SAF-HOLLAND S.A. reports a record year in 2015 - Dividend increases 25%

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

11.03.2016 07:45

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  - Group sales rise 10.5% to EUR 1,060.7 million

  - Adjusted EBIT climbs at a higher rate by 33.0% 

  - Adjusted EBIT margin reaches 8.9% 

  - Company slightly exceeds higher sales and earnings guidance provided in
    August 2015

Luxembourg, March 11, 2016 - The SDAX-listed commercial vehicle supplier
SAF-HOLLAND drove Group sales 10.5% higher in 2015 to EUR 1,060.7 (previous
year: EUR 959.7 million) despite pronounced market weakness in key sales
markets such as Brazil, Australia, and the Russian Federation. This
performance slightly exceeded the higher guidance given in August 2015
projecting sales at the upper end or slightly above the range of EUR 980
million to EUR 1,035 million. Solid demand for trucks and trailers in
Western Europe supported growth, as did the growing share of new products
for axle modules and suspension systems. The translation effect of the
strong US dollar also had a significantly positive impact on Group sales
performance.

Solid capacity utilization combined with the successful implementation of
steps to increase production efficiency led to a marked improvement in
earnings. The gross margin increased by almost a full percentage point. On
the strength of process improvements and the Company's consistent control
of costs, selling, administrative, and R&D costs increased at a lower
percentage rate than sales. All the above led to a pronounced increase of
45.0% in the operating result to EUR 79.3 million in fiscal year 2015
(previous year: EUR 54.7 million).

Adjusted EBIT margin reaches 8.9% 
Adjusted for extraordinary items the EBIT rose 33.0% to EUR 94.0 million
(previous year: EUR 70.7 million). The Group significantly expanded its
adjusted EBIT margin in the reporting year to a level of 8.9% (previous
year: 7.4%). This performance meant the Group was able to surpass slightly
the higher guidance given in August for an adjusted EBIT of nominally just
above EUR 90 million and virtually met its target range for 2015 of a 9% to
10% adjusted EBIT margin.

The finance result improved to a level of EUR -4.0 million (previous year:
EUR -7.7 million) primarily as the result of lower interest and finance
expenses due to derivatives and from the reversal and amortization of
transactions costs in connection with the refinancing of credit lines.
Finance income from unrealized and realized foreign exchange gains on
foreign currency loans and dividends remained at an elevated level of EUR
8.5 million (previous year: EUR 8.7 million).

Result for the period soars more than 50%
The result before tax rose year-on-year by 58.4% and reached EUR 77.6
million in 2015 (previous year: EUR 49.0 million). Given the essentially
unchanged income tax rate, the result for the period advanced to EUR 51.7
million (previous year: EUR 32.7 million), which resulted in undiluted
earnings per share for fiscal year 2015 of EUR 1.14 (previous year: EUR
0.72) and adjusted undiluted earnings per share of EUR 1.37 (previous year:
EUR 0.96).Taking already into account the potentially higher number of
shares from the convertible bond issued in 2014 diluted earnings per share
amounted to EUR 0.99 (previous year: EUR 0.69).

Proposed dividend increase of 25%
In view of the strong business performance, the Board of Directors plans to
propose at the Annual General Meeting a 25% increase in the dividend
payment for fiscal year 2015 for a dividend per share of EUR 0.40 (previous
year: EUR 0.32). This would equal a payout ratio of 38.6% of the available
net earnings, in the determination of which the purely accounting-related
and non-cash earnings from the valuation of inter-group foreign currency
loans were not taken into consideration.

Growth in all regions 
In Europe, still the strongest sales region, sales in 2015 grew 5.1% to EUR
521.9 million (previous year: EUR 496.5 million). This growth was backed by
the continuing economic recovery in Western Europe and the accompanying
investments in fleet modernization made by customers. Demand declined
further, however, from the Russian Federation, which is also an important
outlet for used trucks and trailers. In North America, also currency
effects helped SAF-HOLLAND to increase sales by 15.8% to EUR 421.3 million
in 2015 (previous year: EUR 363.9 million), whereby the North American
truck market cooled off significantly in the second half. In other regions,
sales rose by a total of 18.3% to EUR 117.5 million (previous year: EUR
99.3 million). Whereas the markets in China, most ASEAN countries, and the
Middle East performed positively, the Brazilian truck and trailer market
continued to fall from already low levels.

Higher sales and earnings contributions from all business units
Trailer Systems, the largest business unit, increased sales 12.5% to EUR
612.7 million (previous year: EUR 544.4 million). Adjusted EBIT increased
to EUR 38.0 million (previous year: EUR 20.5 million) thanks to the success
of the program implemented in 2013 to strengthen profitability and the
consolidation of our German plants, in particular. This corresponded to an
adjusted EBIT margin of 6.2% (previous year: 3.8%).

Powered Vehicle Systems grew sales 6.2% to EUR 180.0 million (previous
year: EUR 169.5 million). This expansion was driven by the strong
performance of the European truck business, higher sales in China with
Corpco, a specialist for bus suspensions systems, and favorable currency
effects from the USD. This contrasted with the increasingly challenging
market environment in North America faced by SAF-HOLLAND as the year
progressed. Adjusted EBIT in this business unit increased to EUR 13.6
million (previous year: EUR 11.8 million), and the adjusted EBIT margin
amounted to 7.6% (previous year: 7.0%).

