Good cost control combined with sales growth led to yet another quarter of improved profitability.
Net sales for Q1 totaled SEK 1,246 (1,041) m, equivalent to growth of 20% compared with the same period previous year. However, net sales were impacted by major exchange rate fluctuations. After currency adjustments, net sales increased by 2%.
Operating income for Q1 excluding one-off items amounted to SEK 115 (84) m, which is equivalent to an operating margin of 9.3 (8.1)%. Including one-off items, operating income was SEK 114 (83) m and the operating margin was 9.2 (7.9)%.
The net income after tax for Q1 totaled SEK 79 (48) m and the earnings per share for Q1 totaled SEK 1.78 (1.03).
Cash flow from operating activities for Q1 totaled SEK 2 (3) m.
The Board of Directors of Haldex proposes to the annual general meeting that a dividend of SEK 3.00 (2.00) per share be distributed with the record date on April 30 and the payout date on May 6.
Key figures for January - March 2015
(same period previous year in brackets)
Net sales, SEK m 1,246 (1,041)
Operating income, excl. one-off items, SEK m 115 (84)
Operating income, SEK m 114 (83)
Operating margin, excl. one-off items, % 9.3 (8.1)
Operating margin, % 9.2 (7.9)
Return on capital employed, excl. one-off items,%1 22.4 (16.1)
Return on capital employed,%1 13.5 (9.4)
Net income, SEK m 79 (48)
Earnings per share, SEK 1.78 (1.03)
Cash flow, operating activities, SEK m 2 (3)
1) Rolling twelve months
Comment from Bo Annvik, President and CEO:
“We got off to a good start in 2015 with a quarter of growth and continuing profitability improvement. Profitable growth is at the top of the agenda this year. We created a stable platform over the past years, which increased cost effectiveness. We also have a strong market position, which as a whole creates good prospects for profitable growth.
Success for disc brakes
In 2014, we laid the foundations for continuing expansion in disc brakes and we saw a substantial increase in sales from this product group in Q1 2015. We are currently working on taking advantage of our strong position in Trailer in order to win new customer contracts in Truck. Broadening our product portfolio to launch versions of the disc brake for heavier trucks is in the pipeline.
Our disc brake sales are mainly in Europe and it is difficult to estimate when sales will take off in the U.S. I visited the Mid-America Trucking Show in March and it is clear that the disc brake technology is next in line in the U.S. The great majority of the brakes on display at the show are disc brakes, even though in practice only a very small portion is sold. We are currently planning to relaunch our disc brake in the U.S. after being outside of the market due to a patent dispute. In March 2016, will once again be able to actively sell and market disc brakes on the U.S. market, and given the interest we have observed, we see the second quarter 2016 as a good time to initiate customer discussions again.
Delayed maintenance affecting aftermarket
The winter has been long and hard in North America. The period when many fleets service their vehicles is normally in Q1, but this year we are seeing this period begin later than last year. One part of our business that has been affected substantially is our North American Reman operations, where products are remanufactured and resold in mint condition. We estimate that maintenance work has been postponed slightly, but that the aftermarket is also slightly weaker than the past year.
Field inspection according to plan
Our long-term vision is for Haldex products to have zero errors. We are working very hard to constantly improve our operations and are already operating at a high level. In spite of this, a warranty case emerged in North America in late 2014 requiring much attention in the form of a field inspection and product replacements. All of the disc brakes of the relevant product type we and our customers have in stock were inspected in Q1. In addition, the field inspection is proceeding according to plan and is estimated to continue throughout 2015. I have personally visited our largest customers in North America and had a good, active dialogue concerning our future business relationship. I estimate that we will lose some revenues in the short term due to this product error, but that we will continue in the long term to build on the customer relationships we have had for many years.
We have had an ongoing restructuring program since 2013. We wrapped up the union negotiations involving the final part of the plan at the end of the past year – moving production capacity from Germany to Hungary. We successfully moved the first product line to Hungary in Q1 this year, and I am glad to see that the process is effective and well organized. The move of the remaining product lines are planned to continue throughout 2015.
Opening of the MIRA R&D center
The construction of our new R&D center at MIRA had been in progress for one year, and the center was officially opened in Q1. MIRA is a test track just outside of Birmingham, UK, and we have now successfully co-located development and testing resources in the same building, adjacent to the test track, leading to better and more effective product development.
Outlook for 2015
2014 was a testament to our ability to profitably grow faster than the market and we will tirelessly continue onward in this direction in 2015. in addition to organic growth, we are also interested in complementary acquisitions.
Our market position is positive overall, but since production volumes are already at a high level, the relative growth rates on the market are expected to be lower than what we saw in 2014. The number of trucks produced during the year is expected to increase in both North America and Europe, even though we estimate that North America may gradually slow down in the second half of the year. It is good news that India's economy has begun to recover and we had solid sales in that region in Q1. However, South America and China are facing a challenging time with the majority of truck manufacturers significantly reducing their production. However, 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: Monday April 27 at 15.00 CEST
The press conference is broadcasted at: http://edge.media-server.com/m/p/oee45wtn
To join the telephone conference:
Sweden: +46 8 505 564 74
UK: +44 203 364 5374
Denmark: +45 354 455 80
USA: +1 855 753 2230
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
Haldex AB (publ) is required to publish the above information under the Swedish Financial Instruments Trading Act. The information was submitted for publication on April 24, 2015 at 7.20 am CEST.
For further information, please visit www.haldex.com or contact:
Bo Annvik, President & CEO, 46 418 476000
Catharina Paulcén, SVP Corporate Communications, firstname.lastname@example.org or +46 418 476157
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 2,235 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.