Net sales for Q1 totaled SEK 1,148 (1,097) m, equivalent to a 5% increase compared with the same period of the previous year. After currency adjustments, net sales increased by 0.4%.
Operating income for Q1 excluding one-off items amounted to SEK 81 (77) m, which is equivalent to an operating margin of 7.0 (7.0)%. The operating margin including one-off items amounted to 3.2 (7.0)% for Q1. One-off items for the quarter amounted to SEK 44 (0) m.
Net income after tax amounted to SEK 29 (48) m, while earnings per share amounted to SEK 0.64 (1.08) for Q1.
Cash flow from operating activities totaled SEK 19 (42) m for Q1.
A bidding process for Haldex was initiated on July 14 and is still ongoing. Knorr-Bremse’s offer of SEK 125 per share is conditional upon clearance from relevant competition authorities. The anti-trust investigations are currently underway. When and if approval is obtained, the offer can be completed. On April 19, Knorr-Bremse announced that they have applied for permission from the Swedish Securities Council to extend the acceptance period until September 26.
The board proposes no dividend for 2016.
Key figures for January - March 2017
(same period previous year in brackets)
- Net sales, SEK m 1,148 (1,097)
- Operating income, excl. one-off items, SEK m 81 (77)
- Operating income, SEK m 37 (77)
- Operating margin, excl. one-off items, % 7.0 (7.0)
- Operating margin, % 3.2 (7.0)
- Return on capital employed, excl. one-off items,%1 13.8 (19.6)
- Return on capital employed,%1 7.7 (13.9)
- Net income, SEK m 29 (48)
- Earnings per share, SEK -0.64 (1.08)
- Cash flow, operating activities, SEK m 19 (42)
1) Rolling twelve months
Comment from Åke Bengtsson, Acting President and CEO:
“I took over as the Acting President of Haldex in March. My job is to focus on existing operations and to lead the company until the ongoing bidding process has been completed. All of us here at Haldex are completely dedicated to continuing to build a stronger company, and this is a positive aspect for customers, employees and owners. It is therefore very pleasing to be able to present a quarter in which we can see how Haldex has succeeded in outperforming the general market while also improving its operating income.
Last year presented Haldex with a challenge. The official forecast for the number of vehicles produced in North America deteriorated quarter after quarter. Since half of our net sales are in North America, this had a major impact on Haldex. Q1 this year is showing signs of the North American decline starting to slow. Haldex is maintaining its strong position on actuators in the US, and in this regard the market situation is continuing to have visible effects. That said, overall development in other major product areas is positive, and for the first time in a long time we are able to report growth for most of our product lines. Of our geographical markets, Europe has developed best and sales of disc brakes, still our fastest-growing product, are continuing to boost performance there.
The improvement in our operating income is in line with our net sales growth. Volume changes, primarily in North America, are the primary contributor to the development in the operating margin. The underlying cost structure and cost control within the company are still good.
Strong product portfolio
This quarter has seen the launch of the ITCM (Intelligent Trailer Control Module), which gives the Haldex ABS solution some of the highly appreciated qualities of the more advanced EBS solutions. EBS has long been the leading technology in Europe, while ABS with its lower technology content is still the dominant technology in North America.
Disc brakes were relaunched in the US early last year, and our objective was to secure a major contract. However, given the uncertain ownership situation prevailing since last summer we have been unable to convince American customers to embark upon long-term contracts. That said, we have completed a number of smaller projects and received approval from an axle manufacturer in the US, which means that fleets wanting to use Haldex disc brakes on their vehicles now have these available to them. Our disc brakes have also been praised by American magazine Heavy Duty Trucking (HDT), which presented them with a “Top 20 Award” which involves selection criteria such as innovation, cost effectiveness, safety and efficiency. Disc brakes have continued to grow in Europe, and we forcast disc brakes to be our fastest growing product in years to come.
Focus on existing operations
The bidding process has been ongoing for ten months, and with the extension for which Knorr-Bremse has now applied we are preparing for another few months before the process can be brought to a close. “Business as usual” is our watchword. We have been working with transparent, regular information in-house throughout the entire process while also continuing to invest in strategically important projects. The training programs which we announced previously were launched during Q1, and we have received some very positive feedback. Leading through change has rarely seemed to be as relevant to focus on in training and discussions as it is at the moment. The risk for employees leaving the company is increasing and we are having problems with recruiting new staff. Continuing to retain our staff throughout the entire process is one of our priority targets, and training initiatives like this will give us better managers, enhancing motivation for all staff.
We will be continuing to invest a lot of time and energy in customer relations. We have a very dedicated sales team who have built up strong relationships over many years. The fact that we have succeeded in increasing our net sales in a number of our product areas, even while a number of customers have expressly avoided concluding contracts with us due to the uncertain ownership situation, just goes to prove how much reputational capital our sales staff have. But working under these conditions takes a lot of energy, and the sooner the ownership situation becomes clearer, the better.
This is why we are also investing major resources in assisting with the competition investigations with a view to helping this progress as quickly as possible. The extension requested by Knorr-Bremse shows just how complex these investigations are and how much time they take. We are providing assistance with the competition investigations to the best of our ability, using the resources that can be provided by a company of the size of Haldex.
Haldex in 2017
The impact of the bid situation is still difficult to assess. Although there are certain positive signs on the market and we managed to present some growth during Q1, we are choosing to maintain our previous forecast for the full year: our assessment for 2017 is that it will be difficult for Haldex to show growth due to the weak market conditions and the drawn-out bidding process. Our ambition is to continue to ensure good profitability, but due to lower net sales and high costs related to the bidding process, the operating margin for 2017 is forecast to be slightly lower than in 2016.”
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, April 25 at 11.00 CEST
The press conference is broadcasted at:
To join the telephone conference:
Sweden: +46 8 56 64 26 69
UK: +44 20 3008 9810
US: +1 85 5831 5945
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, firstname.lastname@example.org or +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 Tuesday April 25, 2017 at 7.20 CEST.
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.
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 2,100 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.