DGAP-News: SAF-HOLLAND SE: Measures to sustainably improve profitability rapidly realized
DGAP-News: SAF-HOLLAND SE
/ Key word(s): Annual Results
Corporate News SAF-HOLLAND: Measures to sustainably improve profitability rapidly realized - Group sales and adjusted EBIT margin within guidance - Significant positive operating free cash flow - Solid financial profile has priority - no dividend for the 2019 financial year - Rollout of the Operational Excellence Roadmaps over the course of the year - Comprehensive programme to reduce selling and administrative expenses at all locations will be driven forward at greater speed - Measures to secure regulated business operations initiated
Alexander Geis, CEO of SAF-HOLLAND says: "The 2019 financial year was a particularly challenging one for SAF-HOLLAND. A sudden slump in the market in the middle of the third quarter and high non-recurring expenses related to our plant consolidation in China culminated in a revised guidance being issued at the end of September. We reached the revised targets for both Group sales and the adjusted EBIT margin. For a number of weeks the novel coronavirus SARS-CoV-2 (COVID-19) is a new special challenge for our company, the management team and all employees. We have used recent weeks since the outbreak in China to test our contingency plans and have initiated suitable measures to be able to keep operations running smoothly at our locations at all times. A global emergency response team is advising the Group Management Board on the current situation and prepares the materials needed for decision-making. It also coordinates and monitors communications and operative measures. The health of our staff, suppliers and customers as well as their families has top priority." In addition, this year is all about the issue of "operational excellence". Over the course of the year, Dr. André Philipp, Chief Operating Officer of SAF-HOLLAND, will roll out in all production plants the SAF-HOLLAND Operational Excellence Roadmaps he drew up with his team. The objective is to leverage the operational success potentials that lie unexploited throughout the entire plant network. Group sales and adjusted EBIT margin within guidance Adjusted EBIT amounted to EUR 79.8 million in the 2019 financial year (previous year: EUR 89.6 million). The increase of 18.0 per cent in adjusted selling and administrative expenses to EUR 121.3 million contributed particularly to this deterioration. Among other factors, this development was due to the expenses incurred by the entities acquired since January 2018, exacerbated by the fact that, in the previous year, extraordinary non-cash income of EUR 4.7 million was recorded from the partial liquidation of the US pension plan. Correspondingly, the adjusted EBIT margin of 6.2 per cent fell short of the 6.9 per cent recorded in the previous year. The adjusted result for the period prior to non-controlling interests reached EUR 49.8 million (previous year: EUR 55.5 million) with a significant improvement in the financial result and applying a uniform tax rate of 27.7 per cent (previous year: 26.8 per cent). Based on approximately 45.4 million ordinary shares outstanding, unchanged on the previous year, adjusted undiluted earnings per share for the year as a whole amounted to EUR 1.10 (previous year: EUR 1.22) and adjusted diluted earnings per share amounted to EUR 0.95 (previous year: EUR 1.05). Investments focus on optimizing processes and procedures Significant positive operating free cash flow "In the coming quarters we will intensify our efforts to generate even more free cash flow. We have established a special unit for this purpose that is solely dedicated to this issue at a global level," says Dr. Matthias Heiden, CFO of SAF-HOLLAND. Solid financial profile has priority - no dividend for the 2019 financial year Net financial liabilities (including lease liabilities) increased by EUR 38.1 million to EUR 251.7 million as of December 31, 2019 compared to the reporting date of December 31, 2018. In addition to the dividend payout of EUR 20.4 million, this was due to the first-time application of IFRS 16 on leases, which resulted in financial liabilities of EUR 33.6 million. As of December 31, 2019 SAF-HOLLAND carries cash and cash equivalents of EUR 131.2 million (December 31, 2018: EUR 155.0 million). In order to secure this solid financial profile sustainably, the Group Management and the Board of Directors have decided to propose to the Annual General Meeting, currently scheduled for May 20, 2020, to pay no dividend for the 2019 financial year. EMEA region: Sales down on the previous year The EMEA region generated an adjusted EBIT of EUR 60.1 million in the reporting period from January to December 2019 (previous year: EUR 71.4 million) and an adjusted EBIT margin of 9.6 per cent (previous year: 10.8 per cent). The lower sales volume referred to above and also higher personnel expenses arising from the collective agreement for the metals industry in 2018 had a negative impact on the margin. On the other hand, margin was positively affected by the entities acquired since January 2018. The result for the 2018 financial year was furthermore favoured by exchange rate gains (TRY to EUR). Americas region: Earnings stabilize Sales in the Americas region grew by 13.3 per cent in the 2019 financial year to EUR 534.5 million (previous year: EUR 471.6 million). After eliminating the effects of exchange rates and acquisitions, sales improved by 8.0 per cent to EUR 509.4 million. Adjusted EBIT of EUR 29.2 million is significantly up on the previous year of EUR 8.5 million. The adjusted EBIT margin comes to 5.5 per cent (previous year: 1.8 per cent). The main factors in this regard were improved processes and procedures, the contractual passing on of last year's steel price increases, lower purchase prices for steel and other materials, as well as sustained price increases in the aftermarket. A negative factor was the fact that, in contrast to the previous year, no non-cash extraordinary income from the partial liquidation of the US pension plan was recorded, as in the third quarter 2018. APAC region: Ongoing weakness of the Indian market burdens performance Adjusted EBIT of EUR 3.4 million is well down on the result of the previous year of EUR 8.4 million. This considers the elimination of