Aftermarket

SAF-Holland Boosts Sales, Earnings

September 05, 2008

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Thanks to a strong European trailer market, SAF-Holland saw sales and earnings grow in the second quarter and first half of the year.


Spurred by the strong growth dynamic of the European trailer market at the beginning of the year, sales grew in the second quarter by 19.9 percent to 238.7 million euros, compared to 199.1 million the previous year. Adjusted for exchange rate effects, sales grew by 25.5% to 249.8 million euros. Accordingly the adjusted EBIT improved significantly by 57.7 percent to 19.4 million euros, compared to last year's 12.3 million.

“The strategic advantages of the business combination of SAF and Holland are becoming increasingly clear," said Rudi Ludwig, CEO. "We have expanded our strong international presence. Our productivity is improving step by step, and we are benefiting more and more from the technology transfer between the companies."

SAF-Holland Group's sales increased in the first half of the year by 11.3 percent to 458 million euros, compared to 411.6 million the previous year. Adjusted for exchange rate effects, sales rose by 16.3 percent to 478.5 million euros. The primary growth driver was the European business, which grew by 28.3 percent to 322 million euros.

A relatively strong first quarter of 2007 continues to impact current results in North America. In the early months of the previous year, new emissions regulations had led to pull-forward effects. Accordingly, SAF-Holland recorded a drop in sales in North America in the first half of 2008 to 136 million euros. Adjusted for exchange rate effects, sales declined slightly by 2.6 percent to 156.5 million euros.

SAF-Holland's earnings improved significantly in the first half of the year to be five times the result of the previous year at 17.3 million euros. The main catalysts for this growth were lower finance, selling, and administrative expenses. Also integration and transaction costs had impaired results in the first half of the previous year.

The high rate of growth characteriZing the European trailer market in recent years returned to normal as expected. Nevertheless, the Trailer Systems Business Unit's sales grew by 19.9 percent in the first half of the year to 327.8 million euros. Adjusted for exchange rate effects, sales even rose by 22.5 percent. A changed customer mix, and increases in the prices for materials, slightly reduced the Business Unit's gross margin from 13.4 percent to 13 percent.

At the same time, SAF-Holland took an important step towards the further globalization of the business and the expansion of the trailer product line in Europe. With the acquisition of a division of Austin-Westran, SAF-Holland assumed control of a landing leg production site in China. This acquisition gives the company a starting point for the expansion of the Asian business and simultaneously a manufacturing site for landing legs for the European market.

The company is intending to accelerate on its growth path to expand its
European trailer business via the truck sector. SAF-Holland is acquiring all capital shares of Georg Fischer Verkehrstechnik GmbH, Singen, a subsidiary of Georg Fischer AG, Schaffhausen (Switzerland).

The acquisition is an important step in SAF-Holland's growth strategy as this move strengthens the company's position in the European market for fifth wheels and helps it become a significant supplier of the European truck industry.

"We are gaining from an excellent opportunity to position ourselves already as an international, comprehensive supplier and partner of the truck and trailer industry. We are market leader for fifth wheels in North America; in the European market we can finally close a strategic gap and round up our product range," says Rudi Ludwig, CEO.

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