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July 18, 2018 | Interim Report
Haldex Interim Report, January - June 2018: Continued improved market conditions results in higher margins
The positive trend that started in Q1 continued in Q2. Haldex increased its net sales in all geographic regions. The development in a number of product areas continued to be strong, including brake adjusters, disc brakes and actuators. Higher net sales contributed to a higher operating margin and higher earnings per share. However, large investments in R&D and increased costs to meet production increases in China had a negative impact on income. Despite high working capital, cash flow from operating activities improved in Q2. The forecast for the operating income was adjusted for the full year as a result of the improved market conditions.

Net sales for Q2 totalled SEK 1,372 (1,184) m, equivalent to an increase of 16 per cent compared to the previous year. After currency adjustments, net sales increased by 15 per cent. Net sales for the first six months of the year totalled SEK 2,624 (2,332) m, which is equivalent to a currency-adjusted increase of 14 per cent.

Operating income totalled SEK 103 (31) m for Q2 and SEK 193 (68) m for the first six months of the year, which corresponds to an operating margin of 7.5 (2.6) per cent for Q2 and 7.3 (2.9) per cent for the first six months of the year.

Net income after tax for Q2 totalled SEK 61 (10) m and earnings per share for Q2 totalled SEK 1.37 (0.22). The corresponding figures for the first six months of the year were SEK 119 (39) m for net income after tax and SEK 2.69 (0.86) for earnings per share.

Cash flow from operating activities totalled SEK 65 (39) m for Q2 and SEK 1 (58) m for the first six months of the year.

Haldex’s forecast for the full year was adjusted from an operating margin in line with or slightly lower than the previous year to being in line with or possibly higher than the previous year.

Andreas Larsson has been appointed CFO. Andreas Ekberg, acting CFO, will remain in the role until Andreas Larsson has joined, December 31, 2018, at the latest.

Key figures for April - June 2018
(same period previous year in brackets)

  •  Net sales, SEK m   1,372 (1,184)
  •  Operating income, SEK m   103 (31)
  •  Operating income, excl. one-off items, SEK m   103 (78)
  •  Operating margin, %   7.5 (2.6)
  •  Operating margin, excl. one-off items, %   7.5 (6.6)
  •  Return on capital employed, excl. one-off items,%1    14.0 (12.2)
  •  Return on capital employed,%1   11.7 (4.6)
  •  Net income, SEK m   61 (10)
  •  Earnings per share, SEK   1.37 (0.22)
  •  Cash flow, operating activities, SEK m   65 (39)

1)     Rolling twelve months

Key figures for January - June 2018
(same period previous year in brackets)

  •  Net sales, SEK m   2,624 (2,332)
  •  Operating income, SEK m   193 (3687)
  •  Operating income, excl. one-off items, SEK m   193 (159)
  •  Operating margin, %   7.3 (2.9)
  •  Operating margin, excl. one-off items, %   7.3 (6.8)
  •  Return on capital employed, excl. one-off items,%1    14.0 (12.2)
  •  Return on capital employed,%1   11.7 (4.6)
  •  Net income, SEK m   119 (39)
  •  Earnings per share, SEK   2.69 (0.86)
  •  Cash flow, operating activities, SEK m   1 (58)

2)     Rolling twelve months

Comment from Åke Bengtsson, President and CEO: 

“Haldex continued to grow net sales and increase the operating margin in Q2. Market conditions continued to improve, and the high demand creates challenges in the supply chain, which we handled increasingly better in Q2.

Haldex’s market is going through a transformation. In the short term, we are facing a shift in technology from drum brakes to disc brakes in North America and a sharp increase in demand for automatic brake adjusters due to a change in the legal requirements in China. In the long-term, changes are under way that will affect society as a whole as the market moves toward connected, electric and self-driving vehicles.

Improved market conditions in all regions

Market conditions improved in all of Haldex’s geographic regions in Q2. We could not fully benefit from the growth in North America in Q1, and deliveries to OEMs were prioritised over the aftermarket. Production in Q2 was scaled up to a satisfactory level, and we grew faster than the market in all regions.