restructuring income of EUR 2.2 million from the sale of a building in the course of the merger of SAF-HOLLAND Australia and York Transport Equipment Pty. Ltd. (Australia). The adjusted EBIT margin slipped from 8.9 per cent to 3.8 per cent. The main reason for this deterioration was also the ongoing weakness of the Indian market and a significant slow-down of the market in Australia in conjunction with unfavourable product mix and exchange rate effects. China region: consolidation of locations concluded successfully The China region generated an adjusted EBIT of EUR -12.9 million in 2019 (previous year: EUR +1.3 million). This result was influenced by the extensive restructuring costs incurred in connection with the consolidation of the plants and the goodwill impairment of the China region of EUR 6.7 million. The eliminations do not include non-recurring expenses totalling EUR 8.1 million, which were primarily incurred in the second and third quarters. These consist of impairment losses on inventories and receivables of EUR 4.9 million and EUR 1.7 million respectively, losses of EUR 0.7 million on the disposal of non-current assets and strike-related costs of EUR 0.8 million. The integration of the five Chinese locations into the new plant in Yangzhou has been concluded. The plant in Qingdao shut down its operations on July 31, 2019. The two warehouses in Beijing were also closed down on July 31, 2019. The business activities of the plant in Xiamen and the office in Beijing were shut down at the end of 2019. Pilot production at the new plant in Yangzhou commenced in the fourth quarter. In the course of the plant consolidation, the headcount (including temporary workers) was reduced from 628 to 157. Outlook for the 2020 financial year Under the above assumptions, SAF-HOLLAND is projecting an adjusted EBIT margin for the 2020 financial year of between 4 per cent and 5 per cent. Besides the decline in sales, further effects from COVID-19 will burden result. Factors expected helping to stabilize earnings are the significant reduction of operating losses from the Chinese operations, the consistent execution of program FORWARD in the USA, the Group-wide rollout of the SAF-HOLLAND Operational Excellence System and the high-margin aftermarket business. In order to support the strategic objectives, the company is planning investments of around 3 per cent of Group sales (previous year: 4.1 per cent) in the 2020 financial year. This capital expenditure will focus primarily on continuing the introduction of a Global Manufacturing Platform, further automation and the program FORWARD. Moreover, with a view to the current spread of COVID-19, the economic effects on SAF-HOLLAND cannot currently be adequately determined or reliably quantified. SAF-HOLLAND will publish its first quarter results for 2020 on May 13, 2020.
1 Proposal
1 Adjusted according to IAS 8.42 (cp. Section 2.4.2 in Notes to the Consoliated Financial Statements)
About SAF-HOLLAND SAF-HOLLAND SE, located in Luxembourg, is the largest independent listed supplier to the commercial vehicle market in Europe delivering mainly to the trailer markets. With sales of approximately EUR 1,301 million in 2018, the Company is one of the world's leading manufacturers and suppliers of chassis-related systems and components primarily for trailers, trucks, buses, and recreational vehicles. The product range comprises axle and suspension systems, fifth wheels, kingpins, and landing gear marketed under the brands SAF, Holland, Neway, KLL, V.Orlandi and York. SAF-HOLLAND sells its products to Original Equipment Manufacturers (OEM) on six continents. The Group's Aftermarket business supplies spare parts to the service networks of Original Equipment Suppliers (OES), as well as to end customers and service centers through its extensive global distribution network. SAF-HOLLAND is one of the few suppliers in the truck and trailer industry that is internationally positioned in almost all markets worldwide. With the innovation campaign "SMART STEEL - ENGINEER BUILD CONNECT" SAF-HOLLAND combines mechanics with sensors and electronics and drives the digital networking of commercial vehicles and logistics chains. Approximately 4,000 committed employees worldwide are already today working on the future of the transportation industry. Contact Michael Schickling Future-oriented statements This press release contains certain future-oriented statements that are based on current assumptions and forecasts made by the management of SAF-HOLLAND SE. Various known and unknown risks, uncertainties and other factors may lead to the actual results, financial position, development or performance of the company deviating considerably from the appraisals specified here. The company assumes no obligation to update future-oriented statements of this nature or adapt them to future events or developments. Notes This announcement is for information purposes only and does neither constitute an offer to sell, purchase, exchange or transfer any securities nor a solicitation of any offer to sell, purchase, exchange or transfer any securities. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. SAF-HOLLAND SE does not intend to register any securities referred to herein under the Securities Act or with any securities regulatory authority of any state or other jurisdiction in the United States in connection with this announcement.
Contact: SAF-HOLLAND Group Michael Schickling Hauptstraße 26 63856 Bessenbach Phone +49 6095 301-617 [email protected]
18.03.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. |
Language: | English |
Company: | SAF-HOLLAND SE |
68-70, boulevard de la Pétrusse | |
L-2320 Luxembourg | |
Luxemburg | |
Phone: | +49 6095 301 - 0 |
Fax: | +49 6095 301 - 260 |
E-mail: | [email protected] |
Internet: | www.safholland.com |
ISIN: | LU0307018795 |
WKN: | A0MU70 |
Indices: | SDAX |
Listed: | Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange |
EQS News ID: | 1001245 |
End of News | DGAP News Service |
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1001245 18.03.2020
SAF Holland SE Stock
Currently there is a rather positive sentiment for SAF Holland SE with 4 Buy predictions and 0 Sell predictions.
As a result the target price of 19 € shows a slightly positive potential of 2.48% compared to the current price of 18.54 € for SAF Holland SE.