Strong organic growth and high operating margin despite challenges in the supply chain
- Net sales increased by 25 percent to SEK 1,203m (964). The organic growth was 26 percent.
- Adjusted operating income increased to SEK 100m (58), equivalent to an adjusted operating margin of 8.3 percent (6.0).
- Reported operating profit totaled SEK 96m (-23). Non-recurring items of net SEK 4m related to the long-term restructuring program impacted the operating profit.
- Changes in exchange rates had a positive impact on operating profit of SEK 1m (-1).
- Profit after tax amounted to SEK 55m (-104). Tax totaled SEK -21m (-75).
- Earnings per share were SEK 1.11 (-2.15).
- Cash flow from operating activities totaled SEK 26m (231).
- The structural savings programs have developed according to plan and reduced expenses by SEK 21m.
- An agreement has been entered into with one of the world’s largest manufacturers of heavy trucks for the delivery of Haldex air disc brakes, which is an important milestone in the truck segment. The deal includes equipping a distribution vehicle with the electromechanical braking system (EMB), which is a breakthrough for the European market. The deal was reported as an event after the end of the quarter in the second quarter report.
- The supply chain is strained due to increased raw material and freight costs as well as component and semiconductor shortages.
Events after the end of the quarter
- Group Management is extended with two new positions. An EVP Sales & Product Management has been appointed with a clear focus to further strengthen Haldex growth. An EVP Purchasing has been appointed to improve sourcing processes and increase direct material cost savings.
Comment from Jean-Luc Desire, President & CEO:
This marks my first complete quarter as CEO for Haldex, and I am pleased to see a strong recovery in most of our markets and segments, despite continued challenging market conditions. Financially, net sales showed strong improvement and reached SEK 1,203m (964) in the third quarter, equivalent to an organic growth of 26 percent. While the growth is in comparison to a challenging third quarter last year, we see improved underlying demand from our customers, and according to our assessment of external market data, we are taking market share. Net sales increased 4 percent compared to the previous quarter. Net sales year-to-date amounted to SEK 3,421m (3,019), corresponding to an organic growth of 21 percent.
The Americas and Europe reported organic sales growth of 26 and 38 percent respectively, while Asia reported a 7 percent decline, on the back of a quarter with high demand last year. The aftermarket segment had strong growth of 22 percent and sales increased successfully across all regions. It is positive to see high growth in the trailer segment as well, and that our increased focus on this segment is showing results.
With implemented price adjustments in combination with higher volumes and successful cost savings, we reached an adjusted operating profit of SEK 100m (58), corresponding to margin of 8.3 percent (6.0) in third quarter. Year-to-date, adjusted operating profit amounted to SEK 297m (96), corresponding to a margin of 8.7 percent (3.2). The increased sales and constraints in supply chain however led to a higher working capital and thus a weakened cash flow. The cash flow from operating activities in the third quarter amounted to SEK 26m (231).
Activity levels have increased and the constraints in the supply chain continue, causing both price increases and a shortage of certain commodities, semiconductors, and freight. We have mitigated significant parts of these additional costs through price increases to customers to compensate for increased raw material prices, however, as mentioned previously, we are not able to fully mitigate the impact of increased freight costs. We estimate that increased costs for commodities and freight will continue into the fourth quarter and have therefore decided on further measures. There continues to be a significant shortage of semiconductors, which will impact some of Haldex products at least into the beginning of next year. However, there is great uncertainty about these external factors, which is why we follow market developments closely and will take actions when necessary.
I can also share with you that that we have strengthened Group Management with two new members. To further add focus on growth, we have appointed an EVP Global Sales and Product Management with a global product responsibility. To reach operational excellence in managing our material costs, sourcing has been established as a separate function and an EVP Purchasing has been appointed. We have also reinforced our partnership with ANAND Group regarding our joint venture in India, which is an important step towards increasing the share of low-cost purchasing. With these organizational updates, I am convinced we have a more efficient and focused approach to develop the Haldex business moving forward.
An exciting upcoming event is that Haldex is launching the next generation electronic braking stability platform (EBS) for trailers at the Solutrans show in France in November. The EB+4.0 platform brings parking brake control into electronic management and offers a new modular and customizable approach to customer-specific functions. The trailer brake control system serves as a platform for different product families with the ability for multiple systems to communicate with each other to monitor data, transmit data and act upon data. This product offering is a shift to being present in the ‘brain’ of the trailer data. With this launch, Haldex is setting new standards for trailer braking and suspension systems.
The work on our strategic review is ongoing, and I look forward to presenting our updated approach and exciting journey ahead to you in the fourth quarter.
For further information, please contact:
Jenny Boström, Investor Relations Manager
Telephone: +46 (0)418 47 62 01
Email: [email protected]