earnings conference call - haldex abcorporate.haldex.com/media/4069/haldex-q2-2016.pdfinnovative...

Innovative Vehicle SolutionsInnovative Vehicle Solutions

Earnings conference callQ2 2016

Bo Annvik, CEO / Åke Bengtsson, CFOJuly 15, 2016

1

Innovative Vehicle Solutions

Agenda

Business Highlights

Market Update

Sales

Financials

Outlook

Public offer

2


Business Highlights Q2 2016

Solid operating margin in spite of weaker market conditions

Market conditions continued to be weak in Q2, resulting in lower sales, especially in North America.

Implemented cost savings and solid cost controls partially offset the decrease in sales and had a positive impact on the operating margin. Currency adjusted operating margin of 8.3 percent.

Cash flow improved compared with the same period of the previous year.

A joint venture is about to be formed with the Chinese company VIE, focusing on electromechanical brakes for electric buses in China

3


Q2 vs. long term objectives

4

>10%

<1

1.40 SEK

-2%

DIVIDEND

OPERATING MARGIN

NET DEBT/EQUITY

ORGANIC GROWTH

7.6%

-9%

0.38

2.00


Market update

5


Build rates – Heavy truck

6

Thousands of units

North America official build rates decreased by 26% in Q2 2016. The North American market is expected to decrease by 27% in 2016.

Europe official build rates increased by 5% in Q2 2016. The European market is expected to grow with 1% in 2016.

India and China are expected to grow in 2016 while Brazil will decline.

China Europe North America

India Brazil

Source: the information pertaining to trucks is based on statistics from JD Powers. Information pertaining to the trailer market in Europe is based on statistics from CLEAR, the information pertaining to trucks and trailers in North America is based on statistics from FTR and the trailer information from South America and Asia is based on local sources.


Build rates - Trailer

7

Thousands of units

China Europe North America

India Brazil

North America official build rates decreased by 7% in Q2 2016. The North American market is expected to decrease by 7% in 2016.

European build rates increased with 11% in Q2 2016. The European market is expected to grow with 10% in 2016.

China, India and Brazil are forecasted to show growth in 2016.

Source: the information pertaining to trucks is based on statistics from JD Powers. Information pertaining to the trailer market in Europe is based on statistics from CLEAR, the information pertaining to trucks and trailers in North America is based on statistics from FTR and the trailer information from South America and Asia is based on local sources.


Sales

8


Q2/16 Q2/15 H1/16 H1/15

Net sales, SEK million 1,147 1,290 2,244 2,536

Growth, currency adjusted -9% -1% -10% 0%

Sales, Haldex Group

SEK m

9

2013

2014

2015

2016


Disc brake growth continues

Re-launch of the ModulT disc brake in USA in late February. First deals signed.

New family of truck disc brakes designed and are now being validated on field test.

Discussions with major truck manufacturers on-going. First decisions expected in the fall of 2016.

10


Actuator sales

The market decline of Truck in North America, where Haldex’ has a strong market position for actuators, is the major reason for the decline of actuator sales.

Product recall still having some effect on sales.

Replacement product to be launched in Q3. Sales discussion initiated in Q2. Most customers are planning to reintroduce the Haldex actuator during an upcoming change window.

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Sales per product line

SEK m

Sales

Foundation BrakeAir Controls

1/15 2/15 3/15 4/15 1/16 2/16

1 currency adjusted

SEK million Q2/16 Q2/15 change1 H1/16 H1/15 change1

Foundation Brake 652 744 -10% 1,263 1,454 -11%

Air Controls 495 546 -7% 981 1,082 -8%

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Foundation Brake: Disc brake sales continued to increase in Q2. Sales of actuators declined due to lower market demand and the product recall campaign. Lower sales of brake adjusters linked to market decline and higher disc brake penetration.

Air Controls: ABS proved resistant to the general decline brought about by the weaker market conditions. The largest decline in sales was in Reman. An older version of an Air Controls product has been phased out as part of the restructuring program.


Sales per region

SEK m SEK m

Europe North America

1/15 2/15 3/15 4/15 1/16 2/16

SEK m SEK m

Asia & Middle East South America

1/15 2/15 3/15 4/15 1/16 2/16 1/15 2/15 3/15 4/15 1/16 2/16

SEK million Q2/16 Q2/15 change1

Europe 405 419 -3%North America 586 730 -17%Asia & Middle East 124 106 23%South America 32 35 4%

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Europe: Disc brake sales of our newest models to Trailer customers have increased. Decreased sales of brake adjusters and an old Air Controls product.

North America: The weaker market demand has negatively affected the actuator sales. Lower Reman sales due to a customer with financial difficulties.

Asia: The Indian market has continued to grow, and the Chinese market showed signs of recovering in Q2.

South America: In Brazil, the market continued to be weak in Q2.

