Quarterly Report • May 13, 2015
Quarterly Report
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Quarterly Report of SAF-HOLLAND S.A. as of March 31, 2015
| EUR million | Q1/2015 | Q1/2014 |
|---|---|---|
| Sales | 271.0 | 235.3 |
| Cost of sales | -220.0 | -191.3 |
| Gross profit | 51.0 | 44.0 |
| as a percentage of sales | 18.8 | 18.7 |
| Adjusted result for the period | 14.2 | 9.5 |
| as a percentage of sales | 5.2 | 4.0 |
| Basic adjusted EPS in EUR1) | 0.31 | 0.21 |
| Adjusted EBITDA | 26.2 | 20.3 |
| as a percentage of sales | 9.7 | 8.6 |
| Adjusted EBIT | 22.6 | 17.1 |
| as a percentage of sales | 8.3 | 7.3 |
| Operating cash flow2) | 2.3 | 3.9 |
1) Adjusted net result / weighted average number of ordinary shares outstanding as of the reporting day. 2) The operating cash flow is the cash flow from operating activities before income tax payments.
| EUR million | Q1/2015 | Q1/2014 |
|---|---|---|
| Europe | 131.3 | 132.8 |
| North America | 111.0 | 83.0 |
| Other | 28.7 | 19.5 |
| Total | 271.0 | 235.3 |
| Q1/2015 | Q1/2014 |
|---|---|
| 159.6 | 140.9 |
| 45.3 | 36.5 |
| 66.1 | 57.9 |
| 271.0 | 235.3 |
| 03/31/2015 | 12/31/2014 | |
|---|---|---|
| Total assets (EUR million) | 724.7 | 645.2 |
| Equity ratio (%) | 38.3 | 38.5 |
| Q1/2015 | Q1/2014 | |
| Employees (average) | 3,370 | 3,373 |
| Sales per employee (kEUR) | 80.4 | 69.8 |
Quarterly Report of SAF-HOLLAND S.A. as of March 31, 2015
006 SAF-HOLLAND on the Capital Market Summary of Share Price Development 006 Summary of Corporate Bonds 009 Investor Relations and Capital Market Relationships 011
| 012 | Financial Position and Financial Performance |
|---|---|
| General Framework Conditions 012 |
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| Overview of Business Development 013 |
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| Earnings Situation 015 |
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| Financial Situation 021 |
|
| Assets 022 |
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| 024 | Opportunities and Risk Report |
024 Events after the Balance Sheet Date
024 Outlook
| 030 | Consolidated Statement of Comprehensive Income |
|---|---|
| 031 | Consolidated Balance Sheet |
| 032 | Consolidated Statement of Changes in Equity |
| 033 | Consolidated Cash Flow Statement |
| 034 | Notes to the Consolidated Interim Financial Statements |
SAF-HOLLAND got off to a successful start in 2015. In the first three months, we were able to increase our Group sales as compared to the same period in the previous year by 15.2% to EUR 271.0 million. The adjusted EBIT in the Group increased by 32.2% to EUR 22.6 million and the adjusted EBIT margin reached 8.3% after 7.3% in the prior-year quarter. The expanded business volume as well as the sustainable results of our cost discipline and positive effects from the corporate financing, which was optimized once again, were all reflected in the pleasing upward development.
As our largest business segment, the Trailer Systems Business Unit increased its sales by 13.3% to EUR 159.6 million, which corresponds to 58.9% of Group sales. The adjusted EBIT in the Business Unit increased significantly to EUR 9.3 million and the adjusted EBIT margin reached 5.8%. The impact of the package of measures to increase the profitability of Trailer Systems is becoming increasingly noticeable in the pleasing earnings development. We intend to increase the adjusted EBIT margin for the business segment to about 6% by the end of the year. On the sales side, we further expanded the position of the Business Unit in North America in the first quarter. The North American trailer market is a strategic growth field for SAF-HOLLAND, one in which we are seeking a market share of 30%.
Detlef Borghardt, Chief Executive Officer (CEO)
Sales in our Powered Vehicle Systems Business Unit increased in the first quarter by 24.1% to EUR 45.3 million. The Business Unit thus contributed 16.7% to Group sales. On the earnings side, the business segment's adjusted EBIT increased to EUR 3.0 million. The adjusted EBIT margin improved from 5.7% in the previous year quarter to 6.6%.
Our Aftermarket Business Unit increased its sales in the first three months by 14.2% to EUR 66.1 million. Adjusted EBIT rose to EUR 10.3 million, which corresponds to an adjusted EBIT margin of 15.6% as compared to 16.6% in the prior-year quarter. During the first quarter, the business segment laid the most important groundwork for a further expansion of its global market position. In this context, the expanded Parts Distribution Center in the Persian Gulf began operations in February. From Dubai, it serves fleet customers in the Middle East as well as in North and Central Africa. In addition, we strengthened our sales force in North America and began with the introduction of our GoldLine brand.
At the Heavy Duty Aftermarket Week in Las Vegas, we presented the North American version of our electronic spare parts catalog "Parts on Demand". In March, at the important commercial vehicles fair, the Mid-America Trucking Show (MATS) in Louisville, Kentucky, we presented product innovations that received a great deal of attention.
At the Annual General Meeting on Thursday, April 23, 2015, our shareholders of SAF-HOLLAND decided on a dividend of EUR 0.32 per share for financial year 2014 (previous year: EUR 0.27). Our stated goal remains in the coming years the achievement of an equity ratio of about 40% and thus the meeting of conditions for a dividend distribution in the amount of 40 to 50% of the available net earnings.
The successful business development in the first quarter and the generally strong positioning provide our company with a good basis for the full-year. We are confident that in 2015 we will achieve the targeted Group sales of between EUR 980 million and EUR 1.035 billion. Adjusted EBIT is expected to increase at a much higher rate than sales to about EUR 90 million. The adjusted EBIT margin will thus be within the scope of the original target range of 9 to 10%, although it will likely be at the lower end of the range.
With the growth strategy 2020, which we discussed in the first quarter, we are getting SAF-HOLLAND ready for the future and sustainably positioning the company in the transport industry with a focus on heavy load applications on-road and off-road. We intend to take advantage of the opportunities presented by global megatrends such as population growth, urbanization and globalization in order to put company Foreword from the Management Board
growth on a broader basis. In this regard, the focus will increasingly shift toward regions outside our current core markets. The establishment of a strong consuming middle class in BRIC countries, next-eleven states and other emerging market countries is driving transport volumes and ensures dynamic market growth.
At the same time, we must further develop the high-expansion areas of activity in our company – both in terms of geography and products. As is the case with the megatrends, our growth strategy has a long-term focus. Therefore the majority of our sales growth until 2030 is supposed to be outside of the core regions of North America and Europe. For 2020, this means that we are targeting a sales increase to between EUR 1.250 and 1.500 billion, whereby about half of the planned sales increase is to be generated organically. In addition, complementary cooperations and acquisitions that support the growth strategy outside the core regions will contribute to Group sales. Overall, about a third of sales will be generated outside of Europe and North America by 2020. We are targeting an adjusted EBIT margin of at least 8% and an increase of earnings per share of about 75% compared to 2014.
