusted. cont. Haldex 1st Q 2001 3. The group's operating profit before depreciations (EBITDA) decreased by 13% to 144 MSEK (167), equivalent to a margin of 8.8% (10.3). The operating profit after depreciations (EBIT) was 28% lower than previous year and amounted to 76 MSEK (107). The profit margin was 4.7% (6.7). Compared to the fourth quarter of previous year, however, a significant profit improvement was achieved during the first quarter of 2001. In spite of lower production costs, the group's profit margin declined, mainly due to the following three reasons:: -The volume decline of 8% in invoicing affected the profit negatively by some 35 MSEK or by 2.1 percentage points on the profit margin. -The change in product mix whereby newer products within Brake Systems (disc brakes, ECAM - electronically controlled air management) increased their part of sales. These new products have substantially lower margins until higher volumes and continuous cost reduction work have taken effect. This change in productmix has negatively affected the profit margin with 0.6 percentage points. -The product development costs, which increased by 15% (5% currency adjusted) during the period compared to previous year to 78 MSEK (68), meanta decrease of the profitmargin by almost 0.5 percentage points- all within Brake Systems. The work to both increase volumes and reduce costs of new-introduced products has high priority and represent a significant future potential for improved profits and higher profit margins. All divisions except Traction Systems were during the 1st quarter affected in different degrees by the rapidly declining vehicle business climate in North America. For the divisions Brake Systems and Barnes Hydraulics - with 60% and 70% respectively of their sales in North America - the weak North American market resulted in total division sales decrease (adjusted for currency effects) by 9% and 8% respectively. Cost reduction activities could not fully neutralize declining volumes, which affected the profit margin for the two divisions. The profit margin for Brake Systems was also affected by 0.9 percentage points due to the mix change towards newer products mentioned above. The margin decrease in the Garphyttan Wire division was mainly caused by higher purchase prices, which could not to a full extent be brought forward to customers. The Traction Systems division has according to plan improved profits and margin, even though it still is a matter of reducing losses. In the different parts of the group, a successive adjustment of the organization and costs to lower business volumes have been made. Currency adjusted, the overhead costs (excluding R&D) decreased by 2% during the first quarter compared to corresponding period previous year, which after average salary and price increases of about 3% means a decrease of 5% in in volume terms. Continued cost reductions are ongoing. cont. Haldex 1st Q 2001 4. Capital expenditures, net debt and personnel The period's capital expenditure amounted to 76 MSEK (57). The cash flow, which is seasonally weak for the period, was -67 MSEK (-45). Net debt at the end of the period amounted to 1,350 MSEK (1,022). The no. of employees at the end of the period was 4,097 (4,166). Outlook for the full year 2001 The vehicles business climate on the main markets in North America and Europe will remain weak and for the full year the vehicle production is estimated to be lower than previous year. The group's sales (currency adjusted) and profits are expected to be lower than previous year, and can be expected to increase first in 2002. Accounting principles This report is prepared in accordance with recommendations issued by the Financial Accounting Standards Council and the Swedish Accounting Board. The same principles that were used in the latest Annual Report are applied in this report. Future reporting Interim Report January-June17 August 2001 Interim Report January-September 25 October 2001 Report January-December 2001 February 2002 Stockholm 26 April 2001 Claes Warnander Group President and CEO For further information contact: Claes Warnander, Group President and CEO, phone +46 8 678 72 70 Lennart Hammargren, CFO, phone +46 8 678 72 70 The company auditors have not reviewed this report. www.haldex.com ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/04/26/20010426BIT01430/bit0002.doc The full report http://www.bit.se/bitonline/2001/04/26/20010426BIT01430/bit0002.pdf The full report