earnings conference call - haldex abcorporate.haldex.com/media/6252/haldex-q4-and-fy-2017.pdf ·...
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Innovative Vehicle SolutionsInnovative Vehicle Solutions
Earnings conference callFull year 2017Åke Bengtsson, President & CEOAndreas Ekberg, Acting CFOFebruary 14, 2018
1
Innovative Vehicle Solutions
Agenda
Business Summary
Market Update
Sales
Financials
Way forward
2
Innovative Vehicle Solutions
Business Summary Q4 2017
Strong end to the year
Revenue growth in all geographic regions in Q4 which took us to sales growth for FY 2017.
Disc brake sales continued to increase.
Actuators back to growth.
Growth for brake adjusters. New legislation in China will have a positive impact.
Operating margin of 6.5% excluding one-offs for FY 2017, in line with previous year.
Projects related to autonomous driving are progressing well.
3
Innovative Vehicle Solutions
New technology projects with customers
High pace in the technology shift towards autonomous driving.
Brake systems play a central role in the vehicle system.
Open standards and non-hardware dependent solutions required.
On-going projects with customers are progressing well.
4
Innovative Vehicle Solutions
EMB - Next test phase initiated
Start conditions: 90 km/h, 40 t vehicle weigth
ABS and Drum brakes ( Brake pressure 8 bar)
Improvement from Disc brakes ( Brake pressure 10 bar)
EBS on Truck
EBS also on Trailer
Electromechanical brakes
Physical limit
- 16%
- 7%
- 23%
- 14%
Braking distance
Innovative Vehicle Solutions
2017 – an exceptional year
6
10%
<11/3
faster thanthe market
DIVIDEND
OPERATING MARGIN
NET DEBT/EQUITY
ORGANIC GROWTH
6.5%
1%
0.42
0.55SEK
Innovative Vehicle Solutions
Market update
7
Innovative Vehicle Solutions
Build rates – Heavy truck
8
Thousands of units
North America official build rates increased with 11% in 2017. The North American market is expected to increase with 20% in 2018.
Europe official build rates increased with 5% in 2017. The European market is expected to grow with 3% in 2018.
India and Brazil are expected to increase in 2018 while China 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.
Innovative Vehicle Solutions
Build rates - Trailer
9
Thousands of units
China Europe North America
India Brazil
North America official build rates increased with 2% in 2017. The North American market is expected to decline with 1% in 2018.
European build rates were on par in 2017. The European market is expected to decline with 4% in 2018.
Brazil is expected to grow, India to be flat and China to decline in 2018.
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.
Innovative Vehicle Solutions
Sales
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Innovative Vehicle Solutions
Q4/17 Q4/16 2017 2016
Net sales, SEK million 1,049 1,054 4,462 4,374
Growth, currency adjusted 5% -5% 1% -9%
Sales, Haldex GroupSEK m
11
2014
2015
2016
2017
Innovative Vehicle Solutions
Sales per product line
SEK mSales
Foundation BrakeAir Controls
1/16 2/16 3/16 4/16 1/17 2/17 3/17 4/17
1 currency adjusted
SEK million Q4/17 Q4/16 change1 2017 2016 change1
Foundation Brake 598 577 9% 2,529 2,420 4%
Air Controls 451 477 -1% 1,933 1,954 -2%
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Foundation Brake: Disc brake sales and brake adjuster sales continued to increase. Actuators returned to growth in second half of the year and achieved growth also on a full year basis.
Air Controls: ABS was declining. The Reman sales has stabilized after previous year’s decline.
Innovative Vehicle Solutions
Disc brake technology shift
Feedback from customers and industry analysts are consistent – the shift in North America is happening now and it is happening faster than previously forecasted.
Haldex disc brake has been selected as an option of one of the large axle manufacturers in the US.
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Innovative Vehicle Solutions
Trend reversal for actuators
Lower actuator sales since end of 2014 when the product recall was done.
Trend broken in mid 2017. In second half of the year actuators had two digit growth, reaching growth on full year basis.
Re-design of the product in order to re-launch a new version. To not damage our reputation, we have applied incredibly rigid tests and requirements on the product’s quality. Launch took place during the fall.
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Innovative Vehicle Solutions
New legislation drives demand for brake adjusters
New legislation in China from 1 January 2018.
All new heavy vehicles must have automatic brake adjusters.
Manual brake adjusters are widely used today.
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Innovative Vehicle Solutions
Sales per region
SEK m SEK m
Europe North America
1/16 2/16 3/16 4/16 1/17 2/17 3/17 4/17
SEK m SEK m
Asia & Middle East South America
1/16 2/16 3/16 4/16 1/17 2/17 3/17 4/17 1/16 2/16 3/16 4/16 1/17 2/17 3/17 4/17
SEK million 2017 2016 change1
Europe 1,665 1,571 5%North America 2,202 2,238 -2%Asia & Middle East 462 445 4%South America 133 120 3%
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Europe: Sales of disc brakes, actuators and brake adjusters have increased.
North America: Largest increase from sales of break adjusters and actuators. Disc brake sales is growing, but from low levels.
Asia: Sales in both India and China increased. Sales of brake adjusters and ABS have increased while sales of an older version of the disc brake has declined.
South America: In Brazil, revenue increased mainly due to growth of sales in the aftermarket.
1/16 2/16 3/16 4/16 1/17 2/17 3/17 4/17
1 currency adjusted
Innovative Vehicle Solutions
HDAW – launch of Midland products
Second brand for value line products: Midland in NA and Grau in EU.