On behalf of my colleagues on the Management Board and the Board of Directors, I thank all customers, suppliers, business partners, employee representatives and employees for their good and pleasant cooperation. At the same time, I also thank our shareholders and investors for the confidence they have demonstrated and their commitment to SAF-HOLLAND.
Sincerely,
Detlef Borghardt Chief Executive Officer (CEO)
During the first three months of 2015, the German stock market showed an increasingly upward trend. Several causes existed for the growing interest in shares and the all-time index highs. The monetary push by the European Central Bank (ECB) was a significant trigger. It started a massive government bond purchase program intended to run until at least 2016. Additional factors for the boom on the stock market could be found in the historically low interest rates, the heavy drop in oil prices and the weaker euro in conjunction with improved economic forecasts and increased growth predictions. Add to this that the critical situation in Eastern Ukraine eased and hopes increased for a solution to the sovereign debt problems in Greece.
The benchmark DAX index reached a new all-time high in the first quarter and exceeded the 12,000-point mark several times after mid-March. On March 31, it closed at 11,966 points. Compared to the end-of-year level for 2014, this represented an increase of roughly 22% and the strongest upward movement of the DAX in 12 years. The SDAX, of which the SAF-HOLLAND share is a part, climbed to over 8,000 points in the middle of February. The end-of-quarter value of our reference index was at 8,417 points – a 17% increase compared to the 7,186 points at the end of 2014.
During the first quarter, the SAF-HOLLAND share impressed with its strong performance. The price initially moved parallel to the DAX and SDAX upward movements but then significantly set itself apart. At the end of the quarter, the share traded at EUR 14.94 (previous year: EUR 11.30) – an increase of 34.6% compared to the price of EUR 11.10 at the end of 2014. Our share thus gained double the percentage points than the SDAX.
On the basis of the quarterly closing price and the 45,361,112 issued shares, the market capitalization of SAF-HOLLAND was at EUR 677.7 million on March 31, 2015 (previous year: EUR 512.4 million).
007
SAF-HOLLAND on the Capital Market
Source: Commerzbank AG, Frankfurt am Main.
The SAF-HOLLAND share is listed on the Frankfurt Stock Exchange. Since 2010, it has been among the SDAX stocks meeting the high transparency requirements of the Deutsche Börse's Prime Standard. During the first quarter of this year, our share's average daily trading volume was 256,444 (previous year: 172,157).
All SAF-HOLLAND shares are free-float. Among holders of more significant stakes are investment trusts based in the USA, Great Britain, Switzerland, France, the Benelux and Germany. Deutsche Bank AG is among the larger institutional investors with a minority stake of 5.29% (2,401,539 votes). Ameriprise Financial Inc./ Threadneedle Asset Management Ltd., London owns a 5.24% stake (2,376,212 votes). Members of SAF-HOLLAND's Management Board and the Board of Directors hold 3.09% (previous year: 3.73%) of our company shares.
Various banks and financial service providers regularly analyze SAF-HOLLAND. In the context of their coverage, they draft studies on the companies and gather comments, assessments and recommendations on the share. Their activities significantly contribute to the SAF-HOLLAND share becoming even more a focus of private and institutional investors. In January of 2015, BNP Paribas, Paris and, in February of 2015, Macquarie Capital Ltd., London joined the group of analysts covering SAF-HOLLAND. At the time of publication of this statement, eight out of 11 analysts rated the share as a "buy", one as a "hold" and two as "outperform".
| May 7, 2015 | Commerzbank AG | hold |
|---|---|---|
| May 5, 2015 | Kepler Cheuvreux | buy |
| March 18, 2015 | Bankhaus Lampe KG | buy |
| March 17, 2015 | Macquarie Capital Ltd. | outperform |
| March 13, 2015 | Quirin Bank AG | buy |
| March 13, 2015 | Deutsche Bank AG | buy |
| March 13, 2015 | ODDO SEYDLER BANK AG | buy |
| March 13, 2015 | Exane BNP Paribas | outperform |
| March 12, 2015 | Hauck & Aufhäuser Institutional Research AG | buy |
| November 6, 2014 | equinet Bank AG | buy |
| November 6, 2014 | Montega AG | buy |
SAF-HOLLAND intends to ensure shareholders participate in the company success by distributing 40% to 50% of available net earnings as a dividend when the equity ratio is about 40%. During the Annual General Meeting on April 23, 2015, shareholders followed the recommendation by the Board of Directors to pay a dividend of EUR 0.32 per share (previous year: 0.27) for the 2014 financial year. The total of EUR 14.5 million which was paid out on April 24, 2015 (previous year: EUR 12.2 million) corresponds to approx. 44% (previous year: 50%) of the period results for the 2014 financial year. Relative to each share and the end-of-year price for 2014, this means a dividend yield of 2.9% (previous year: 2.5%).
| WKN / ISIN | A0MU70 / LU0307018795 |
|---|---|
| Stock exchange symbol | SFQ |
| Number of shares | 45,361,112 shares |
| Designated Sponsors | Commerzbank AG, ODDO SEYDLER BANK AG, Kepler Cheuvreux |
| Daily high / low in the reporting period1) |
EUR 15.77 / EUR 11.06 |
| Quarterly closing price1) | EUR 14.94 |
| Market capitalization at the end of the first quarter2) |
EUR 677.7 million |
| Adjusted earnings per share2) | EUR 0.31 |
1) XETRA closing price. 2) On the basis of weighted average number of issued shares over observation period.
009
SAF-HOLLAND on the Capital Market
SAF-HOLLAND has issued corporate and convertible bonds on the capital market. During these times of continuously low interest rates, the appealing investment opportunities experience great popularity among private and institutional investors.
SAF-HOLLAND has a BBB investment grade credit rating with a stable outlook. Following a further comprehensive analysis, rating agency Euler Hermes confirmed its rating from September 2013 and April 2014 on April 7, 2015. Its twelve-month forecast continues to predict a stable company development.
Since October 2012, we have been listed at the Frankfurt Stock Exchange Prime Standard for corporate bonds. Being listed in this prime segment provides investors with greatest transparency and good bond tradability.
During the first three months of 2015, the SAF-HOLLAND bond continued its upward trend and ended trading on March 31 with a closing price of the day of 113.7% (previous year: 112.1%).
| PERFORMANCE OF SAF-HOLLAND CORPORATE BOND in % | |
|---|---|
| 114 | Price |
| 112 | |
| 110 | |
| 108 | |
| January 1, 2015 | March 31, 2015 |
Source: IKB Deutsche Industriebank AG, Düsseldorf.
| KEY CORPORATE BOND DATA | ||
|---|---|---|
| WKN | A1HA97 | |
| ISIN | DE000A1HA979 | |
| Volume | EUR 75.0 million | |
| Denomination | EUR 1,000 | |
| Coupon | 7.00% p.a. | |
| Interest date | April 26 | |
| Term | 5.5 years | |
| Maturity | April 26, 2018 | |
| Bond segment | Prime Standard | |
| Stock Exchange | Frankfurt | |
| Status | Not subordinated | |
| Company rating | BBB, stable outlook (Euler Hermes) | |
| Quarterly closing price1) | 113.7% | 1) Bloomberg closing price. |
In the course of a private placement in September 2014, we issued convertible bonds integrated into the OTC trade of the Frankfurt Stock Exchange. It provides bondholders with the opportunity to acquire SAF-HOLLAND shares at the defined convertible price.
