SAF-HOLLAND: Sales Growth in the First Nine Months, Operating Earnings at Last Year’s Level
• Adjusted EBIT of EUR 46.4 million
• Sales rise to EUR 646.3 million, adjusted for exchange rate
effects to EUR 673.2 million
• Full year 2008: Sales of EUR 820 million and EBIT margin of about
6 percent expected
Luxembourg, November 19, 2008 – In the first nine months of 2008,
SAF-HOLLAND S.A. achieved Group sales of EUR 646.3 million, corresponding
to an increase of 5.4 percent over the comparable period of the previous
year. Adjusted earnings before interest and taxes (EBIT) of EUR 46.4
million (previous year: EUR 46.6 million) remained stable. The European
trailer business was an important driver of growth in the first half of
2008. However, the intensifying bank crisis and its effects on the industry
slowed sales development in the third quarter. During this period, sales
totaled EUR 188.3 million (previous year: EUR 201.8 million); adjusted for
exchange rate effects, sales were EUR 194.7 million.
For the period from January through September 2008, profit was EUR 18.4
million (previous year: EUR 14.7 million), primarily as a result of the
solid performance in the first half of 2008. In the last three months of
the period under review, profit declined to EUR 1.1 million. The impact of
underutilization of production capacity was the most important factor. In
addition, it is possible to pass higher prices for materials along to
customers only after a delay. The adjusted EBIT margin during the period
from January to September amounted to 7.2 percent (previous year: 7.6
percent).
Rudi Ludwig, CEO of the SAF-HOLLAND Group, commented: 'The business
environment has deteriorated to such an extent in recent months that the
industry could be facing a difficult period. Therefore, we are adjusting
our cost structures to new market conditions as quickly as possible. By the
end of the year, we will have introduced all of the measures necessary to
position the Company well for 2009. We remain committed to our long-term
growth strategy even though we cannot achieve our goals in the originally
designated time frame.'
Market position improved for the Powered Vehicle Systems Business Unit
Despite a muted business environment, a noticeable revival of the Powered
Vehicle Systems Business Unit that began in the second quarter continued
during the past three months. Thus, the Business Unit was able to boost
sales in the third quarter by 23.2 percent to EUR 23.4 million (previous
year: EUR 19.0); adjusted for exchange rate effects, sales even rose by
35.3 percent to EUR 25.7 million. During the months from January to
September 2008, the Business Unit’s sales totaled EUR 60.4 million
(previous year: EUR 64.1 million); adjusted for exchange rate effects,
sales climbed to EUR 68.3 million. The Business Unit will benefit from
additional growth stimuli in the future as a result of its entry into the
European fifth wheel business via the acquisition of Georg Fischer
Verkehrstechnik GmbH at the beginning of October 2008.
Product range expanded in the Trailer Systems Business Unit
The business performance of the Trailer Systems Business Unit was
characterized by a strong first half of the year and a weak third quarter.
Overall, sales during the nine-month period grew by 10.9 percent to EUR
451.3 million (previous year: EUR 407.0 million); adjusted for exchange
rate effects, sales rose by 13.1 percent to EUR 460.4 million. In the third
quarter, sales declined as a result of the weaker market environment by 7.2
percent to EUR 123.5 million (previous year: EUR 133.7 million). As early
as 2009, SAF-HOLLAND will commence production of its own axle systems in
North America, thus rounding out its product range there for the trailer
systems segment. Since the business combination of SAF and HOLLAND twenty
months ago, progress has been made in facilitating technology transfer
between the two predecessor companies.
Aftermarket Business Unit stabilizes business performance
In the first nine months of 2008, the Aftermarket Business Unit of
SAF-HOLLAND generated sales of EUR 134.6 million (previous year: EUR 142.3
million); adjusted for exchange rate effects, sales totaled EUR 144.5
million. Of this amount, EUR 41.4 million (previous year: EUR 49.1 million)
accrued in the third quarter; adjusted for exchange rate effects, sales
totaled EUR 43.4 million. These months were characterized by a somewhat
slow summer and market weakness in September. In total, the Business Unit
is contributing to the Group’s overall performance with a share of sales of
21.5 percent and an EBIT margin of 16.2%.
Financial structure influenced by capital increase and acquisition
As of September 30, total assets increased to EUR 592.3 million
(12/31/2007: EUR 554.6 million). Equity rose to almost EUR 130 million
(12/31/2007: EUR 108.2 million), driven in part by proceeds from a capital
increase of about EUR 14 million in September. The equity ratio climbed to
21.9 percent (12/31/2007:19.5 percent). Reflecting the acquisition of the
landing leg business of Austin-Westran and exchange rate effects, as of
September 31, 2008 total short- and long-term loans amounted to EUR 282.6
million (12/31/2007: EUR 262.9 million). As of the same reporting date,
cash flow from operating activities amounted to EUR 30.9 million (previous
year: EUR 40.0 million). Its decline essentially mirrors the relationship
of higher inventories to weaker sales. The combination of high demand for
products in the early months of 2008, plant relocations, and the setting up
of the Group’s own axle production in North America led to an increase in
inventories. In September, SAF-HOLLAND initiated a project to reduce net
working capital in the second half of the year by about EUR 20 million.
Number of employees rose slightly
During the nine months ended September 30, the Company had an average of
3,061 employees (12/31/2007: 2,996). The primary cause for the increase was
the purchase of the landing leg business of Austin-Westran. Initial
measures to adjust capacity to changing market conditions included the
termination of approximately 130 subcontractor employment agreements.
Outlook
For the full year 2008, the Company expects slight sales growth to about
EUR 820 million (previous year: EUR 812.5 million), representing slower
growth than had been anticipated prior to the economic downturn. The
adjusted EBIT margin should reach about 6 percent (previous year: 7.4
percent), reflecting the impact of capacity underutilization through the
end of the year caused by a distinct decline in orders. SAF-HOLLAND has
introduced a series of programs to boost efficiency and reduce costs. In an
initial step, employment agreements with contractors and temporary workers
were terminated. By the end of the year, the number of employees is to
decrease further. In addition, the closure of production sites in Europe
and North America is planned. Additional projects, for example to reduce
logistics costs, are underway or are close to being completed. These
measures will help SAF-HOLLAND in fiscal year 2009 against the backdrop of
a weaker market environment. The Group expects to benefit from the
acquisitions of Georg Fischer Verkehrstechnik GmbH and Austin-Westran’s
landing leg product line. Additional factors are the start of axle
production in North America as well as pending new major orders, which
would generate additional growth in North America and China. The latter
confirm SAF-HOLLAND’s strong position as a systems supplier as the orders
encompass the entire product range for trailers. The Group reiterates its
long-term goal of achieving sales of at least one billion Euro combined
with an EBIT margin of 10%.
Company Profile
With more than EUR 800 million in sales and approximately 3,000 employees,
SAF-HOLLAND S.A. is one of the worldwide 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, couplers, 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.
19.11.2008 Financial News transmitted by DGAP