1/15 2/15 3/15 4/15 1/16 2/16

1 currency adjusted


Sales per customer category

Truck: Sales have mainly decreased due to the weaker market in North America. Some increase in sales in Asia and South America.

Trailer: Continued success for the disc brake in Europe but somewhat lower sales to Trailer customers in North America, due to weaker market conditions.

Aftermarket: Stable sales in Europe and Asia, decline in North and South America.

TruckTrailerAftermarket

1 currency adjusted

SEK million Q2/16 Q2/15 change1 H1/16 H1/15 change1

Truck 278 349 -17% 537 688 -19%Trailer 362 373 -2% 706 752 -5%Aftermarket 507 568 -8% 1,001 1,096 -7%

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SEK m

1/15 2/15 3/15 4/15 1/16 2/16


Joint venture for electromechanical brakes

Joint venture with VIE to develop electromechanical brake systems for commercial vehicles with an initial focus on the electric bus market in China.

The Chinese market for electrical buses is forecasted to grow by 47% between 2015 and 2020, to over 141,000 vehicles produced during 2020.

Electromechanical brakes offers better comfort and shorter braking distance.

In the long term electromechanical brakes are expected to be usedglobally for all types of electricalcommercial vehicles.

15


Initial success for aftermarket brand and e-commerce

Sales of new brands, including e-commerce in North America, better than plan.

Broader range of products focused on third and fourth vehicle owners, which have shorter service life requirements and do not want to pay for a premium product.

Midland for North America. Grau for Europe.

Remanufactured products extended to Europe under the Reman brand. Initial focus on compressors.

16


Financials

17


Earnings

SEK

Earnings per share

SEK m

Operating income & margin*

%

IncomeOperating margin

1/15 2/15 3/15 4/15 1/16 2/16 1/15 2/15 3/15 4/15 1/16 2/16

18

No one-off items in H1.

Currency adjusted operating margin of 8.3% in Q2.

SEK

1/15 2/15 3/15 4/15 1/16 2/16

Sales & Margins*

RevenueGrossmarginOperating margin

* Excluding one-off items

Q2/16 Q2/15 changeGross margin, % 28.2 29.3 -1.1

Operating income (excl one-off items), SEK million 87 137 -36%

Operating income, SEK million 87 134 -35%

Operating margin (excl. one-off items), % 7.6 10.6 -3.0

Operating margin, % 7.6 10.4 -2.8

Net income, SEK million 62 86 -28%

Earnings per share, SEK 1.39 1.92 -28%


Operating margin analysis

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Q2/16 Q2/15

Sales mix

Product mix

Volume

Exchange rates

Gross margin

Restructuring program


Cash FlowWorking Capital & Cash Conversion Days

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* excluding one-off items

SEK million Q2/16 Q1/16 Q4/15 Q3/15 Q2/15 Q1/15

Cash flow from operating activities 61 42 111 133 -26 2

Cash flow after net investments* 25 21 102 122 -24 -9

SEK mSEK m

Cash flowoperating activities

Working capitalCash conversion days

1/15 2/15 3/15 4/15 1/16 2/16

Working capital & Cash conversion days

Days

1/15 2/15 3/15 4/15 1/16 2/16


Financial Key FiguresQ2 2016 vs. Q1 2016

SEK million June 30 Mar 31 Quarterly2016 2016 change

Working capital 712 652 +9%

Intangible assets 483 474 +2%

Capital employed 2,087 2,061 +1%

Total assets 2,922 2,885 +1%

Equity 1,340 1,389 -4%

Net debt -504 -377 +34%

Return on capital employed (excl. one-off items)* 17.3 19.6 -2.3

Return on capital employed* 11.7 13.9 -2.2

Equity ratio, % 46 48

Net debt/Equity ratio, % 38 27

Contingent liabilities 0 0

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1) Rolling twelve months


Outlook

22


Market outlook 2016

North AmericaContinue to be weak and may be impacted further by a decline in the Trailer segment during the fall.

EuropeA couple of percentage points up.

ChinaSigns of recovery.

IndiaPositive market conditions.

BrazilNot expected to recover in 2016.

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Haldex in 2016

Forecast unchanged since previous report.

Haldex’s overall forecast is that net sales for 2016 will be lower than the net sales for 2015.

Our goal is to continue ensuring solid profitability. The operating margin for first six months can be considered realistic under current market conditions.

24


Public offer

July 14, SAF-Holland announced an unsolicited public takeover offer for all shares in Haldex.

The Board of Haldex will evaluate the Offer and announce its opinion on the Offer no later than two weeks prior to the expiry of the acceptance period (Aug 12).

The Board of Haldex can confirm that it has received a credible non-binding proposal from another third party

25


Questions?

26

Thank You!

earnings conference call - haldex abcorporate.haldex.com/media/4069/haldex-q2-2016.pdfinnovative...

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