Our convertible bonds showed a clear upward trend during the first quarter of 2015. Since the end of 2014, the price increased from 107.5% to 130.7% on March 31.
011
SAF-HOLLAND on the Capital Market
| WKN | A1ZN7J |
|---|---|
| ISIN | DE000A1ZN7J4 |
| Volume | EUR 100.2 million |
| Denomination | EUR 100,000 |
| Coupon | 1.00% p.a. |
| Method of payment | Semi-annual, for first time on March 12, 2015 |
| Term | 6 years |
| Maturity | September 12, 2020 |
| Status | Unsubordinated and unsecured |
| Conversion price | EUR 12.37 per share1) |
| Conversion premium | 20% above reference price |
| Conversion ratio | Initially 8,083.6823 per bond (approx. 8.1 million shares)2) |
| Dividend protection | Up to EUR 0.27 per share annually |
| Stock exchange | Over the counter market of the Frankfurt Stock Exchange |
| Quarterly closing price3) | 130.7% |
1) As of April 23, 2015: EUR 12.33 per share. 2) As of April 23, 2015: 8,110.8921 per bond (approx. 8.1 million shares). 3) Bloomberg closing price.
The Investor Relations activities of SAF-HOLLAND are oriented toward comprehensive and timely information for shareholders, bond holders and analysts. We provide capital market participants with detailed explanations on our business performance, global growth strategy and company forecasts. Our extensive and continuous Investor Relations efforts contribute directly to broadening our investor base. Our commitment simultaneously contributes to increasing the standing of SAF-HOLLAND shares and company bonds as an attractive investment option.
During the first quarter of 2015, we continued to provide company information within the scope of individual discussions, group meetings and phone conferences as well as road shows. Presentations on investor conferences in Germany, the United Kingdom, Austria and Switzerland were among our capital market activities.
Our SAF-HOLLAND Investor Relations website provides comprehensive information on the share itself as well as corporate and convertible bonds. It also makes available for download reports and presentations: http://corporate.safholland.com/de/investoren.html.
The Institute for the World Economy (IfW) anticipates a slight decrease in global production for the first quarter of 2015. However, this is not regarded as a fundamental economic weakness. The institute still expects global production to increase substantially for the full year of 2015.
The economy in the Eurozone benefited from greater consumer spending, increasing investing activities and rising exports in the first quarter. The gross domestic product (GDP) adjusted for calendar, price and seasonal factors increased by 0.3% compared with the last quarter of 2014. Production in Germany rose somewhat more, where an increase in GDP by 0.4% is anticipated in comparison with the previous quarter.
The strong economic recovery in North America continued over the first three months of the year. Based on IfW calculations, the US GDP rose by 0.5% in comparison with the fourth quarter of 2014. The US Bureau of Economic Analysis calculated a GDP increase at an annual rate of 0.2% for the first three months of the year.
Emerging markets also benefited from the greater demand in advanced economies, although the situation in the BRIC countries is again mixed. The Brazilian economy remained flat, primarily due to infrastructure bottlenecks and declining prices for raw materials. In Russia, the poor conditions resulting from the decline in the Ruble again took a turn for the worse in the first quarter. The IfW now anticipates that production in this country will decrease by 3.0% over the current year. In contrast, the economy in the Asian BRIC countries continues to expand. A 7% rise in production is anticipated for China with a 7.4% increase for India over the full year of 2015.
The European commercial vehicle market continued its upward development over the reporting quarter. 278,376 commercial vehicles were newly registered in the European Union in the first two months of the year, 8.0% more than over the same period last year. According to industry association ACEA, new registrations increased in nearly all major European country markets. Registrations declined only in France, although this was more than compensated by burgeoning growth in Spain and Great Britain. Heavy trucks with a total weight of over 16 tons remained in high demand. New registrations in this class rose by 8.2% from January to February.
Financial Position and Financial Performance
The North American market again benefited from brisk demand. January orders were up 18% from last year's comparable levels for trailers and 5% for trucks in classes 5 to 8. Trailer orders in February lagged behind the same month in the previous year, although according to ACT Research this cannot be regarded as a sign of market weakness. According to the market research institute, demand remains high. Furthermore, trailer demand should continue to be spurred by a wide range of factors, including high freight volumes and the pent-up demand for fleet modernization and expansion. For class 8 trucks, 7% more orders were placed in February and 9% fewer in March than in the corresponding months of the previous year. ACT Research views the first decline after 25 months of continuous growth as a sign that the upswing in the North American truck market may peak this year.
The development of commercial vehicle sales was largely lower in the BRIC countries. The Indian market was the exception to this rule, where sales of trucks and buses rose by 5.3% in January and by 10.1% in February in comparison with the corresponding periods in the previous year. New registrations dropped significantly in Brazil over the reporting period. For the truck segment between 10 and 15 tons, there were 19.2% fewer newly registered vehicles than in the first quarter of 2014. New registrations in the upper weight classes dropped by an average of 48.2% in comparison with the previous year. Market tendencies were weaker in Russia as well. 10,900 trucks were produced over the first two months, 32.6% fewer than in the same period in 2014. According to manufacturing association CAAM, 20.1% fewer trucks were produced in China from January to February than in the previous year period. Chinese OEM production numbers increased by 15% in the bus segment, where SAF-HOLLAND has increased its activities.
SAF-HOLLAND recorded positive business development over the first quarter of 2015. Sales volume was increased by more than 10% in each of our Business Units. The favorable Euro/ Dollar exchange rate also had a substantial positive effect here. Overall, Group sales increased by 15.2% to EUR 271.0 million as compared to the same period in the previous year (previous year: 235.3) and by 5.5% to EUR 248.3 million adjusted for exchange rate effects.
All business segments also achieved substantial growth in earnings. Adjusted EBIT increased disproportionately to sales by 32.2% to EUR 22.6 million for the Group (previous year: 17.1). The adjusted EBIT margin improved to 8.3% (previous year: 7.3%). In addition to the expanded business volume, this positive development also reflects the consistent results of our cost discipline.
We opened the significantly expanded Parts Distribution Center (PDC) in Dubai during the reporting period. SAF-HOLLAND has already been represented with an international subsidiary in the Emirate since 2011. It supports fleet customers in the Middle East as well as in North and Central Africa. The new expanded PDC now provides three times the previous area. At the same time, capacity was established to enable the assembly of components and systems for heavy-duty applications in the truck and trailer segments. As a hub for global goods transport, Dubai benefits from its favorable geographic location and its first-class infrastructure. The United Arab Emirates and thus also Dubai hold 6th place in the ranking of key emerging markets in the global logistics sector.
We intend to increase adjusted EBIT margin for the Trailer Systems business segment to roughly 6% by late 2015. A package of measures launched in 2013 will be implemented for this purpose; this implementation also proceeded on schedule within the reporting period. Focal points in the many initiatives include transfer of the German plant in Wörth to the two plants at the main site in Bessenbach. Plant relocation and the associated construction measures in Bessenbach are proceeding according to schedule. From today's perspective, the Wörth plant can be closed in September. Consolidation of the German plants would thus be completed earlier than originally planned. With regard to plant consolidation in North America, further steps were decided upon and their implementation commenced during the reporting quarter. This especially affects the international subsidiaries in Canada.
