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July 18, 2017 | Interim Report
Haldex interim report, January - June 2017: A quarter with slightly weaker growth than the market
During Q2, the market continued to be positive and Haldex experienced strong growth in Europe. However, growth in North America was slightly weaker, and as a whole Haldex’ growth is somewhat weaker than in the market. The sale of actuators, which was previously the primary cause behind the fall in sales, stabilized, and only a slight reduction was noted in Q2. A number of product areas experienced positive development, and the disc brake continued to show the most growth.  Operating profit dropped slightly, largely due to lower sales in North America, where the operating margin is higher than in the other Haldex regions. The quarter continued to be burdened by the bidding process, which draws focus and resources away from the core operations.  

Net sales for Q2 totaled SEK 1,184 (1,147) m, which corresponds to a 3 percent increase compared with the same period of the previous year. After currency adjustments, net sales decreased by 2 percent. Net sales for the first six months of the year totaled SEK 2,332 (2,244) m, which is equivalent to a currency-adjusted decrease of 1 percent.

Operating income excluding one-off items totaled SEK 78 (87) m for Q2 and SEK 159 (164) m for the first six months of the year, which corresponds to an operating margin of 6.6 (7.6) per cent for Q2 and 6.8 (7.3) per cent for the first six months of the year. The operating margin including one-off items totaled SEK 2.6 (7.6) percent for Q2 and SEK 2.9 (7.3) for the first six months of the year. One-off items for Q2 amounted to SEK 47 (0) m net and for the first six months of the year to SEK 91 (0) m net.

Net income after tax for Q2 totaled SEK 10 (62) m and earnings per share for Q2 totaled SEK 0.22 (1.39). The corresponding figures for the first six months of the year are SEK 39 (110) m for net income before tax and SEK 0.86 (2.47) for earnings per share.

Cash flow from operating activities totaled SEK 39 (61) m in Q2 and SEK 58 (103) m for the first six months of the year.

A bidding process for Haldex was initiated on July 14, 2016, and is still ongoing. Knorr-Bremse’s bid of SEK 125 m is conditional and dependent on authorization from relevant competition authorities. On June 29, 2017, the board of directors announced withdrawn support for the bid from Knorr-Bremse due to the very low probability that it will be approved by the competition authorities.

Key figures for April - June 2017
(same period previous year in brackets)

  •  Net sales, SEK m   1,184 (1,147)
  •  Operating income, excl. one-off items, SEK m   78 (87)
  •  Operating income, SEK m   31 (87)
  •  Operating margin, excl. one-off items, %   6.6 (7.6)
  •  Operating margin, %   2.6 (7.6)
  •  Return on capital employed, excl. one-off items,%1    12.2 (17.3)
  •  Return on capital employed,%1   4.6 (11.7)
  •  Net income, SEK m   10 (62)
  •  Earnings per share, SEK   0.22 (1.39)
  •  Cash flow, operating activities, SEK m   39 (61)

1)    Rolling twelve months

Key figures for January - June 2017
(same period previous year in brackets)

  •  Net sales, SEK m   2,332 (2,244)
  •  Operating income, excl. one-off items, SEK m   159 (164)
  •  Operating income, SEK m   68 (164)
  •  Operating margin, excl. one-off items, %   6.8 (7.3)
  •  Operating margin, %   2.9 (7.3)
  •  Return on capital employed, excl. one-off items,%1    12.2 (17.3)
  •  Return on capital employed,%1   4.6 (11.7)
  •  Net income, SEK m   39 (110)
  •  Earnings per share, SEK   0.86 (2.47)
  •  Cash flow, operating activities, SEK m   58 (103)

2)    Rolling twelve months

Comment from Åke Bengtsson, Acting President and CEO: 

“The market has gradually improved during the first two quarters. During Q1 we performed better than the market in general, but we were not quite as successful in Q2. One exception is Europe, and we have been winning market shares in several products in this geographical region thanks to sales of disc brakes, which are continuing to rise. North America, which represents half of our sales, continues to be a challenge. The market in North America has improved, but Haldex has not been able to fully benefit from this upswing, primarily due to the uncertainty surrounding Haldex’ situation.

Disc brake contract in USA

The disc brake was re-introduced in the USA at the beginning of last year, and we have been working intensively to secure new contracts. We are pleased to present a disc brake contract in the USA in Q2 where the fleet placed an order for a number of trailers with one of the large axle manufacturers and specified Haldex disc brakes in the vehicles. This customer is one of the customers who was previously affected by the quality problems with our actuator, and we have worked hard to regain their confidence. We are very pleased that they are now choosing Haldex for this emerging technology in the USA.

