SAF-Holland expects 'significant sales growth'
Tina Grady Barbaccia | August 26, 2010
SAF-Holland S.A. says it expects significant sales growth to more than EUR 550 million in the current fiscal year, after reaching EUR 419.6 million in 2009. Earnings are positively influenced by growing sales. The Group benefits from rising demand and its own efficiency improvements. Adjusted EBIT increased substantially to EUR 14.6 million in the first half of the year. In the second quarter adjusted EBIT already doubled compared to the previous quarter, while sales increased by 29.4 percent from April to June.
Rudi Ludwig, CEO of SAF-HOLLAND notes: “SAF-HOLLAND can look back on a pleasing business development in the first half of 2010. The second quarter in particular gives us a positive outlook for the rest of the year. We notice both the continuously rising demand and the positive effects of cost-saving measures initiated in the past 18 months. As previously communicated, SAF-HOLLAND is benefitting tremendously from the economic upswing and the corresponding increase in demand for transportation services. This trend will continue. We expect Group sales to be over EUR 550 million and Group earnings to sustainability improve.”
Adjusted result for the period nearly reaches profit threshold
Overall, sales increased by 34.8 percent to EUR 287.5 million (previous year: EUR 213.3 million) in the first half of 2010, adjusted for exchange rate effects to EUR 286.7 million. All three Business Units improved in the reporting period. European business accounted for 47.2 percent (previous year: 49.2percent), while the group generated 46.5 percent of its sales in North America (previous year: 46.1 percent). The share of other regions slightly increased to 6.3 percent (previous year: 4.7percent). Thanks to greater capacity utilization and project related Aftermarket sales, the gross margin rose to 19.2 percent(previous year: 16.2 percent) in the reporting period.
Adjusted EBIT improved to EUR 14.6 million (previous year: EUR -1.3 million). With adjusted profit for the period of EUR 1.0 million (previous year: -4.6) in the second quarter, the Group recorded a positive result once again, and was close to break-even level with EUR -0.6 million (previous year: EUR -9.9 million) in the first half of the year. Adjusted earnings per share amounted to EUR -0.03 (previous year: -0.48).
Cash flow from operating activities before income tax payments totaled EUR 19.7 million (previous year: EUR 21.0 million) in the first half of 2010 –in the second quarter, it improved considerably compared to the previous quarter. The Group benefited from its strict inventory management, which reduced the turnover period to 47 days in the second quarter. In the first three months of the year, it was 58 days. The equity ratio increased slightly to 5.4 percent as of the reporting date (December 31, 2009: 5.2 percent). As a result of growing demand, the Company employed 83 new industrial employees for German plants; in North America, the number of employees has risen b131 since the beginning of the year.
Trailer Systems with best quarter since 2008
The Trailer Systems Business Unit achieved the highest sales since the fourth quarter 2008 in the second quarter of 2010. In both Europe and North America, SAF-HOLLAND’s sales volume increased. Despite the pleasing sales increase, demand is still significantly below earlier levels. Overall, the segment’s sales increased by 52.0 percent to EUR 136.0 million in the first half of the year (previous year: EUR 89.5 million), adjusted for exchange rate effects to EUR 135.7 million. The gross margin improved to 4.0 percent (previous year: -3.8 percent). The share in Group sales rose to 47.3 percent (previous year: 42.0 percent).
Powered Vehicle Systems significantly increases its gross margin
Thanks to growing demand and improved capacity utilization, the Powered Vehicle Systems Business Unit increased its gross margin to 25.2 percent (previous year: 21.1 percent). Sales in the segment grew by 25.8 percent to EUR 61.5million (previous year: EUR 48.9 million), adjusted for exchange rate effects to EUR 61.2 million. The gross margin improved to 25.2 percent (previous year:21.1%). The Business Unit accounted for 21.4 percent of total sales (previous year: 22.9 percent).
Aftermarket receives project contracts from North Africa
Sales in the Aftermarket Business Unit increased to EUR 90.0 million(previous year: EUR 74.9 million), adjusted for exchange rate effects to EUR 89.8 million. The gross margin remained stable at 38.1 percent (previous year: 37.8 percent). The replacement parts business contributed 31.3 percent (previous year: 35.1 percent) to Group sales. The Business Unit benefits from new project business in North Africa as well as from its strong international service and distribution network. It will continue to be strengthened by establishing and expanding warehouse locations in North America, among other things. The Aftermarket Business Unit will continue to gain importance as a result of the increasing number of SAF-HOLLAND installed axles and, for the Group, is a guarantor of stable sales and earnings.
New efficient components presented
SAF-HOLLAND is continuously striving to increase the efficiency of trucks and trailers. With lighter and thus more efficient components, SAF-HOLLAND plans to build upon its strong market position and to reduce the burden on the environment and enterprises with new products for commercial vehicles. With a new disc brake, which was presented only recently, and a new wheel head, the weight of a typical three-axle trailer decreases by 96 kilogram for our European customers. The new components – disc brake and wheel head – are the beginning of a number of other planned innovation.
2010: Sales increase to over EUR 550 million expected
As the demand for trucks and trailers increases significantly again worldwide, the production is on the rise – a trend we expect to continue. For example, the North American truck business (class 8) is expected to grow in production by around 26 percent in the current year; the number of deliveries in the trailer area is forecast to increase by around 39 percentin the USA (source: Market research institute ACT).
Due to the good business development in the first half of the year and the positive forecasts, SAF-HOLLAND expects sales to amount to over EUR 550 million for the full year 2010. In terms of earnings, the Group will benefit from greater capacity utilization and efficiency improvements. It is the Company’s mid-term goal to achieve sales of EUR 1 billion while generating an adjusted EBIT margin of 10 percent.Note: EBIT was adjusted for the following effects which are not originally attributable to the operating business: depreciation and amortization arising from the purchase price allocation as well as restructuring costs.
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