In North America, the Aftermarket Business Unit introduced our electronic Parts on Demand (POD) spare parts catalog at the start of the year. Spare parts ordering is digitized and modernized by the catalog, which functions in the same way as a typical on-line store. Distributors have access to more than 15,000 parts as well as 15 years' worth of sales data. Fleet customers can select required spare and wear parts online and can order them directly. We also intend to offer POD as an app for Android and iOS platforms in North America over the course of the year. Spare parts are shipped via our central distribution center in Cincinnati, Ohio. We can supply 75% of the customer base in less than two days from this location.
We presented new products for the North American transport industry at the Mid-America Trucking Show (MATS) in Louisville, Kentucky in March. The focus was again on innovations to optimize the total cost of ownership for our fleet customers. For example, we introduced
1) Average rates, Q1/2015 vs. Q1/2014.
Financial Position and Financial Performance
products including the Holland Atlas FastGear landing gear at the most important commercial vehicle trade fair in North America. Both models in the new generation can be raised and lowered faster than any other landing gear on the market. In addition to the time savings, Holland Atlas FastGear also provides innovative features for improved safety while simultaneously reducing maintenance requirements.
Our SAF INTEGRAL axle system with disk brakes and P89 hub introduced at the MATS in 2014 received the coveted HDT Top 20 Award in February 2015. This annual award distinguishes the 20 best innovations in the industry in North America. It is awarded by Heavy Duty Trucking (HDT), a leading publication in the transport industry. The level of innovation of the new products is a key criterion in the decision process. The ability to address significant industry issues and potential benefit to the bottom line in fleet operation are also deciding factors. All of the nominated products are evaluated by both the HDT editorial team as well as by a panel of fleet operators.
In the first quarter, SAF-HOLLAND increased Group sales by 15.2% to EUR 271.0 million (previous year: EUR 235.3 million). The significant increase of EUR 35.7 million was generated largely in North America and was positively affected by the Euro/Dollar exchange rate. However, countries outside of our core markets, especially Mexico and China, contributed substantially to sales development.
CURRENCIES: DEVELOPMENT OF US DOLLAR AND CANADIAN DOLLAR AGAINST THE EURO (Q1/2015)1)
| +21.54% |
|---|
| +8.07% |
Group sales generated in the first quarter of 2015 are EUR 248.3 million adjusted for exchange rate effects, corresponding to an increase of 5.5%.
SALES DEVELOPMENT BY REGION
| EUR million Q1/2015 |
Q1/2014 | ||||
|---|---|---|---|---|---|
| Europe | 131.3 | 48.4% | 132.8 | 56.4% | |
| North America | 111.0 | 41.0% | 83.0 | 35.3% | |
| Other | 28.7 | 10.6% | 19.5 | 8.3% | |
| Total | 271.0 | 100% | 235.3 | 100% |
SAF-HOLLAND benefited well from the largely favorable market climate in Europe. We increased our capacity already in February in keeping with high demand. Further extra shifts were scheduled in March and started in the second quarter based on the continuing good order situation. In total, SAF-HOLLAND generated sales in the region of EUR 131.3 million (previous year: EUR 132.8 million). The decline of 1.1% compared with the previous year is due primarily to difficult business in Russia, where the commercial vehicle market shrank by roughly one third over the reporting period.
In addition, the Trailer Systems Business Unit profited from a special economic situation in Europe early in last year: Freight forwarders and fleet customers had invested heavily in trailers in the first quarter of 2014. This unusually high demand included overdue investments in connection with the introduction of Euro-6. As a result of the impending tougher emissions standards, trucks were first ordered in late 2013, and trailer purchases were put off until 2014.
The contribution of the European region to Group sales decreased to 48.4% in the first quarter 2015 (previous year: 56.4%), primarily due to the disproportionate sales growth in North America.
SAF-HOLLAND achieved Group sales of EUR 111.0 million in the North American core market (previous year: EUR 83.0 million). Compared with the same period in the previous year, this corresponds to a sales growth of EUR 28.0 million or 33.7%. Sales adjusted for exchange rate effects came to EUR 91.3 million, corresponding to a 10.0% increase. The region's contribution to overall sales increased to 41.0% (previous year: 35.3%).
In line with the growth strategy, we especially continued to expand the position of the Trailer Systems Business Unit in North America. This again proved that SAF-HOLLAND is present on the market with a comprehensive product spectrum. In addition to our complete range of integral axle systems, the entire palette of suspension systems is thus also available to North American trailer customers. Increased local production capacity also provides favorable conditions for expanding our business. We are successively utilizing this capacity with accelerated sales and intensive new business. The North American trailer market is a strategic growth area for SAF-HOLLAND, where we are targeting a market share of 30%.
Financial Position and Financial Performance
In countries outside the core markets, including the BRIC countries, sales grew to a total of EUR 28.7 million (previous year: EUR 19.5 million), corresponding to 10.6% of Group sales (previous year: 8.3%). The primary driver for growth proved especially to be our established business in China, which benefits from the large demand of North American fleet operators. These operators order vehicles from Chinese manufacturers, equipping their orders with products from SAF-HOLLAND. Corpco, which was assigned to Powered Vehicle Systems, also profited from a major order in the first quarter. This more than compensated the ordinarily seasonally weaker business development of the Chinese provider of bus suspensions.
There was a favorable development in the expanded sales activities in Central and Latin America. For example, Mexican activities of the Trailer Systems and Aftermarket Business Units provided substantial positive momentum. Our restructuring measures in Brazil again yielded increasing success with further optimization of manufacturing costs. However, these advantages did not come fully into play during the reporting period, as the weak market climate in the country does not currently permit high volumes. The current situation in the Brazilian market could also benefit SAF-HOLLAND over the medium term. For example, one of our major OEM customers there is exploiting the consolidation for further growth, which should successively expand our order share. Disadvantages due to the weak Ruble were largely compensated in the current difficult Russian market. Prices were adjusted in the Aftermarket Business Unit and deliveries to end customers increased.
| INCOME STATEMENT | ||||
|---|---|---|---|---|
| EUR million | Q1/2015 | Q1/2014 | ||
| Sales | 271.0 | 100% | 235.3 | 100% |
| Cost of sales | -220.0 | -81.2% | -191.3 | -81.3% |
| Gross profit | 51.0 | 18.8% | 44.0 | 18.7% |
| Other income | 0.4 | 0.2% | 0.1 | 0.0% |
| Selling expenses | -14.5 | -5.4% | -13.7 | -5.8% |
| Administrative expenses | -11.2 | -4.1% | -10.6 | -4.5% |
| Research and development costs | -5.4 | -2.0% | -4.7 | -2.0% |
| Operating result | 20.3 | 7.5% | 15.1 | 6.4% |
| Finance result | 6.6 | 2.4% | -3.3 | -1.4% |
| Share of net profit of investments accounted for using the equity method | 0.3 | 0.1% | 0.2 | 0.1% |
| Result before tax | 27.2 | 10.0% | 12.0 | 5.1% |
| Income tax | -9.1 | -3.3% | -3.7 | -1.6% |
| Result for the period | 18.1 | 6.7% | 8.3 | 3.5% |
| Number of shares1) | 45,361,112 | 45,361,112 | ||
| Basic earnings per share in EUR | 0.40 | 0.18 | ||
| Diluted earnings per share in EUR | 0.34 | 0.18 | ||
1) Weighted average number of ordinary shares.
