SAF-HOLLAND S.A.: SAF-HOLLAND records organic growth of 11.7% in Q2 2018 and an adjusted EBIT margin of 6.9%; 2018 full-year targets adjusted

SAF-HOLLAND records organic growth of 11.7% in Q2 2018 and an adjusted EBIT margin of 6.9%; 2018 full-year targets adjusted
 

- Group sales in Q2 2018 increase to EUR 345.4 million (py: EUR 300.3 million); organic growth of 11.7%

- Q2 2018 adjusted EBIT of EUR 23.8 million (py: EUR 26.7 million)

- Company adjusts 2018 outlook: 2018 adjusted EBIT margin is now expected to range from 7.0 to 8.0% (previous target: 8.0 to 8.5%) due to additional operating expenses still required for newly restructured production network in North America and rising commodity prices

- Organic sales growth target raised to 5 to 7% (previous target: 4 to 5%)
 

Luxemburg, July 16, 2018 - According to preliminary results for the second quarter of 2018, SAF-HOLLAND S.A. ("SAF-HOLLAND"), a supplier to the trailer, truck and bus industries, increased sales by 15.0% to EUR 345.4 million (py: EUR 300.3 million). In addition to the better-than-expected organic growth, the acquisitions closed in the second quarter of 2018 also contributed to the Group's strong revenue growth for the first time. The newly acquired companies V.Orlandi, Italy (as of April 1, 2018) and York Transport Equipment (Asia) Pte. Ltd., Singapore (as of May 1, 2018) added a total of EUR 21.1 million to Group sales in the second quarter of 2018. On an organic basis (before exchange rate and acquisition effects), SAF-HOLLAND increased sales by 11.7% to EUR 335.5 million (py: EUR 300.3 million).
 

Burden from alignment of restructured US plant network and strong rise in steel prices, especially in North America
Sales in the Americas region in a market environment that was still characterized by very strong customer demand in the second quarter of 2018 increased to EUR 123.0 million (py: EUR 116.8 million). Sequentially, compared to the prior quarter, sales increased by 20.7%. The region's adjusted EBIT was burdened by EUR 2.3 million (Q1 2018: EUR 3.9 million) in additional operating expenses and start-up costs still necessary for the newly restructured plant network in North America. In addition to start-up inefficiencies in production, expedited shipping and higher logistics costs - also resulting from the overall strained situation in the industry supply chain - led to cost increases. Furthermore, the sharp rise in steel prices, especially in North America, put upward pressure on costs. Although SAF-HOLLAND is typically able to pass on a large part of the price increases, this occurs with a significant delay of up to six months. In the second quarter of 2018, the burden from the higher, steel-related up-front material costs in the Americas region totaled EUR 4.3 million (Q1 2018: EUR 2.0 million). As a result, the earnings trend in the Americas region overall was noticeably weaker than planned. Nevertheless, the region managed to achieve a sequential earnings improvement with the adjusted EBIT margin rising from -0.7% in the first quarter of 2018 to 0.6% in the second quarter of 2018, thereby making a return to profitability. In contrast, the regions EMEA and APAC/China (including India) continued their very solid development in terms of sales and earnings. Since the second quarter of 2018, India, and thus the acquired York Group, has been included in the scope of consolidation of the APAC/China region (previously EMEA/I).
 

2018 full-year outlook adjusted
In light of the preliminary figures for the second quarter of 2018 falling short of our initial schedule in reducing the additional operating expenses in the US in the current market environment, and in order to adequately reflect the effects of the continued increase in raw material prices for steel and components, SAF-HOLLAND is adjusting its full-year 2018 target for the adjusted EBIT margin from the original forecast range of 8.0 to 8.5% to 7.0 to 8.0%. Unchanged the Company plans to successively improve its earnings in the Americas region in the coming quarters. In addition to optimizing costs and price increases, the better integration of capacity planning and the logistics processes in the North American region currently being implemented should also contribute significantly to achieving this improvement.
 

In contrast, the Group now expects organic sales growth to come in above the original expectations for full-year 2018 and range from 5 to 7% (prior forecast: 4 to 5%). The newly acquired companies V.Orlandi and York are expected to contribute an additional approx. EUR 60 million to Group sales in 2018. Previously, the Group had anticipated sales of around EUR 50 million.
 

2020 medium-term forecast confirmed
With regard to the medium-term goals of our Strategy 2020, the Management Board of SAF-HOLLAND confirms the target of an adjusted EBIT margin of at least 8.0% and expects Group adjusted EBIT margin for the 2019 financial year to return to the range of 8.0 to 9.0%.

The final results, including the balance sheet and cash flow statement, will be released in connection with the publication of the financial report for the second quarter of 2018 on August 14, 2018.
 

Conference Call on July 16, 2018, at 10:45 a.m. CEST
 

On this occasion, SAF-HOLLAND will hold a management conference call for analysts and investors on Monday, July 16, 2018, led by CEO Detlef Borghardt and CFO Dr. Matthias Heiden.
 

To join the conference call and web presentation, please use the following dial-in numbers:

+49 30 232531428 Germany
+1 516 269 8983 United States
+41 43 550 14 52 Switzerland
+44 1635 598061 United Kingdom
+45 89 87 21 46 Denmark
 

Web-Präsentation Event Manager:

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