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April 25, 2018 | Interim Report
Haldex Interim Report, January - March 2018: Growth in all regions and improved operating income
The market conditions continued to improve during the first quarter, and Haldex increased its net sales in all geographic regions. The development in a number of product areas has been strong, including brake adjusters, disc brakes and actuators. The operating margin improved compared with the same period of the previous year. Large investments in R&D and increased costs to meet production increases in China had a negative impact on income but were offset by higher sales. The increased demand for primarily automatic brake adjusters in China also had a negative impact on both working capital and cash flow from operating activities. Earnings per share doubled compared to the same period of the previous year.

Net sales for Q1 totalled SEK 1,252 (1,148) m, equivalent to an increase of 9% compared with the previous year. After currency adjustments, net sales increased by 13%.

Operating income amounted to SEK 90 (37) m in Q1. This corresponds to an operating margin of 7.2 (3.2)%. Haldex did not report any one-off items in Q1.

Net income after tax for Q1 totalled SEK 58 (29) m and earnings per share for Q1 totalled SEK 1.30 (0.64).

Cash flow from operating activities in Q1 totalled SEK -64 (21) m.

The Board of Directors has proposed to the annual general meeting that a dividend of SEK 0.55 (0.00) per share be distributed with record date of 7 May and payout date of 12 May. The annual general meeting will be held on 3 May 2018.

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

  •  Net sales, SEK m   1,252 (1,148)
  •  Operating income, SEK m   90 (37)
  •  Operating income, excl. one-off items, SEK m   90 (81)
  •  Operating margin, %   7.2 (3.2)
  •  Operating margin, excl. one-off items, %   7.2 (7.0)
  •  Return on capital employed, excl. one-off items,%1    13.5 (13.8)
  •  Return on capital employed,%1   9.0 (7.7)
  •  Net income, SEK m   58 (29)
  •  Earnings per share, SEK   1.30 (0.64)
  •  Cash flow, operating activities, SEK m   -64 (21)

1)    Rolling twelve months

Comment from Åke Bengtsson, President and CEO

“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 Chinese legislation. 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. Haldex handled both the short-term and long-term changes well at the beginning of 2018.

Technological development

During Q1, Haldex clarified its product strategy and how we will contribute to the ongoing technology shift which was an appreciated part of our capital market day. It is becoming increasingly clear that OEMs share our view of an open and scalable system. The traditional forms of cooperation are being replaced by broad technology partnerships, where open standards ensure that systems within the vehicle can communicate with one another and with other vehicles on the road. New and old technologies will exist side-by-side on our roads for many years to come. 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. Our view is shared by a number of customers, but there are different opinions on how open and scalable the systems should be.

Electromechanical brakes have been part of Haldex’s development plan for more than a decade and are once again back in focus following our joint venture with Chinese VIE. We currently have knowledge about this new technology that few others in our industry have. Tests and prototype development is progressing well, and the next step is to pass testing at a government testing institution. No competitive solutions have been identified to date that have come as far in their development.

It is very important for Haldex’s future competitiveness that we continue to pursue key development projects and are able to attract the right competence to these projects. R&D (research and development) is therefore one of our important focus areas, and the investment level will continue to be high during the year.

Improved market conditions in all regions

The market conditions improved in all of Haldex’s geographic regions during Q1, and Haldex grew faster than the market in Europe, Asia and South America. The North American market grew the most with the highest levels of produced trucks and trailers since 2014. Growth in the USA has been so strong in Q1 that Haldex has not been able to fully benefit from it.

Greater demand in China for brake adjusters

The Chinese market is predicted to have a weaker growth trend in 2018. However, 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 thus expected to quadruple in the future, and Haldex’s sales of automatic brake adjusters in China already doubled in Q1. This expansion, however, resulted in higher costs at the same time as the margins are lower in China on this product group than in the western world. This creates challenges for how growth is balanced against expansion costs, and Haldex is continuously evaluating its growth plans to find an optimal level where the market share can be maintained or strengthened while also protecting profitability.

Technology shift in North America

In addition to greater production volumes for newly manufactured heavy vehicles, the North American market is expected to be positively impacted by the shift from drum brakes to disc brakes. However, this technology shift is expected to have a minor impact in 2018 and will primarily affect demand for disc brakes in coming years. Haldex has continued to win customer contracts for disc brakes in North America in Q1, and sales of the disc brake are growing, albeit from low levels.

Improved operating margin

Higher sales created conditions for a higher operating margin, and in Q1 Haldex’s operating margin reached the same levels as prior to the public offers. This operating margin was generated despite a sales mix with a lower percentage of the more profitable aftermarket sales and higher costs for both expansion and R&D. Cost control continues to be good, and Haldex plans to continue with the current investment level.

Operating capital and cash flow

In the initial stage of growth, it is not unusual to experiences an increased need for working capital. However, higher volumes should make it possible to optimise the supply chain and thus in the long run optimise working capital, which has been initiated in various activities at Haldex. The goal is to reduce the level of the working capital over time and thus also improve cash flow from operating activities.

Outlook for 2018

Market growth in Q1 has been slightly higher than in previous forecasts, but our overall assessment for 2018 has remained the same: We believe that net sales for 2018 will increase compared to 2017. Higher sales enable higher operating income. This will be offset by greater investment in development projects and costs for expansion in North America and China. The operating margin for 2018 is expected to be somewhat lower or in line with the operating margin excluding one-off items in 2017.

If market growth continues to exceed previous forecasts, Haldex may need to revise its assessment for 2018.”

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, April 25, 2018 at 9.00 CEST

The press conference is broadcasted at:


To join the telephone conference:

SE: +46 85 66 42 696
UK: +44 203 008 98 10
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. The information was submitted for publication by the Haldex media contact stated in the release on April 25, 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.