05/23/2012

SAF-HOLLAND: Good start in the new financial year

Luxembourg, May 23, 2012 - SAF-HOLLAND is continuing on a growth path. In the first quarter of 2012 sales increased by 7 percent to EUR 216.6 million (previous year: EUR 202.4 million). The company, which is among the leading suppliers to the global truck and trailer industry, thereby grew at a higher rate than the market. The earnings situation is also developing positively: Although the earnings contribution from a project which had, for the most part, expired as anticipated in the third quarter of 2011, adjusted EBIT reached EUR 14.0 million (previous year: EUR 14.6 million) which corresponds to an adjusted EBIT margin of 6.5 percent (previous year: 7.2 percent). If the previous year's contribution from the project is not taken into consideration, the adjusted EBIT margin in the reporting period is approximately one percentage point higher than the comparable figure from the previous year. 

"SAF-HOLLAND has started the year well. Our expectations for growth in the first quarter were exceeded and were also more than fulfilled in regard to earnings", said Detlef Borghardt, CEO of SAF-HOLLAND. All business segments and regions contributed to the expansion of business at SAFHOLLAND S.A. The Group generated approximately 52 percent of its sales in Europe, 42 percent in North American and a good 6 percent in other countries throughout the world, including the BRIC countries. 

Adjusted result for the period with a plus of 20 percent 

Mainly due to favorable business development in core markets, gross profit increased to EUR 39.1 million (previous year: 38.0 million) equivalent to a margin of 18 percent (previous year: EUR 18.8 percent). This figure, which is 0.8 percent lower when compared to the previous year resulted from, among other things, increases in material prices and delivery bottlenecks from suppliers in the USA. SAF-HOLLAND can pass on part of the price increases at a later date. In addition, capacity expansion measures at the suppliers will optimize the supply of materials to the company in the second quarter. The adjusted result for the period improved significantly, increasing by 20 percent to EUR 5.9 million (previous year: EUR 4.9 million). Adjusted earnings per share amounted to EUR 0.14 (previous year: EUR 0.22). At the same time, it should be noted that as a result of the capital increase at the end of March 2011, the average number of shares issued, at 41.2 million (previous year: 22.3 million), nearly doubled. 

Cash flow from operating activities totaled EUR 6.1 million (previous year: EUR 10.8 million). The change resulted in particular from the high business volume and also from the fact that some customers had moved their payments forward into December 2011. This one-time effect of approximately EUR 6.0 million resulted in an increase in the fourth quarter of 2011 and a corresponding weakening at the beginning of 2012. As a result of growth in the business and the ongoing financial optimization the equity of SAF-HOLLAND rose to EUR 194.9 million (December 31, 2011: EUR 192.2 million). In relation to the increased total assets, this resulted in an equity ratio of 35.3 percent. 

Trailer Systems takes advantage of high demand in the core markets

The Trailer Systems Business Unit increased its sales by EUR 6.4 million to EUR 120.9 million. Gross profit increased to EUR 12.1 million (previous year: EUR 11.0 million) and thereby a gross margin of 10.0 percent was achieved. In Europe the business segment benefited from better framework conditions than initially expected. Added to this was the strong North American business, which continues to be driven by pent up investments from fleet operators and increased interest in axle and suspension systems from SAF-HOLLAND. In the first quarter, Trailer Systems generated 55.8 percent of Group sales. 

Powered Vehicle Systems shows strong profitability 

The Powered Vehicle Systems Business Unit increased its sales by more than 9 percent to EUR 40.8 million (previous year: EUR 37.3 million). As a result of this growth, the Business Unit's share of Group sales rose slightly to 18.8 percent (previous year: 18.4 percent). Gross profit reached EUR 6.1 million (previous year: EUR 7.5 million). A comparison to the previous year primarily shows effects from a lucrative project which had as anticipated, for the most part, expired in the third quarter of 2011. Nevertheless, Powered Vehicle Systems once again demonstrated its earning power with a gross margin of approximately 15 percent. 

Aftermarket renewed with growth in sales and earnings 

Sales in the Aftermarket Business Unit rose by 8.5 percent to EUR 54.9 million (previous year: EUR 50.6 million). Gross profit increased to EUR 20.9 million (previous year: EUR 19.8 million). Alongside the continued commitment in the Middle East, above all the new spare parts program is proving itself. This product range offered in Eastern Europe opens up a spare parts market for trailers that have already been delivered to the used vehicle market. In total, the Business Unit expanded its share of Group sales in the first quarter to 25.4 percent (previous year: 25.0 percent). In the medium-term SAF-HOLLAND seeks to a generate 30 percent of total sales with the Aftermarket business. 

Positive business development anticipated for 2012 and 2013 

The favorable business development for the first quarter confirms SAF-HOLLAND's positive expectations for the full year. For 2012 the company anticipates good business development which should continue in 2013. This evaluation is subject to corresponding financial, political and economic developments in Europe and North America and is based on the assumption that replacement investments for transport companies and fleet operators can be financed as a result of the general economic environment. 

Note: 

EBIT was adjusted for the following effects which are not originally attributable to the operating business: depreciation and amortization arising from the purchase price allocation as well as restructuring and integration costs.

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