SAF-HOLLAND remains on a growth path

SAF-HOLLAND S.A.: SAF-HOLLAND remains on a growth path

SAF-HOLLAND S.A. / Key word(s): Quarter Results

17.11.2011 / 07:18

SAF-HOLLAND remains on a growth path

- Adjusted EBIT improves by 73.1% to EUR 45.0 million

- Sales increase by 36.5% to EUR 627.0 million

Luxembourg, November 17, 2011 - SAF-HOLLAND S.A., one of the world's leading manufacturers and providers of premium systems and components for trucks and trailers, increased its sales in the first nine months of financial year 2011 (reporting day: September 30) to EUR 627.0 million (previous year: EUR 459.2 million). This was primarily due to demand for commercial vehicles remaining at a good level, primarily in SAF-HOLLAND's core markets of North America and Europe. The Company especially benefited from pent-up demand for trailers that still exists in the transport industry. Adjusted EBIT increased in the first nine months of 2011 to EUR 45.0 million (previous year: EUR 26.0 million). With adjusted operating earnings before interest and taxes (EBIT) of EUR 15.0 million and an adjusted EBIT margin of 7.2%, both figures remained largely stable in the third quarter of 2011 as compared to the second quarter of 2011.

Detlef Borghardt, CEO of SAF-HOLLAND: 'The positive business development confirms our strategy: we intend to grow globally by expanding our international presence and rounding out our product range.' With regard to the current market situation in the commercial vehicles industry, Borghardt said: 'Signs still point to growth in both of our core markets of North America and Europe although the dynamic trend is apparently declining in Europe. SAF-HOLLAND is flexible enough to react successfully to various market scenarios. At the same time, we are accelerating the expansion of our business in the world's growth markets.'

Sales and earnings meet expectations

Good sales in September were able to compensate for the seasonally quieter summer months of July and August, which resulted in stable development in the third quarter as compared to the first two quarters of the current financial year. Overall, SAF-HOLLAND increased sales in the third quarter of 2011 by 21.8% to EUR 209.1 million (previous year: EUR 171.7 million) as compared to the previous year period. Adjusted for exchange rate effects, sales amounted to EUR 218.0 million. All three Business Units contributed to the growth in sales. Europe accounted for 54.8% of sales (previous year: 52.5%), while 39.5% stemmed from North America (previous year: 41.6%), and 5.7% (previous year: 5.9%) was contributed by the other regions. As a result of a changed product mix and increases in the prices for materials, the gross margin decreased in the first nine months of 2011 to 18.1% (previous year: 19.1%). Adjusted EBIT rose in the same period to EUR 45.0 million (previous year: EUR 26.0 million), in the third quarter alone it climbed to EUR 15.0 million (previous year: EUR 11.4 million). This corresponds to an adjusted EBIT margin of 7.2% for both the first nine months as well as for the third quarter of 2011. The adjusted result for the period rose to EUR 21.1 million as compared to EUR 1.8 million in the first nine months of the previous year. Adjusted earnings per share improved to EUR 0.60 (previous year: EUR 0.09) - despite a significant rise in the number of shares following the capital increase in March 2011.

Cash flow from operating activities before income tax payments remained positive with EUR 24.3 million (previous year: EUR 34.2 million). In comparison to the previous year, it was influenced by an increase in net working capital as a result of the growing business volume. Due to the successful capital increase in March 2011, the reduction of debt and continued positive business development, the financial position of the Company has improved significantly as compared to the previous year. The equity ratio amounted to 33.7% as of September 30, 2011 (December 31, 2010: 5.1%). Total assets increased along with the good business development to EUR 540.5 million (December 31, 2010: EUR 484.7 million).

As of September 30, 2011, the number of employees in the SAF-HOLLAND Group increased to 3,152 (September 30, 2010: 2,742). As compared to the previous quarter of 2011, the number of employees remained largely stable.

