Net sales for Q1 totaled SEK 1,097 (1,246) m, equivalent to a 12% decrease compared with the same period of the previous year. After currency adjustments, net sales decreased by 11% in Q1.

Operating income for Q1 excluding one-off items amounted to SEK 77 (115) m, which is equivalent to an operating margin of 7.0 (9.3)%. No one-off items were recognized in Q1, which resulted in an operating margin of 7.0 (9.2) including one-off items as well.

Net income after tax totaled SEK 48 (79) m and earnings per share totaled SEK 1.08 (1.78) for Q1.

Cash flow from operating activities in Q1 totaled SEK 42 (2) m.

The board of directors has proposed to the annual general meeting that a dividend of SEK 2.00 (3.00) per share be distributed. In addition, the board has proposed that shares be repurchased for use in acquisitions or to be cancelled, thus increasing shareholder value. Haldex will hold its annual general meeting on May 3, 2016.

Key figures for January - March 2016
(same period previous year in brackets)

Net sales, SEK m 1,097 (1,246)
Operating income, excl. one-off items, SEK m 77 (115)
Operating income, SEK m 77 (114)
Operating margin, excl. one-off items, % 7.0 (9.3)
Operating margin, % 7.0 (9.2)
Return on capital employed, excl. one-off items,%1 19.6 (22.4)
Return on capital employed,%1 13.9 (13.5)
Net income, SEK m 48 (79)
Earnings per share, SEK 1.08 (1.78)
Cash flow, operating activities, SEK m 42 (2)

1) Rolling twelve months

Comment from Bo Annvik, President and CEO:

“Net sales for Q1 were down substantially year-on-year. The decline in demand in North America combined with the effects of the product recall impacted our sales significantly. However, we saw some improvement in March which continued into April and I therefore see no signs that the situation for Haldex will further deteriorate.

We had solid cost controls in Q1 and raised our gross margin. The change in the operating margin is directly correlated with lower net sales and not higher expenses. Currency fluctuations also impacted the operating margin negatively by 0.7 percent, resulting in an operating margin of 7.7% after currency adjustments. A Haldex that can deliver high profitability even when net sales are down significantly remains one of our highest priorities and we are continuing to work toward the target of at least 10% operating margin we set for the long term.

North America

The product recall of one type of our actuators on the US market is continuing to impact us. About half of the sales decline we experienced in Q1 is related to actuators. The improved version of the recalled actuator will be launched after the summer, but we will already initiate customer discussions in Q2, which will give us indications of how well we have succeeded in regaining the customer confidence.

In late February, we relaunched our disc brake in the US after several years of being unable to sell and market this product due to a patent dispute. The response from both customers and media has been very positive and several customers expressed interest in getting to know the product better straight away. Our goal is to secure a contract on the US market with a trailer customer before the end of the year, which would be of great strategic value.

We have everything we need to get back to previous net sales levels in North America. However, it will take time due to the generally weak market conditions. Visible effects cannot be expected until the end of the year.

Products driving growth

Haldex has a strong product portfolio with the disc brake serving as its main growth driver. As previously announced, net sales from this product category are expected to increase by one-third this year and then gradually reach even higher volumes over the coming years. In Q1, one of our customers renewed a delivery agreement for 2016-2018, guaranteeing us a certain minimum volume. We are the primary supplier in this contract, which is a strong signal that we have succeeded in gaining the confidence of the customer in spite of our size relative to competitors. However, the delivery levels they have now confirmed were included in our previous forecasts, which means that this agreement does not change our expected net sales from this product group, but it does give us a stronger position with the customer and a better reputation on the market.

Other discussions with major truck manufacturers have proceeded according to plan. No customer has made a final decision on their choice of supplier yet in ongoing processes. A decision is not expected until the fall. It is worth noting that the long planning times which are standard in our industry and revenue from these contracts is expected to start coming in 2020.

Stable aftermarket

The aftermarket is usually relatively stable when new production decreases. There is a transitory period though where accumulated inventories are used first before there is a noticeable change on the aftermarket. However, the aftermarket has had a stabilizing effect in Q1, which is positive.

Haldex is aiming to broaden its range of products for the aftermarket, which is even more important now that new production is decreasing. In mid-April, we launched our two new brands on a broad front – Midland for North America and Grau for Europe. This is a part of our efforts to put out a broader range of products focused on third and fourth vehicle owners, which have shorter service life requirements and do not want to pay for a premium product. We also launched our new website which has a new addition: an e-commerce platform, which is mainly geared toward our aftermarket customers. Our North American customers are the first to get access to the e-commerce platform, followed closely by our European customers later this year. Haldex has never previously offered e-commerce to a major customer group and we are confidently looking forward to how this channel can supplement our current sales.

Market outlook

Our outlook for 2016 remains unchanged in comparison to the previous quarterly report. The European market is looking promising in 2016 with an increase in order intake, while North America is forecast to see a decline from a strong year in 2015. However, 2016 is forecast to be a year of above-average volumes in North America from a historical perspective. The positive trend will continue in India, but we expect no significant improvement in Brazil and China in 2016.

We are sticking with our forecast that 2016 will be a year where we will still be feeling the effects of the events in North America and struggle to generate growth. However, our goal is to continue ensuring solid profitability, and the operating margin for Q1 can be considered realistic under current market conditions.”

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

Date & Time: Friday April 22 at 11.00 CEST

The press conference is broadcasted at: http://financialhearings.nu/?160422/haldex

To join the telephone conference:

Sweden: : +46 8 56 64 26 98
UK: +44 20 3008 9809
US: +1 646 5025 116

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/presentations