SAF-HOLLAND achieves an operating result in the first half of the year just short of break-even
* Sales: EUR 213.3 million
* Adjusted EBIT: EUR -1.3 million
* CEO Dr. Beutel: 'Restructuring makes an impact, proposed trustee model
sustainably supports operating business'
Bessenbach, August 25, 2009 - SAF-HOLLAND S.A. achieved an adjusted
operating result nearly at break-even point in the first half of 2009 with
June the first month of the year to show a profit. The Group is beginning
to benefit from the cost reduction and restructuring activities which the
Company has initiated due to weak business conditions. Management and
employees remain focused on the day to day business of the Company, a
situation unaffected by the on-going negotiations with the banks on the
Company's financing arrangements. The trustee model proposed by the banks
primarily affects the interests of owners and financing banks.
Dr. Reiner Beutel, CEO of SAF-HOLLAND Group GmbH: 'SAF-HOLLAND is
benefitting from our decisive cost reduction initiatives. Both in June and
July, a positive monthly operating result was achieved. In addition,
liquidity has continuously improved. It is not only on the cost side where
positive signs are visible: the truck market in the USA also seems to be
stabilizing and our global Aftermarket business has been showing an
upswing since March. We are confident that this positive development in
North America and in the Aftermarket will continue. Our efforts will pay
off even more, if demand sustainably increases. Finalizing the negotiations
with the banks, whether on the basis of the currently proposed 'trustee
model', would also sustainably support and financially secure the operating
business.'
Cost savings stop decline in earnings
Demand for trucks, trailers, components and replacement parts continues to
suffer from high inventories of unsold vehicles and under-utilized fleets
and equipment. As a result, Group sales fell in the first half of the year
by more than 50 % to EUR 213.3 million (previous year: EUR 458.0 million).
The decline primarily affected business in Europe with a drop of 67.9 % to
EUR 104.9 million (previous year: EUR 326.8 million) in the first
half-year. In North America, sales went down by only 16.3% to EUR 98.3
million (previous year: EUR 117.5 million). While extraordinary expenses,
which were primarily due to refinancing negotiations, burdened earnings,
cost savings and efficiency increases had a positive effect. Adjusted EBIT
amounted to a total of EUR -1.3 million (previous year: EUR 37.5 million).
The gross margin in the first half of the year was almost at the same level
as in the previous year at 16.2 % (previous year: 17.7 %). Adjusted profit
for the period amounted to EUR -9.9 million (previous year: EUR 21.1
million) in the first half of the year, and was influenced by financing
costs, particularly higher interest rates and a higher utilization of bank
credits. Adjusted earnings per share amounted to EUR -0.48 (previous year:
1.12)
The second quarter of 2009 was characterized by conflicting developments: a
weak May was followed in June by the second highest monthly sales of 2009
to date. In the three months from April to June, the Group achieved sales
of EUR 101.2 million (previous year: EUR 238.7 million). Adjusted EBIT was
EUR -0.8 million (previous year: EUR 19.4 million).
Trailer Systems with higher demand since June
A decline in sales of up to 90%, related mainly to plant closures by our
customers, was experienced by the Trailer Systems Business Unit. Since
June, however, sales have increased but at a low rate. We have started our
own axle production in the USA, replacing purchased axles from external
manufacturers. The Group also received its first orders for axle systems
with disc brakes which offer reduced braking distances over drum brakes. We
expect our business to benefit from new braking regulations which take
effect in 2011 and require that braking distances for new trucks be reduced
by 30%. Cumulative sales declined in the first half-year to EUR 89.5
million (previous year: EUR 327.8 million), the gross margin decreased to
-3.8% (previous year: 13.0%) due to the high underutilization. The Business
Unit's share of total sales fell to 42.0% (previous year: 71.6%).