Brake adjusters are growing rapidly in China

On 1 January 2018, a new law went into effect that requires automatic brake adjusters on newly produced heavy vehicles in China. The market for automatic brake adjusters is therefore expected to quadruple. After two quarters, however, we can see that the law is not being fully complied with, and the rate of the implementation of automatic brake adjusters is progressing somewhat slower. This is positive for Haldex since expansion that occurs too rapidly creates challenges in how to balance growth against expansion costs. In Q2, more than SEK 100 m of the increase in net sales came from the expansion in China, which strengthens our market position on this important market.

Electromechanical disc brakes in China

We are pursuing in China one of our most important strategic development projects. The electromechanical brake, that is being developed in a joint venture with Chinese VIE, has been installed on an electric bus that will be tested in the autumn. A successful commercial electromechanical brake is key for making electric heavy vehicles more efficient. The braking system on heavy vehicles is traditionally operated by compressed air, in contrast to cars, which normally use hydraulics. An electric bus or truck thus needs to have an air pressure system installed. This makes the vehicle unnecessarily heavy and reduces the possible driving distance. An electromechanical brake is based on disc brake technology, but it offers a shorter braking distance and lowers the weight of the vehicle. Haldex’s electromechanical brake project therefore will have a major impact on the company’s potential for many years to come, and we are still not seeing any competing technology that has advanced further than we have.

Technology shift in North America

In June, I visited a number of customers in the United States. It is clear that the disc brake is on the agenda for both OEMs, distributors and fleets. The knowledge about disc brakes in terms of maintenance and related costs is still being built up in the different customer groups, but it is no longer discussed whether a change will take place, but when it will happen. The change in technology is expected to have a smaller effect in 2018 and will primarily affect the demand for disc brakes in the next few years. One of the US largest axle manufacturers announced in the second quarter that Haldex disc brake is available as an option to its customers, which gives us a good market entry. It was also clear during my visit that we are still suffering from the effects from previous quality issues. Returning business is challenging if the customer is satisfied with his new supplier and it will take time to get back to previous levels of these products.

R&D in close cooperation with customers

We have a close dialogue with a number of customers regarding future solutions, primarily within the area of self-driving vehicles. We have presented a solution that improves the driving qualities and reduces the braking distance when combined with existing brake technology. This solution has generated considerable interest from several customers, and development contracts are under discussion. It is becoming increasingly clear that OEMs share our view of open and scalable systems. Haldex is convinced that the intelligence will need to be moved to an independent software layer that can control different types of hardware, regardless of whether it is a drum brake, a disc brake or an electromechanical brake. The technology shift facing the industry requires investments to remain competitive in the future. With the positive feedback we have received about our projects, we are confident about the decision to increase the R&D spending.

Improved operating margin and cash flow

The increase in net sales created conditions for higher income, and Haldex continued to improve both the operating margin and cash flow in Q2. The operating margin was generated despite higher costs for both expansion and R&D. Cost control continues to be good, and Haldex plans to continue with the current investment level. Activities were initiated in Q1 to optimise the working capital and thus cash flow, which gave effect in Q2. These activities are continuing, and the working capital is still not at a satisfactory level.

Outlook for 2018

Market growth during the first six months is higher than the previous forecast, and even though the second half of the year normally has lower sales than the first half, we are seeing possibilities for achieving higher profitability than what was previously communicated. We believe that net sales for 2018 will increase compared to 2017. Greater investment in development projects and costs for expansion in North America and China will burden the income. Haldex previously made the assessment that the operating margin in 2018 would be somewhat lower or in line with the operating margin in 2017 excluding one-off items. Haldex’s new assessment is that the operating margin in 2018 will be in line with or possibly slightly higher than the operating margin in 2017 excluding one-off items.”

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, President and CEO and Andreas Ekberg, acting CFO. The presentation will also be webcasted live and you can participate with questions by telephone.

Date & Time: Wednesday, July 18, 2018 at 11.00 CEST

The press conference is broadcasted at:


To join the telephone conference:

SE: +46 85 66 42 691

UK: +44 203 008 98 08

US: +1 855 831 59 48

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, President & CEO, +46 418 476000
Andreas Ekberg, acting CFO, +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, 2018 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 2,200 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 4.5 billion SEK.