The Group's gross profit in the reporting period increased to EUR 51.0 million (previous year: EUR 44.0 million), which corresponds to a gross margin of 18.8% relative to sales (previous year 18.7%). Our expenses increased only slightly in the key cost categories, however, they are nearly all below the comparable quota from the previous year as a percentage of total sales. Selling expenses of EUR 14.5 million (previous year: EUR 13.7 million) were 5.4% of Group sales (previous year: 5.8%). Administrative expenses of EUR 11.2 million (previous year: EUR 10.6 million) were 4.1% of total sales (previous year: 4.5%). We had expenditures of EUR 5.4 million for research and development (previous year: EUR 4.7 million). R&D expenditures excluding capitalized development costs were thus 2.0% of sales as in the same quarter in the previous year.
The combination of a higher gross profit and strict cost discipline enabled us to increase the operating result to EUR 20.3 million (previous year: EUR 15.1 million). Earnings before tax rose still more steeply, reaching EUR 27.2 million (previous year: EUR 12.0 million). This is influenced by the finance result, which improved to EUR 6.6 million (previous year: EUR -3.3 million) and which especially reflects foreign currency gains. The result for the period therefore also rose disproportionately to EUR 18.1 million (previous year: EUR 8.3 million).
| EUR million | Q1/2015 | Q1/2014 |
|---|---|---|
| Result for the period | 18.1 | 8.3 |
| Income tax | 9.1 | 3.7 |
| Finance result | -6.6 | 3.3 |
| Depreciation and amortization from PPA | 1.6 | 1.5 |
| Restructuring and integration costs | 0.4 | 0.3 |
| Adjusted EBIT | 22.6 | 17.1 |
| as a percentage of sales | 8.3 | 7.3 |
| Depreciation and amortization | 3.6 | 3.2 |
| Adjusted EBITDA | 26.2 | 20.3 |
| as a percentage of sales | 9.7 | 8.6 |
| Depreciation and amortization | -3.6 | -3.2 |
| Finance result | -2.2 | 1) -3.4 2) |
| Adjusted result before taxes | 20.4 | 13.7 |
| Income tax | -6.2 | -4.2 |
| Adjusted result for the period3) | 14.2 | 4) 9.5 5) |
| as a percentage of sales | 5.2 | 4.0 |
| Number of shares6) | 45,361,112 | 45,361,112 |
| Basic adjusted EPS in EUR7) | 0.31 | 0.21 |
| Diluted adjusted EPS in EUR7) | 0.27 | 0.21 |
RECONCILIATION OF ADJUSTED EARNINGS FIGURES
With growth of 32.2%, adjusted EBIT rose substantially to EUR 22.6 million (previous year: EUR 17.1 million), bringing the adjusted EBIT margin to 8.3% (previous year: 7.3%). The adjusted result for the period increased to EUR 14.2 million (previous year: EUR 9.5 million). This yields adjusted earnings per share of EUR 0.31 (previous year: EUR 0.21) while the number of shares on which this figure is based remained unchanged at 45.4 million shares.
1) The finance result was adjusted for unrealized foreign exchange gains from the evaluation of intercompany foreign currency loan in the amount of EUR 8.8 million at the closing rate. 2) The finance result was adjusted for unrealized foreign exchange gains from the evaluation of intercompany foreign currency loan in the amount of EUR 0.1 million at the closing rate. 3) The determination of the adjusted result for the period has changed compared to the Annual Report as of December 31, 2014. Unrealized foreign exchange gains and losses are now considered in the calculation of the adjusted result for the period to provide better insight into the company`s financial position. 4) A uniform tax rate of 30.60% was assumed in the calculation of the adjusted result for the period. 5) A uniform tax rate of 30.70% was assumed in the calculation of the
adjusted result for the period. 6) Number of ordinary shares outstanding (weighted average).
7) Adjusted earnings per share calculations include minority results in the amount of EUR 0.1 million (previous year: EUR -0.1 million).
019
Financial Position and Financial Performance
| Trailer Systems Business Unit |
Systems Business Unit |
Powered Vehicle | Aftermarket Business Unit |
Adjustments/ eliminations |
Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| EUR million | Q1/2015 | Q1/2014 | Q1/2015 | Q1/2014 | Q1/2015 | Q1/2014 | Q1/2015 | Q1/2014 | Q1/2015 | Q1/2014 |
| Sales | 159.6 | 140.9 | 45.3 | 36.5 | 66.1 | 57.9 | – | – | 271.0 | 235.3 |
| Cost of sales | -142.1 | -127.0 | -37.9 | -30.6 | -47.8 | -40.1 | 7.8 | 6.4 | -220.0 | -191.3 |
| Gross profit | 17.5 | 13.9 | 7.4 | 5.9 | 18.3 | 17.8 | 7.8 | 6.4 | 51.0 | 44.0 |
| as a percentage of sales |
11.0 | 9.9 | 16.3 | 16.2 | 27.7 | 30.7 | – | – | 18.8 | 18.7 |
| Other operating income and expense |
-8.2 | -8.5 | -4.4 | -3.8 | -8.0 | -8.2 | -7.8 | -6.4 | -28.4 | -26.9 |
| Adjusted EBIT | 9.3 | 5.4 | 3.0 | 2.1 | 10.3 | 9.6 | – | – | 22.6 | 17.1 |
| as a percentage of sales |
5.8 | 3.9 | 6.6 | 5.7 | 15.6 | 16.6 | – | – | 8.3 | 7.3 |
The Trailer Systems Business Unit increased sales in the first quarter by 13.3% to EUR 159.6 million (previous year: EUR 140.9 million). As the largest segment of SAF-HOLLAND, this Business Unit thus contributed 58.9% of Group sales (previous year: 59.9%). On the earnings side, Trailer Systems profited both from the expanded business volume as well as from the success of our measures to improve profitability. Gross profit of the Business Unit thus increased disproportionately to sales to EUR 17.5 million (previous year: EUR 13.9 million), which yields a gross margin of 11.0% (previous year: 9.9%). Adjusted EBIT increased to EUR 9.3 million (previous year: EUR 5.4 million) with an adjusted EBIT margin of 5.8% (previous year: 3.9%). The greatly improved key figures document the increasing effect of our package of measures to improve the profitability of Trailer Systems. Further information on the package of measures is given on page 14.
In Europe, Trailer Systems matched the high sales level of the same quarter in the previous year resulting from a beneficial economic situation. At the time, freight forwarders and fleet operators had invested heavily in trailers and thus continued purchases which they had delayed in favor of trucks in 2013 in the context of the Euro-6 standard. The Business Unit substantially increased sales and captured further market share in North America as well. In addition to our expanded end-customer support, this positive development resulted from optimization at the Warrenton, Missouri site, the operating business of which was more closely connected to activities in Dumas, Arkansas.
The Powered Vehicle Systems Business Unit increased sales by 24.1% to EUR 45.3 million (previous year: EUR 36.5 million). The Business Unit thus contributed 16.7% of Group sales (previous year: 15.5%). The Powered Vehicle Systems Business Unit also achieved growth in earnings. Gross profit was thus EUR 7.4 million (previous year: EUR 5.9 million) for a gross margin of 16.3% (previous year: 16.2%). Adjusted EBIT reached EUR 3.0 million (previous year: EUR 2.1 million) and adjusted EBIT margin 6.6% (previous year: 5.7%).