Powered Vehicle Systems with stable demand in the USA
The Powered Vehicle Systems Business Unit significantly increased sales and
earnings compared to the previous year. Additional business from the former
Georg Fischer Verkehrstechnik GmbH acquired in 2008 as well as a major
order in the USA allowed for an increase in sales of 32.2% to EUR 48.9
million (previous year: EUR 37.0 million) in the first half of the year.
The gross margin improved to 21.1% (previous year: 14.9%). The share in
Group sales rose to 22.9% (previous year: 8.1%). According to estimates
from leading market research institutes, the truck market in the USA has
stabilized. In view of new emission regulations beginning in 2010, an
upturn of demand can be expected at the end of the year.
Aftermarket with upswing since March
In the first half of 2009, the Aftermarket Business Unit again assisted in
stabilizing sales of the Group. Since March, demand has revived in Europe
and North America. The acquisition of the former Georg Fischer
Verkehrstechnik showed positive effects due to the broader product
portfolio. In addition, new orders were generated in the Middle Eastern
states and the worldwide services network is continuously being extended.
With -19.6%, the decline in sales to EUR 74.9 million (previous year: EUR
93.2 million) was lower than in the Trailer Systems business. New
international sourcing activities contributed to an improved gross margin,
which increased to 37.8% (previous year 35.4%). This business segment
currently contributes 35.1% (previous year: 20.3%) to total Company sales.
Milestones reached in cost reduction programme
SAF-HOLLAND made good progress in terms of cost reductions and efficiency
improvements in the first half of 2009. Net working capital declined
significantly by EUR 13.6 million; inventories were reduced by EUR 22.8
million to EUR 66.3 million. Cash and cash equivalents rose to EUR 14.2
million (December 31, 2008: EUR 8.6 million) as of the reporting date June
30, 2009. Cash flow from operating activities before income tax improved
despite weak sales development to EUR 21.0 million (previous year: EUR 20.3
million). Repayments for current financing were made on schedule. The
equity ratio was 10.5% (December 31, 2008: 13.4%). In addition, the Group
reached a supplementary labor agreement with the workforce in Germany. It
provides for savings in the single-digit millions and grants employment and
location guarantees in return.
In parallel with operating the business, there have been intensive
discussions with the lending banks on the Group's refinancing. Until the
end of July, a standstill agreement was in force with the banks, who have
also endorsed a preliminary expert opinion on the financial restructuring
from the auditing firm KPMG and the prognosis as a going concern. In
August, the banks proposed a refinancing arrangement that included the
transfer of the Company's operational activities to a trustee. This would
mean that SAF-HOLLAND S.A. would, to a large extent, be legally separated
from the operating business and the assets of the Group. At the same time,
the operating business would be sustainably supported and financially
secured. After negotiating the economic considerations, an extraordinary
General Meeting of the shareholders must make a decision on the proposal.
Outlook:
Even if the first signs of a market revival in the worldwide replacement
part business and stabilization in the truck market in the USA are visible,
SAF-HOLLAND expects a clear sales decline over the year compared to 2008
with a corresponding reduction in earnings. The planned cost reductions of
EUR 60 million will, however, cushion the decline in earnings. Moreover,
liquidity is to be improved by inventory cuts and lower net working
capital. Over the long term, SAF-HOLLAND expects an increase in demand
which will also be boosted by new emissions regulations in the USA
(beginning in 2010) and braking regulations (beginning in 2011).
Note:
SAF-HOLLAND reports adjusted earnings figures since costs have accrued as a
result of the business combination, the IPO and restructuring that are not
directly attributable to the operating business. EBIT has been adjusted for
the following effects: depreciation and amortization from the purchase
price allocation as well as restructuring and integration costs.
Company Profile:
With more than EUR 800 million in sales and over 2,000 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, 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
July 2007.
Contact:
SAF-HOLLAND Group GmbH
Barbara Zanzinger
Hauptstraße 26
63856 Bessenbach
Phone +49 6095 301-617
barbara.zanzinger@safholland.de
25.08.2009 Financial News transmitted by DGAP