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Innovative Vehicle SolutionsInnovative Vehicle Solutions
Earnings conference callQ2 2016
Bo Annvik, CEO / Åke Bengtsson, CFOJuly 15, 2016
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Innovative Vehicle Solutions
Agenda
Business Highlights
Market Update
Sales
Financials
Outlook
Public offer
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Innovative Vehicle Solutions
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
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Innovative Vehicle Solutions
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
Innovative Vehicle Solutions
Build rates – Heavy truck
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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.
Innovative Vehicle Solutions
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.
Innovative Vehicle Solutions
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
Innovative Vehicle Solutions
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.
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Innovative Vehicle Solutions
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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Innovative Vehicle Solutions
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.
Innovative Vehicle Solutions
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
Innovative Vehicle Solutions
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
Innovative Vehicle Solutions
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.
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Innovative Vehicle Solutions
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.
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Innovative Vehicle Solutions
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
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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%
Innovative Vehicle Solutions
Operating margin analysis
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Q2/16 Q2/15
Sales mix
Product mix
Volume
Exchange rates
Gross margin
Restructuring program
Innovative Vehicle Solutions
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
Innovative Vehicle Solutions
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
Innovative Vehicle Solutions
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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Innovative Vehicle Solutions
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.
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Innovative Vehicle Solutions
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
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