Trend reversal for actuators

This quarter is the first that we have been able to see a slow-down in the decline in actuators. It is very positive that we have successfully broken the trend that started when we had to the product recall at the end of 2014. We received positive feedback from our customers about how we handled the recall, but it takes a long time to regain trust after a quality defect. Since then we have re-designed the product in order to re-launch a new version. In order not to damage our reputation once more, we have applied incredibly rigid tests and requirements on the product’s quality. Preparations are currently under way for the launch in Q3. Given that we to date have not had a replacement product, we have exceeded our expectations in terms of regaining the trust of our customers.

Uncertainty regarding ownership

The uncertainty created by the bidding situation is affecting our ability to sign long-term contracts. In the short-term, customers are not terminating signed contracts, but we are hurt during the negotiations of future contracts, i.e. the contracts that will create growth for Haldex in coming years. The long lead times in our industry result in negotiations with the large companies every 5-8 years. During this time, the customer does not normally switch suppliers. It is these long-term contracts that we have either lost or risk losing since the customer does not know who will own the company in the future. Due to dual sourcing, i.e. the practice of having more than one supplier for a single product to reduce risk, it is important for the customer not to end up in a situation where the same supplier is handling all contracts. It is therefore a safer option to place the order with a third company. We still have an opportunity to win a number of contracts where our creative solutions have kept us at the negotiating table, but with each month that passes the chances are shrinking and soon the window will be closed for a number of years in the future. An extension of the bidding process by only a few months therefore risks impairing Haldex’ ability to grow over the next few years.

Focus on existing operations

The bidding process has been ongoing for a year, and Q2 2017 was very intensive in this respect. Knorr-Bremse began to seriously pursue the European process first in February, and during the spring we have invested several man-years in providing the authorities with information and helping Knorr-Bremse prepare various carve-out scenarios. We have met potential buyers for different product lines and allowed them to conduct due diligence of the different parts. The time plan presented by Knorr-Bremse set a target of having these plans approved during the summer. Going through such an extensive process creates a lot of uncertainty within the company, in addition to the time it takes from running the business. When the European authority announced in June that its criticism was more widespread than the scenarios we prepared together with Knorr-Bremse, Haldex’ Board of Directors chose to withdraw its support for the bid, and I support them in this decision. There is no measured plan for gaining approval and the buyers that were presented were questionable in the opinion of the authorities.

It has been extremely challenging to focus on and perform the day-to-day activities while at the same time dedicating large parts of our day to preparing divestitures. I am proud that we did as well as we did during Q2. We surrendered some of our market shares, but we did so under incredibly challenging conditions. We have continued to invest in all strategic projects. Haldex’ strong culture and loyal employees have played a large role in ensuring that we have not lost more employees than what we have so far, but the concern in the organization is noticeable. It will be difficult to successfully run the company much longer under the current conditions. At the same time, I am convinced that the long-term value of Haldex has been strengthened. Our position as a challenger on the market is highly valued by our customers, and the product portfolio that we are now continuing to develop could be a significant part of the technology shift facing the vehicle industry - for example within autonomous driving - where brake functionality naturally becomes a very important part of the solution.

Haldex in 2017

The impact of the bidding situation is difficult to assess. Even if there are positive signs on the market, we are choosing to keep our previous forecast for the full year. The assessment of 2017 is that the market could reach last year’s level, but the uncertainty surrounding Haldex’ situation makes it difficult for Haldex to show growth. Our ambition is to continue to ensure good profitability, but due to lower net sales and higher costs from the bidding process, the operating margin for 2017 is forecast to be slightly lower than in 2016.”

Åke Bengtsson
Acting President and CEO

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 Åke Bengtsson, Acting President and CEO. The presentation will also be webcasted live and you can participate with questions by telephone.

Date & Time: Tuesday, July 18 at 11.00 CET

The press conference is broadcasted at:


To join the telephone conference:

SE: +46 8 566 426 92

UK: +44 203 00 898 09

US: +1 855 831 59 46

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:

Åke Bengtsson, Acting 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 EU Market Abuse Regulation and the Swedish Financial Instruments Trading Act. The information was submitted for publication by the Haldex media contact stated in the release on July 18, 2017 at 7.20 CET.

The interim report 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.

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 2,150 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 4.4 billion SEK.