Business Unit production capacities remained well utilized in Europe. Momentum was promoted by the largely favorably market climate. This was further augmented by positive effects from export business, which profited significantly from the low Euro rate.
We also experienced positive effects from the growing demand in North America. However, a continuing weak development in government contracts counteracted the share gained in the overall economy. The US government is currently investing cautiously in wheeled vehicles as the result of factors including a planned shift in models. The multi-year contract for vehicles in the new generation will be awarded to a US OEM next year. This order should have a volume of roughly 55,500 units.
Aftermarket business again developed positively. Declining sales in the generally weak Russian market were counterbalanced by expanded sales in additional regions. Overall, the Aftermarket Business Unit`s sales increased in the first quarter by 14.2% to EUR 66.1 million (previous year: EUR 57.9 million). The contribution of the Business Unit to Group sales was 24.4% and was thus at the level of the previous year (previous year: 24.6%). Business in the Middle East was hit by foreign exchange losses on the earnings side. However, the business segment's gross profit still increased to EUR 18.3 million (previous year: EUR 17.8 million), corresponding to a gross margin of 27.7% (previous year: 30.7%). Adjusted EBIT improved to EUR 10.3 million (previous year: EUR 9.6 million) with an adjusted EBIT margin of 15.6% (previous year: 16.6%).
In the first quarter, the Aftermarket Business Unit made further preparations for expansion of its global market share. The expanded Parts Distribution Center (PDC) thus began operation on the Persian Gulf in February. Further information on the PDC is given on page 13.
We started the introduction of our GoldLine brand in North America. This brand targets the Aftermarket in North, Central and South America with select specifications. SAF-HOLLAND has already long offered spare parts under the label SAUER GERMANY QUALITY PARTS for Asian countries, regions in the Middle East and Eastern European countries. Results show that additional brands optimally round out our program of original spare parts. This enables SAF-HOLLAND to supply trucks and trailers with spare parts throughout their entire life cycle. This opens up additional sales potential with corresponding contributions to sales and earnings in markets which are characterized by a large fleet of high-age vehicles.
Financial Position and Financial Performance
Our financial management is geared towards long-term security for the growth path of SAF-HOLLAND. Key points are a broad basis for corporate financing, suitable financing conditions and maximum flexibility. Financing was again sustainably optimized in the second half of 2014 with the issue of our convertible bonds and early refinancing of bank credit lines. These two transactions yielded total interest cost savings of roughly EUR 2.0 million per year. The new financing structure also offers advantages for the long term: The convertible bonds run until September 2020, the new credit line until October 2019 and the SAF-HOLLAND corporate bond until April 2018.
Cash flow before change of net working capital reached EUR 26.6 million in the reporting quarter (previous year: EUR 19.6 million). Net working capital was EUR 125.9 million (previous year: EUR 95.6 million) and thus exceeded the corresponding value for the previous year as expected. This gain resulted from the cumulative effect of various individual structural factors. The greater inventory volume is significant along with the substantially higher trade receivables of EUR 154.5 million (previous year: EUR 115.9 million) due to the increased business volume. Inventory increased primarily as a result of growing business volume, the expanded group of Parts Distribution Centers and developments related to the consolidation of European plants. We deliberately established stocks of prefabricated components in advance of the relocation of systems and machinery. We increased inventory volume to be able to compensate any import difficulties due to factors including the developments in Russia and the Ukraine. Net working capital over the report time frame corresponded to 11.6% (previous year: 10.2%) based on quarterly sales projected over twelve months.
Cash flow from operating activities before income tax payments totaled EUR 2.3 million in the first quarter (previous year: EUR 3.9 million) as a result of increased net working capital.
The cash flow from investing activities still affected by the Corpco acquisition in the previous year reached EUR -5.6 million in the reporting quarter (previous year: EUR -8.5 million). Cash flow from financing activities totaled EUR -0.4 million (previous year: EUR 0.8 million).
Key items in the investments made from January to March of 2015 were initial expenditures for the PDCs in Malaysia and Dubai as well as expenditures in the context of plant consolidation in Europe, including equipment. We also renewed investments in the improvement and expansion of our global IT structures. The focus here was on the expansion to North America of the Advanced Planner & Optimizer (APO) IT solution already long in use in Europe. After optimization of our master data, this software solution will support sales planning and material availability in the North American locations in the ongoing fiscal year. It is then intended to also support capacity planning with APO in the coming year.
SAF-HOLLAND's total investments in the Group amounted to EUR 5.7 million in the first quarter of 2015 (previous year: EUR 8.5 million), corresponding to an investment ratio of 2.1% (previous year: 3.6%). It should be noted here that our investment volume in the comparison period was affected by the Corpco acquisition. Investments adjusted for this were EUR 4.0 million in the first quarter of 2014.
As of March 31, 2015, total assets rose to EUR 724.7 million (December 31, 2014: EUR 645.2 million). Equity was at EUR 277.6 million (December 31, 2014: EUR 248.6 million). In relation to the significantly increased balance sheet total, this results in an equity ratio of 38.3% (December 31, 2014: 38.5%).
Primarily as a result of higher property, plant and equipment values, non-current assets reached EUR 383.3 million at the end of the reporting quarter (December 31, 2014: EUR 364.0 million). Current assets amounted to EUR 341.4 million (December 31, 2014: EUR 281.2 million) as a result of changes in trade receivables as well as the increased inventory volume. 1)
With the increase in business volume, trade receivables also increased to EUR 154.5 million (December 31, 2014: EUR 103.0 million) with 51 days outstanding (December 31, 2014: 39 days). Inventories of EUR 135.9 million (December 31, 2014: EUR 122.2 million) have an unchanged period outstanding of 56 days. The expected higher inventory volume and the days of inventory outstanding above our target figure of 45 days can be attributed to our plant consolidation in Europe as well as various other influencing factors. More details on this topic are given in the information on net working capital on page 21.
On the liabilities side, non-current liabilities were at EUR 273.3 million as of the balance sheet date (December 31, 2014: EUR 265.0 million). This was influenced by factors including higher tax liabilities as well as changes in interest bearing loans and bonds. At a total of EUR 179.6 million as of March 31, 2015 (December 31, 2014: EUR 177.8 million), this balance sheet item includes both our convertible bond which was issued in 2014 as well as the corporate bond issued in 2012. The current liabilities of EUR 173.9 million (December 31, 2014: EUR 131.6 million) are characterized by the increased trade payables, which in turn result from the expanded business volume and the greater inventory in the context of plant consolidation.
Overall liabilities from interest bearing loans and bonds amounted to EUR 184.3 million (December 31, 2014: EUR 181.3 million). Cash and cash equivalents amounted to EUR 38.7 million (December 31, 2014: EUR 44.2 million), resulting in a net debt of EUR 145.6 million as of the balance sheet date (December 31, 2014: EUR 137.1 million). Including cash and cash equivalents and the agreed credit facility, SAF-HOLLAND reported a total liquidity of EUR 143.0 million (December 31, 2014: EUR 146.9 million/March 31, 2014: 128.8 million).
| 03/31/2015 | ||||
|---|---|---|---|---|
| kEUR | Amount drawn valued as of the period-end exchange rate |
Agreed credit lines valued as of the period-end exchange rate |
Cash and cash equivalents |
Total liquidity |
| Facility A | 6,315 | 85,000 | – | 78,685 |
| Facility B | – | 23,038 | – | 23,038 |
| Other Facility | 3,410 | 1) 6,012 |
38,680 | 41,282 |
| Total | 9,725 | 114,050 | 38,680 | 143,005 |
1) Bilateral credit line for the activities of the Group in China.
