BESSENBACH, Germany — SAF-HOLLAND SE, one of the world’s leading suppliers of trailer and truck components, has obtained its rating report issued by Scope Ratings GmbH (“Scope”).
After analyzing the business-specific and financial risks, Scope awarded SAF-HOLLAND SE with a rating of BBB- and a stable outlook. The newly issued BBB-/Stable rating by Scope Ratings GmbH is at the same level as the previously assigned rating by Scope Hamburg GmbH in April 2022.
In determining its rating, Scope addressed the impact of the recent acquisition of the Swedish braking systems specialist Haldex AB on SAF-HOLLAND’s financial profile. The financing of the acquisition will result in a short-term increase in financial liabilities.
The advantages resulting from the combination of the two companies, including a further improvement in their strong market positions, a broader customer base, and complementary product portfolios, were all assessed as positive.
This assessment was further underscored by the broader international presence and increasing share of Group sales of the more profitable aftermarket business. A better rating was precluded, according to Scope, by the comparatively high free cash flow volatility in recent years, cyclical business risks, and the existing room to improve operating profitability versus the industry as a whole.
According to Scope, the stable outlook is based on the expectation that the company could even withstand a moderate cyclical downturn in the global commercial vehicle markets thanks to its resilient aftermarket-based business model. The rating could improve in the future through a gradual reduction in financial liabilities and a further rise in free cash flow.
During the past 2022 financial year, SAF-HOLLAND generated operating free cash flow of €120.0 million, despite a challenging environment, demonstrating the strength of its internal financing capabilities.
With the publication of the Annual Report 2022, the SAF-HOLLAND Management Board stated that it plans to significantly reduce its leverage again on the back of increasing profitability and the continued steady management of its working capital. The Company is targeting a ratio of net financial debt to EBITDA of less than 2x by the end of the 2024 financial year (December 31, 2022: approx. 2.6 x).