Sales in the Aftermarket Business Unit climbed 9.0% to EUR 268.0 million
(previous year: EUR 245.8 million). Sales in this unit also saw an
increasing contribution from the trade brands GoldLine and Sauer Germany
Quality Parts, which primarily target markets with older vehicles. Despite
upfront costs for expanding sales structures in various states in North
America and the further development of international distribution centers
and sales offices, this business unit was able to advance its adjusted EBIT
to EUR 42.4 million (previous year: EUR 38.4 million) and adjusted EBIT
margin to 15.8% (previous year: 15.6%).

Solid sales and earnings performance expected - stable to slightly higher
organic sales and an adjusted EBIT margin of 8-9%
The market environment in fiscal year 2016 is expected to remain
challenging, particularly for important regional markets such as Brazil,
Russia, and Australia, where an improvement is not expected until the end
of 2016. Coming off of very high levels, the US heavy truck market
(class-8) is expected to weaken in 2016 and decline by an estimated 20%.

Nevertheless, SAF-HOLLAND is confident that it will achieve stable to
slightly higher organic sales in 2016, backed by further growth of the
European truck and trailer market. It is important to note that the
non-core agricultural product line, Aerway, was sold in December 2015 and
will no longer contribute to 2016 Group sales and earnings (2015 sales
contribution of roughly EUR 7 million). On this basis, the Group is
targeting sales of EUR 1,050 million to EUR 1,070 million in 2016. In view
of the projected upfront expenses for business expansion under strategy
2020, SAF-HOLLAND is budgeting for an adjusted EBIT margin of between 8%
and 9% in 2016 compared to 7.4% in 2014 and 8.9% in 2015. The financial
position is expected to remain sound from the continued exercise of our
investment discipline and through the Group-wide optimization of our net
working capital. The Group is targeting a net working capital ratio of 12%
to 13%, despite the planned reduction in factoring for cost reasons.

In alignment with the objectives of our Strategy 2020, additional sales and
earnings contributions could stem from new cooperations, joint ventures and
acquisitions, provided they offer attractive opportunities achievable at a
reasonable price and have a manageable risk profile. The effects of
potential acquisitions are not included in our sales and earnings guidance.


EUR million                                 2015       2014      Y-o-Y in %
Sales                                    1,060.7      959.7            10.5
Adjusted EBIT                               94.0       70.7            33.0
Adjusted EBIT margin (%)                     8.9        7.4         1.5 ppt
Result before tax                           77.6       49.0            58.4
Result for the period                       51.7       32.7            58.1
Undiluted earnings per share in EUR         1.14       0.72            58.3
Diluted earnings per                        0.99       0.69            43.5
share in EUR
Dividend per share in EUR                   0.40       0.32            25.0
Free cash flow                              35.0       11.3           209.7
Equity ratio (%)                           32.4*       38.5        -6.1 ppt




* The equity ratio was 45.3% when adjusted for the liquidity that exceeded
the amount presumed necessary for the operating business, primarily
stemming from the EUR 200 million promissory note loan.

Notes:
Adjusted EBIT was adjusted for the following items that are not
attributable to the operating business: amortization resulting from
purchase price allocation and impairment reversals on intangible assets
from impairment tests as well as one-time restructuring and integration
costs. The annual report of SAF-HOLLAND S.A. as of December 31, 2015 can be
accessed at
corporate.safholland.com/en/investoren/reports/2015.html.

Company Profile:
SAF-HOLLAND S.A., located in Luxembourg, is the largest listed supplier to
the commercial vehicle market in Europe. With sales of approximately EUR
1,060 million in 2015 and more than 3,100 employees, the company is one of
the world's leading manufacturers and suppliers of chassis-related systems
and components primarily for trailers, trucks, buses, and recreational
vehicles. The product range comprises axle and suspension systems, fifth
wheels, kingpins, and landing gear and is marketed under the brands SAF,
Holland, and Neway. SAF-HOLLAND sells its products to Original Equipment
Manufacturers (OEMs) on six continents. The Aftermarket Business Unit sells
spare parts to the Original Equipment Service (OES) of the manufacturers
and to end customers and service centers through its own extensive global
service and distribution network. SAF-HOLLAND is one of the few suppliers
in the truck and trailer industry that is internationally positioned in
almost all markets worldwide.




Contact:
SAF-HOLLAND GmbH
Stephan Haas
Hauptstraße 26
63856 Bessenbach

Phone +49 6095 301-617
Stephan.Haas@safholland.de


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Language:     English
Company:      SAF-HOLLAND S.A.
              68-70, boulevard de la Pétrusse
              L-2320 Luxembourg
              Grand Duchy of Luxembourg
Phone:        +49 6095 301 - 0
Fax:          +49 6095 301 - 260
E-mail:       info@safholland.de
Internet:     www.safholland.com
ISIN:         LU0307018795, DE000A1HA979, 
WKN:          A0MU70, A1HA97
Indices:      SDAX
Listed:       Regulated Market in Frankfurt (Prime Standard); Regulated
              Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich,
              Stuttgart
 
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