023
Financial Position and Financial Performance
| 03/31/2014 | ||||
|---|---|---|---|---|
| kEUR | Amount drawn valued as of the period-end exchange rate |
Agreed credit lines valued as of the period-end exchange rate |
Cash and cash equivalents |
Total liquidity |
| Facility A1 | 49,860 | 49,860 | – | – |
| Facility A2 | 10,797 | 15,425 | – | 4,628 |
| Facility B1 | 14,525 | 80,000 | 17,798 | 83,273 |
| Facility B2 | 190 | 36,360 | – | 36,170 |
| Other Facility | – | 1) 4,720 |
– | 4,720 |
| Total | 75,372 | 186,365 | 17,798 | 128,791 |
1) Bilateral credit line for the activities of the Group in China.
As of March 31, 2015, the Group's employees, including temporary employees totaled 3,370 (previous year: 3,373). Employee distribution by regions corresponded to that of the same quarter in the previous year. The largest group of employees thus belonged to our North American organization with an unchanged proportion of 45%. As previously, 37% of employees worked at our European companies, with a further 18% at locations outside of the two core markets. Sales per employee increased to kEUR 80.4 in the reporting period (previous year: kEUR 69.8).
| Total | 3,370 | 3,373 |
|---|---|---|
| Other | 617 | 608 |
| North America | 1,520 | 1,522 |
| Europe | 1,233 | 1,243 |
| 03/31/2015 | 03/31/2014 |
Our research and development activities are geared toward the success of our fleet customers. The focus is on innovations which contribute to increasing transport efficiency. In this context, we also worked primarily on new developments for weight reduction in the first quarter of 2015. Additional key points of focus were innovations in the areas of durability, safety and ease of maintenance. We also dealt with technical adaptations of our products to meet special customer requests and regional market requirements.
New products for the North American market were presented in March at MATS, the most important commercial vehicle fair in the region. We presented innovations in the Aftermarket area, including Parts on Demand, the North American version of our electronic spare parts catalog, at the Heavy Duty Aftermarket Week in Las Vegas, Nevada in late January. Further information on MATS and the spare parts catalog is given on page 14.
SAF-HOLLAND had global research and development expenditures of EUR 5.4 million (previous year: EUR 4.7 million). Including capitalized development costs, this results in an R&D ratio of 2.2% relative to Group sales, the same as in the prior-year period. The share of capitalized development costs also remained unchanged at EUR 0.5 million.
The Group has recorded no changes from the opportunities and risk profile at the end of the 2014 financial year as outlined in the 2014 annual report. Overall, the risks are manageable and sufficient provisions have been made for known risks.
At the Annual General Meeting of SAF-HOLLAND S.A. on April 23, 2015, shareholders approved the recommendation of the Board of Directors to distribute a dividend of EUR 0.32 (previous year: 0.27) per share for financial year 2014. The dividend was distributed on April 24, 2015. The total dividend distribution amounts to EUR 14.5 million (previous year: EUR 12.2 million), which corresponds to a share of roughly 44% of the result for the period achieved in 2014.
The Board of Directors mandate of Richard W. Muzzy ended as planned with the Annual General Meeting of April 23, 2015. In order to ensure continuity, Martina Merz had already been elected to the Board in the previous year.
| Bernhard Schneider | Chairman of the Board of Directors |
|---|---|
| Sam Martin | Deputy Chairman of the Board of Directors |
| Detlef Borghardt | Member of the Board of Directors |
| Dr. Martin Kleinschmitt | Member of the Board of Directors |
| Anja Kleyboldt | Member of the Board of Directors |
| Martina Merz | Member of the Board of Directors |
The IfW expects a continued upswing in the global economy for the forecast period of 2015/2016. However, as the institute emphasizes, the global economy remains sensitive to disturbances. Risks are seen especially in geopolitical developments, economic policy decisions and the effects of the decline in oil prices.
The institute's forecast is based on the assumption that no new crises will develop and existing ones will not escalate further. It is further assumed that strains on the financial markets are limited in time or region, that there will be no significant effects from changes in exchange rates and no increasing doubts regarding the existence of the Eurozone. Given these assumptions, global economic activity should increase by 3.1% in 2015 and by 3.4% in 2016. Growth rates of 4% in this year and 5% in the coming year are forecast for world trade.
Oppurtunities and Risk Report Events after the Balance Sheet Date Outlook
The upswing is especially spurred in the advanced economies by the expansive monetary policy and the decline in oil prices. Based on this, the Eurozone economy should accelerate, with growth rates of 1.3% achievable in this year and 1.7% in the next year. For Germany, the institute anticipates a growth in gross domestic product by 1.8% in 2015 and 2.0% in 2016.
Substantially stronger economic growth is forecast for the United States. In addition to growing private consumption, this should be driven especially by the upward trend in new home construction. Corporate investments should also provide further impetus as a result of the favorable outlook for sales and earnings. Overall, the IfW expects the US gross domestic product to grow by 3.0% in this year and by 3.5% in the coming year.
Economic development will remain highly disparate in the BRIC countries in the future. For example, economic output in Russia is expected to decline substantially in 2015, while recovery is gradually taking hold in Brazil. The Asian BRIC countries remain drivers for growth. Although the expansion rate in China is decreasing further, production is still rising roughly twice as fast as the global economy. Economic prospects are also positive in India, where gross domestic product will increase strongly in 2015 and 2016.
FORECAST ECONOMIC DEVELOPMENT IN KEY MARKETS
| 2014 | 2015 | 2016 | |
|---|---|---|---|
| European Union | 1.3% | 1.7% | 2.0% |
| Eurozone | 0.9% | 1.3% | 1.7% |
| Germany | 1.6% | 1.8% | 2.0% |
| United States | 2.4% | 3.0% | 3.5% |
| Brazil | -0.1% | 0.8% | 2.0% |
| Russia | 0.4% | -3.0% | 0.5% |
| India | 7.2% | 7.4% | 7.4% |
| China | 7.4% | 7.0% | 6.7% |
Source: Institute for World Economy (IfW), Global Economy in Spring 2015 (March 2015).
The perspectives for the global commercial vehicle market remain positive. According to Frost & Sullivan, global sales of medium and heavy-duty trucks will increase by 3.5% over the current year. Trucks in the 16 ton class and higher should correspond to nearly two thirds of the total 2.9 million units. Frost & Sullivan anticipates disproportionate growth rates in India and the Next Eleven markets, but also in North America.
The market upswing is expected to gain intensity in Europe. ACT Research anticipates 155,307 new registrations of trailers in Western Europe in 2015, 16.7% more than in the previous year. New registrations should increase by another 4.4% to 162,182 units in the coming year. The truck market is also increasing further. According to Frost & Sullivan, the sales volume of medium-duty trucks will increase by 1.2% in 2015, with a 3.3% increase in the higher weight classes.