Sales of Trailer Systems record highest growth rates

The Trailer Systems Business Unit continued to show dynamic development, which was attributable to the two core markets of Europe and North America. SAF-HOLLAND has yet to note any indication of a slowdown in the North American market, whereas the first signs of caution have appeared among European market participants. Compared to the previous year period, sales rose in the first nine months of 2011 by 58.9% to EUR 362.2 million (previous year: EUR 227.9 million). Primarily due to increased capacity utilization, the gross margin increased to 9.5% (previous year: 5.7%). The segment contributed 57.8% (previous year: 49.6%) to Group sales.

Powered Vehicle Systems benefits from continued heavy demand in North America

The Powered Vehicle Systems Business Unit expanded its business while targeting sales of EUR 111.9 million (previous year: EUR 93.6 million) in the first nine months at the same time. The segment's activities were marked by bottlenecks in the supply of casting material in the third quarter of 2011 as well. Nevertheless, weekend shifts and overtime hours ensured that the products reached customers on time. This, however, weighed on the costs of the Business Unit. The gross margin was influenced by increases in the prices for materials, inefficiencies in production due to supply delays and changes to the product mix. It amounted to 17.5% (previous year: 24.3%). Due to the strong growth in the Trailer Systems Business Unit, the share in total sales decreased to 17.8% (previous year: 20.4%). In comparison to the previous quarter in 2011, it remained stable.

Aftermarket becomes more international

The Aftermarket Business Unit continued to expand its business in the first nine months. In July, SAF-Holland opened a subsidiary in the Emirate of Dubai, and the Aftermarket Business Unit immediately began supplying customers in the Middle East and parts of North and Central Africa from this location. Sales rose to EUR 152.9 million (previous year: EUR 137.7 million), corresponding to an increase of 11.0%. Despite increases in the price of materials, the gross margin rose to 39.6% (previous year: 37.8%). The segment generated 24.4% (previous year: 30.0%) of Group sales.

SAF-HOLLAND confirms forecast for 2011

According to forecasts from market research institutes ACT and FTR, the production of commercial vehicles in the USA will continue to grow in 2011 and 2012.

SAF-HOLLAND is prepared for various market scenarios, even if the markets may grow more slowly in the coming months than in the first half of the year. The future developments of financial markets remain impossible to predict. In particular, it is not clear how current uncertainties will affect the real economy. SAF HOLLAND maintains its expectation to achieve a sales increase of up to 25% for full year 2011 as compared to 2010. Earnings will also improve considerably. In light of a changed customer and product mix and current increases in material prices, growth in the adjusted EBIT margin will not keep pace with the growth in sales. For 2012 we anticipate a positive business development for the overall company subject to the uncertainty of the global political and financial markets.

Note: EBIT was adjusted for the following items that are not originally attributable to the operating business: depreciation and amortization arising from the purchase price allocation as well as restructuring and integration costs.


Company Profile:
With sales of approximately EUR 631 million in 2010 and about 3,000 employees, SAF-HOLLAND S.A. is one of the world's leading manufacturers and suppliers of premium product systems and components primarily for trailers as well as trucks, buses and recreational vehicles. The product range encompasses axle and suspension systems, fifth wheels, coupling devices, kingpins, and landing legs. SAF-HOLLAND customers include the majority of large truck and trailer producers all over the world. The products are sold to Original Equipment Manufacturers (OEMs) and Original Equipment Suppliers (OESs) by means of a global service and distribution network and via aftermarket channels directly to the end users and service garages. SAF-HOLLAND has therefore established itself as one of the few manufacturers in its sector that is internationally positioned with an extensive product range and a broad service network. SAF-HOLLAND S.A. has been listed in the Prime Standard of the Frankfurt Stock Exchange since June 2007 and has been in the SDAX since December 2010.


Barbara Zanzinger
Hauptstraße 26
63856 Bessenbach

Phone +49 6095 301-617

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