NA has now launched a wider set of products under the Midland brand.
Cooperation with suppliers like Fras-Le for jointly branded brake pads.
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Innovative Vehicle Solutions
Sales per customer category
Truck: Sales have increased in all geographic regions.
Trailer: Continued success for the disc brake in Europe. Trailer sales in North America has decreased while it has increased in Asia.
Aftermarket: Sales growth in all geographic regions.
TruckTrailerAftermarket
1 currency adjusted
SEK million Q4/17 Q4/16 change1 2017 2016 change1
Truck 264 236 19% 1,029 1,006 2%Trailer 309 334 -4% 1,400 1,383 1%Aftermarket 476 484 4% 2,033 1,985 2%
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SEK m
1/16 2/16 3/16 4/16 1/17 2/17 3/17 4/17
Innovative Vehicle Solutions
Financials
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Innovative Vehicle Solutions
Earnings
SEK
Earnings per share
SEK m
Operating income & margin*
%
IncomeOperating margin
1/16 2/16 3/16 4/16 1/17 2/17 3/17 4/17 1/16 2/16 3/16 4/16 1/17 2/17 3/17 4/17
20
143 MSEK in one-offs in 2017, of which SEK 19 m related to restructuring activities, SEK 56 m to customer commitments and SEK 68 m related to the bidding process.
SEK
1/16 2/16 3/16 4/16 1/17 2/17 3/17 4/17
Sales & Margins*
RevenueGrossmarginOperating margin
2017 2016 changeGross margin, % 27.5 27.9 -0.4Operating income (excl one-off items), SEK million 292 291 0%Operating income, SEK million 149 204 -27%Operating margin (excl. one-off items), % 6.5 6.6 -0.1Operating margin, % 3.3 4.7 -1.4Net income, SEK million 79 91 -13%Earnings per share, SEK 1.67 2.00 -16%
Innovative Vehicle Solutions
Operating margin analysis
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Q4/17 Q4/16
Sales mix
Product mix
Volume
Exchange rates
Gross margin
Restructuring program
Innovative Vehicle Solutions
Cash FlowWorking Capital & Cash Conversion Days
22
* excluding one-off items
SEK mSEK m
Cash flowoperating activities
Working capitalCash conversion days
1/16 2/15 3/16 4/16 1/17 2/17 3/17 4/17
Working capital & Cash conversion days
Days
1/16 2/16 3/16 4/16 1/17 2/17 3/17 4/17
SEK million Q4/17 Q3/17 Q2/17 Q1/17 Q4/16 Q3/16 Q2/16 Q1/16Cash flow from operating activities 45 27 39 19 88 65 61 42Cash flow after net investments* 16 1 13 4 92 27 25 21
Innovative Vehicle Solutions
Financial Key FiguresQ4 2017 vs. Q3 2017
SEK million Dec 31 Sept 30 Quarterly2017 2017 change
Working capital 694 734 -5%
Intangible assets 549 524 +5%
Capital employed 2,169 2,207 -2%
Total assets 3,078 3,120 -1%
Equity 1,395 1,361 +2%
Net debt -584 -572 +2%
Return on capital employed (excl. one-off items)* 13.3 12.6 +0.7
Return on capital employed* 6.8 4.2 +2.6
Equity ratio, % 45 44
Net debt/Equity ratio, % 42 42
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*) Rolling twelve months
Innovative Vehicle Solutions
Way forward
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Innovative Vehicle Solutions
Smarter transportation drives long term value
Increased transportation needs and improved infrastructure
Sustainable and safe solutions needed
Cost efficiency
Connectivity
Electrification
Autonomous driving
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Innovative Vehicle Solutions
Capital market event, March 9Grand Hotel, StockholmAt 12.00 – 15.00
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CUSTOMER FOCUS
OPERATIONAL EXCELLENCE
BRIDGE BUILDING CULTURE
Entrepreneurship
Customer service
Key account approach
Commercial excellence program
.
Safety #1
Quality – 0 defects
Manage cost
Standardized work
Continuous improvement
Ethics
5C behaviors
Leadership
Competence
PRODUCT LEADERSHIP
Innovative product development
Value driving product properties
R&D capabilities
Product/technology roadmaps
AFTERMARKET EXPANSION
Lifecycle offering approach
Second brand and reman offerings
E-commerce
M&A driven capability growth
Digitalized offerings
STRATEGIC OBJECTIVES DRIVING OUR FUTURE2016 - 2021 Profitable growth
Ethical Haldex
Green Haldex Safe Haldex
Innovative Vehicle Solutions
Market outlook 2018
North America Has recovered and is expected to reach a higher level than the previous year. Difficult, to assess how quickly the shift to disc brakes will occur.
EuropeConsidered to be stable with slightly higher order intake in 2018.
ChinaWeak market according to the forecast institutes, but Haldex’ sales is estimated to grow due to greater demand for brake adjusters.
IndiaExpected to return to growth in 2018.
BrazilSigns of a recovery have persisted, and the market is expected to grow, although from very low levels.
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Innovative Vehicle Solutions
Haldex in 2018
We estimate net sales for 2018 to increase compared to 2017.
Higher sales enable higher operating income. This will be off-set against greater investment in development projects and costs for expansion in North America and China.
The operating margin for 2018 is expected to be slightly lower or in line with the operating margin excluding one-off items in 2017.
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Innovative Vehicle Solutions
Questions?
29
Thank You!
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