SAF-HOLLAND SE: SAF-HOLLAND achieves an adjusted EBIT margin slightly above the margin guidance and a high operating free cash flow after a strong final quarter

22.02.2021

SAF-HOLLAND achieves an adjusted EBIT margin slightly above the margin guidance and a high operating free cash flow after a strong final quarter

- Group sales decreased by 25.3 per cent to EUR 959.5 million due to market conditions and COVID-19

- Adjusted EBIT margin slightly above the margin guidance that was raised in November 2020 to 5 to 6 per cent

- Capex ratio at 2.5 per cent within the medium-term target of around 2.5 per cent

- Net working capital ratio significantly improved from 14.3 per cent to 11.9 per cent

- Operating free cash flow exceeds the 100-million-euro mark for the first time

Bessenbach, February 22, 2021. SAF-HOLLAND SE ('SAF-HOLLAND'), one of the world's leading suppliers of trailer and truck components today published its preliminary unaudited financial figures for financial year 2020.

Alexander Geis, Chairman of the Management Board of SAF-HOLLAND SE says: 'We closed financial year 2020 with a strong fourth quarter in a challenging market environment. With Group sales of slightly more than EUR 250 million (previous year: EUR 275.5 million) we generated an adjusted EBIT margin of over 8 per cent in the fourth quarter, thereby clearly exceeding the pre-COVID-19 figure of the same quarter of the previous year of 4.7 per cent.'

'The figures underscore the resilience of our business model. The extensive programme launched at the end of September 2019 to sustainably reduce selling and administrative expenses made a significant contribution to our pleasing financial performance. With the successful restructuring of our North American and Asian production network, we are entering the future in a much stronger position and have thus created a solid foundation for achieving the financial targets defined in our new medium-term strategy 2025. The development of the order intake in the EMEA and Americas regions leads us to expect a good start to the 2021 financial year,' adds Alexander Geis.

Adjusted EBIT margin at roughly the same level as the previous year despite COVID-19

Due to market conditions and COVID-19, Group sales in the financial year 2020 came to EUR 959.5 million, 25.3 per cent below the previous year's level of EUR 1,284.2 million. Sales in the OE business decreased by 29.8 per cent or EUR 285.7 million to EUR 673.4 million in the reporting period from January to December 2020. The share of total sales accounted for by the OE business therefore decreased from 74.7 per cent to 70.2 per cent. By contrast, sales in the spare parts business only decreased by 12.0 per cent or EUR 38.9 million to EUR 286.2 million. The share of the spare parts business in total sales increased from 25.3 per cent to 29.8 per cent accordingly.

In spite of the significant decline in sales, SAF-HOLLAND nevertheless generated an adjusted EBIT margin that is slightly above the margin guidance, which was raised in November 2020 to 5 to 6 per cent (previous year 6.2 per cent). The higher proportion of the high-margin spare parts business in total sales and sustained savings in selling and administrative expenses had a positive impact.

Capex ratio: 2.5 per cent

Additions to property, plant and equipment and intangible assets totalled EUR 24.5 million in the financial year 2020 (previous year: EUR 53.0 million). The capex ratio decreased accordingly, from 4.1 per cent to 2.5 per cent, lying within the mid-term target of approximately 2.5 per cent.

Net working capital ratio significantly improved - high operating free cash flow

The net working capital ratio, measured as the ratio of net working capital to Group sales over the last 12 months, improved significantly year-on-year from 14.3 per cent to 11.9 per cent. A sharp decrease in inventories and trade receivables was accompanied by slightly lower trade payables. This was countered by the decline in 12-month sales due to market conditions and COVID-19.

Overall, the positive contribution made by net working capital management led to a significant improvement in the net cash flow from operating activities. In combination with a sharp fall in the net cash outflow from investing activities for property, plant and equipment and intangible assets, operating free cash flow exceeded the 100-million-euro mark for the first time. Correspondingly, net financial debt as of December 31, 2020 was scaled back significantly.

'The high operating free cash flow reflects the success of the measures taken to optimise net working capital and also our disciplined investment policy,' says Inka Koljonen, CFO of SAF-HOLLAND SE. 'We will continue to work hard on our cost structures and continue to pursue and extend our Cash-is-King project to achieve sustainable cash surpluses and a leverage ratio in the target corridor of 2-3x EBITDA.'

SAF-HOLLAND SE publishes its full set of audited consolidated financial statements and its annual report 2020 containing the outlook for the 2021 financial year on March 25, 2021.

About SAF-HOLLAND

SAF-HOLLAND SE, located in Bessenbach, is one of the leading international manufacturers of chassis-related assemblies and components, primarily for trailers and trucks. In addition to axle and suspension systems, the product range includes fifth wheels, coupling systems, kingpins and landing gear, which are sold under the SAF, Holland, Neway, KLL, V.Orlandi and York brands. SAF-HOLLAND supplies original equipment manufacturers (OEM) on six continents. In the Aftermarket business, the Company supplies replacement parts to manufacturers' service networks (OES), wholesalers, and, with the help of distribution centers, to end customers and service centers via an extensive global sales network. With the innovation offensive 'SMART STEEL - ENGINEER BUILD CONNECT', SAF-HOLLAND combines mechanics with sensors and electronics and is driving forward the digital networking of commercial vehicles and logistics chains. Around 3,000 committed employees worldwide are already working on the future of the transport industry today. Further information is available at: https://corporate.safholland.com/en

Contact

Michael Schickling
Head of Investor Relations and Corporate Communications
Tel: [phone]
[e-mail]

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.

Note

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.