BESSENBACH, Germany — SAF-HOLLAND SE, a leading supplier of trailer and truck components, recently released its quarterly statement for the first quarter of 2023.
Group sales grow organically by 10.8%
SAF-HOLLAND increased Group sales in the first quarter of 2023 by 29.9% to €480.4 million (previous year: €369.7 million). Growth was driven by continued strong demand from customers for truck and trailer components, the acquisition of Haldex and economies of scale and a positive product mix.
The Swedish brake system specialist was included in the scope of consolidation as of February 21, 2023 and contributed €59.1 million to Group sales. Sales adjusted for exchange rate and acquisition effects increased by 10.8% in the first quarter of 2023.
The SAF-HOLLAND Group’s organic growth in the first quarter of 2023 stemmed largely from the APAC and Americas regions. In the APAC region, SAF-HOLLAND, as a leading manufacturer of axle and suspension systems in India, benefited from the ongoing government infrastructure programs and the expansion of the transport sector on the subcontinent.
The Group’s growth in North America was mostly driven by continued solid market demand and the increase in new trailers equipped with disc brake technology. The development in the EMEA region was more subdued, as expected, due to the challenging overall economic environment.
Adjusted EBIT margin improves to 9.0%
Strong organic growth combined with further efficiency improvements in production-related areas and cost savings in administrative functions led to an increase of 84.6% in adjusted EBIT to €43.4 million in the first quarter of 2023 (previous year: €23.5 million).
Consequently, the adjusted EBIT margin increased to 9.0% (previous year: 6.4%). The very high year-on-year earnings growth was also due to the fact that higher steel, freight and energy costs had been a temporary burden in the first quarter of 2022. In the further course of 2022, SAF-HOLLAND was largely able to pass on the higher costs to customers through price adjustments.
All three of the Group’s reporting regions increased their profitability in the first quarter of 2023. The Americas and APAC regions achieved strong adjusted EBIT margins of 10.0% and 10.6%, respectively. The earnings growth in these regions was driven primarily by the strong increase in sales and operating leverage effects. In the EMEA region, the adjusted EBIT margin improved to 7.9% (previous year: 4.9%).
Result for the period up 48.9%
The financing costs for the Haldex acquisition and the increased interest for lines of variable financing led to a decrease in the finance result to EUR –10.2 million (previous year: €–2.8 million). The result before income tax in the first quarter of 2023 amounted to EUR 28.6 million (previous year: €18.2 million). Based on a Group tax rate of 31.8% (previous year: 28.3%), the Group generated a result for the period of EUR 19.5 million (previous year: EUR 13.1 million), corresponding to an increase of 48.9%. Earnings per share amounted to €0.43 (previous year: €0.29), and adjusted earnings per share reached EUR 0.54 (previous year: €0.33).
Operating free cash flow improves by EUR 15.4 million year-on-year
Net financial debt declined to €508.1 million as of March 31, 2023 (December 31, 2022: €510.6 million). The leverage ratio (ratio of net financial debt to EBITDA) had a noticeable decline to 2.9 (December 31, 2022: 3.4). On a pro forma basis, taking into account the EBITDA contribution of Haldex for the last twelve months, the leverage ratio equaled 2.4 (December 31, 2022: 2.6).
The improvement was largely due to the development of operating free cash flow, which rose to €5.4 million in the first quarter of 2023 (previous year: €–10.0 million). This increase was primarily the result of significantly higher result before income tax and the continued consistent management of net working capital.
Outlook for 2023 specified at the beginning of May – Sales now expected to tend around the upper end of the range
In view of the positive business development in the first quarter of 2023 and based on the expected development for the global truck and trailer markets in the further course of the year, SAF-HOLLAND substantiated its forecast as follows in an ad hoc release dated May 4, 2023:
Based on current estimates, the Company is assuming Group sales for full-year 2023 tending around the upper end of the previously planned sales range of €1,800 million to €,950 million (previous year: €1,565.1 million).
This forecast is based on the assumption of stable exchange rates and takes into account the sales contribution of Haldex following its inclusion in the Group’s scope of consolidation as of February 21, 2023. SAF-HOLLAND expects in the course of the second and third quarters of 2023 to be able to largely recover the temporary sales shortfall totaling around €40 million caused by the cyberattack on the Company’s IT systems at the end of March 2023. The Group’s adjusted EBIT margin for full- year 2023 is still expected to be in the range of 7.5% to 8.5%.
