earnings conference call - haldex abcorporate.haldex.com/media/6252/haldex-q4-and-fy-2017.pdf ·...

Innovative Vehicle SolutionsInnovative Vehicle Solutions

Earnings conference callFull year 2017Åke Bengtsson, President & CEOAndreas Ekberg, Acting CFOFebruary 14, 2018

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Innovative Vehicle Solutions

Agenda

Business Summary

Market Update

Sales

Financials

Way forward

2


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.

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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


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


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


Market update

7


Build rates – Heavy truck

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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.


Build rates - Trailer

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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.


Sales

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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


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.


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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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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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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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


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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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


Financials

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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

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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%


Operating margin analysis

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Q4/17 Q4/16

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 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


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


Way forward

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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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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


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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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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Questions?

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Thank You!

earnings conference call - haldex abcorporate.haldex.com/media/6252/haldex-q4-and-fy-2017.pdf ·...

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