2015 will presumably be the best year for the North American trailer market since the late 1990s: According to calculations by ACT Research, the number of deliveries should increase by 12.0% to 320,300 trailers in 2015. Market growth will then presumably pause in the following year. The situation is similar for the truck segment, where production numbers for class 8 vehicles should increase by 14.6% in the current year. The multi-year market growth should have reached an initial peak by that point.
For the Asian BRIC countries, Frost & Sullivan anticipates that sales numbers for trucks in the middle and higher weight classes 2015 will increase by 11.3% in India and by 2.2% in China. According to ACT Research, trailer sales should increase by 6.7% in China and by 22.3% in India. Demand remains weak in Brazil, due to factors including higher lending rates for funding programs through which truck purchases are largely financed. However, this South American country remains the most promising sales region over the medium term. IHS Automotive expects the Brazilian market for medium and heavy-duty trucks as well as buses to increase by a total of 208,000 units by 2020. This would be an increase of 28% compared with 2014. The Russian commercial vehicle market will presumably initially decline further. The government has already introduced a scrapping incentive to support truck sales. Initiatives to limit the permissible maximum age of commercial vehicles are also under discussion, some of which should take effect already in this fiscal year. Barring current uncertainties, the Russian market still holds potential. Accordingly, the country continues to rank seventh in the ranking of key
emerging markets.
Since 2010, SAF-HOLLAND has been pursuing a medium-term strategy 2015 which focuses on an expansion of the trailer business in North America, strengthening of the international Aftermarket activities and a further penetration of markets in BRIC countries. In the first quarter of 2015, the Board of Directors and the Management Board approved the follow-up strategy 2020. It positions SAF-HOLLAND for the future, puts the profitable company growth on an even broader basis and provides additional expansion momentum. The strategy is built on the opportunities presented by global megatrends. The global demographic development and the upswing in emerging markets are determinants that are shaping our global market in ways that are as fundamental as they are sustainable. In this context, the development of the strong consumer middle class in the population is particularly important. It is this group that, through their consumption, drives the transport of goods with trucks and trailers on the roads.
Geared toward the long-term impact of the megatrends, the majority of the sales growth until 2030 is supposed to be outside of the core regions of Europe and North America. For 2020, this means that SAF-HOLLAND is targeting an increase in sales to between EUR 1.250 and 1.500 billion. This corresponds to annual average sales growth of 4 to 7%, which is well above the development of the markets. About half of the planned sales increase is to be generated organically. In addition, complementary cooperations and acquisitions that support the growth strategy outside the core regions will contribute to Group sales. By 2020, about a third of sales will be generated outside of Europe and North America. At the same time, the company believes that it will be able to achieve an adjusted EBIT margin at a level of at least 8%, despite the planned strong growth in emerging markets. In terms of earnings per share, an increase by 2020 of about 75% as compared to 2014 is expected under consideration of the higher number of shares resulting from the convertible bonds issued in 2014.
With this medium and long-term goal setting, the strategy 2020 puts attractive growth areas which, compared to the core markets, offer disproportionately high sales potential in the foreground. These are, on the one hand, the strongly expanding areas of activity from SAF-HOLLAND and, on the other hand, the most promising sales opportunities in the world's emerging markets.
Within our spectrum of altogether 64 regional and product-oriented areas of activity, eight priorities have been defined. They are important growth areas in which SAF-HOLLAND is, in part, already active today and which can grow further by means of more intensive market penetration, gaining further market share and the introduction of new products. Examples include the Outlook
activities located in Dubai for the Middle East and for Africa as well as the expansion of our program and our services for suspension systems for trucks and buses. In 2020, the eight focus areas of activity will contribute 80%, thus more than EUR 1 billion in total sales.
Studies have shown that the greatest and fastest growth of the strongly-consuming middle class is taking place outside of SAF-HOLLAND`s current core markets in the emerging markets of Asia, Central and South America as well as the Middle East and Africa. The planned expansion of road networks in these areas is also extremely important and ensures that the basic foundation for the transport of goods by truck and trailer is in place. SAF-HOLLAND has also been active at least partially in these regions outside of Europe and North America for years. We will systematically expand these activities and extend them to other geographical sales areas – in Central America, India and China as well as other regions around the world. Thus, in 2020 about a third of Group sales will be generated outside of what are today our core markets. To achieve this objective, we will rely on both internal and external growth.
The successfull business development of the first quarter provides an advantageous foundation for the rest of the year. SAF-HOLLAND is also well-positioned to take full advantage of the increasing demand in our core markets of Europe and North America. In addition, promising perspectives are also offered in other regions of the world.
Against this backdrop, we expect, from today's perspective, that the positive business development will continue over the course of the year and that SAF-HOLLAND will again grow profitably in full year 2015. The increasing success of our package of measures to enhance the profitability of the Trailer Systems Business Unit will also contribute to meeting this target. Assuming the political, overall economic and industry-specific environment does not worsen, SAF-HOLLAND continues to target Group sales of between EUR 980 million and EUR 1.035 billion for 2015. In the current financial year, adjusted EBIT is expected to increase at a much higher rate than sales and reach about EUR 90 million. The adjusted EBIT margin is thus expected to come in within the scope of the original target of approximately 9 to 10%, although it will likely be at the lower end of the expected range. With earnings per share, management expects an increase of about 30% compared to 2014 under full consideration of the higher number of shares due to the convertible bonds issued in 2014.
9 Equity
10 Other Provisions
| kEUR | Notes | Q1/2015 | Q1/2014 |
|---|---|---|---|
| Result for the period | |||
| Sales | (5) | 271,004 | 235,288 |
| Cost of sales | -219,988 | -191,260 | |
| Gross profit | 51,016 | 44,028 | |
| Other income | 377 | 121 | |
| Selling expenses | -14,524 | -13,691 | |
| Administrative expenses | -11,214 | -10,642 | |
| Research and development costs | -5,433 | -4,688 | |
| Operating result | (5) | 20,222 | 15,128 |
| Finance income | (6) | 9,411 | 168 |
| Finance expenses | (6) | -2,847 | -3,480 |
| Share of net profit of investments accounted for using the equity method | 346 | 204 | |
| Result before tax | 27,132 | 12,020 | |
| Income tax | (7) | -9,065 | -3,760 |
| Result for the period | 18,067 | 8,260 | |
| Attributable to: | |||
| Equity holders of the parent | 18,000 | 8,336 | |
| Non-controlling interests | 67 | -76 | |
| Other comprehensive income | |||
| Items that may be reclassified subsequently to profit or loss | |||
| Exchange differences on translation of foreign operations | (9) | 10,895 | -441 |
| Changes in fair values of derivatives designated as hedges, recognized in equity |
(9)/(12) | – | 396 |
| Income tax effects on items recognized directly in other comprehensive income |
(9) | – | -108 |
| Other comprehensive income | 10,895 | -153 | |
| Comprehensive income for the period | 28,962 | 8,107 | |
| Attributable to: | |||
| Equity holders of the parent | 28,675 | 8,183 | |
| Non-controlling interests | 287 | -76 | |
| Basic earnings per share in EUR | 0.40 | 0.18 | |
| Diluted earnings per share in EUR | 0.34 | 0.18 |
002 Company 006 Group Interim Management Report 028 Consolidated Interim Financial Statements
042 Additional Information
031
Consolidated Statement of Comprehensive Income Consolidated Balance Sheet
| kEUR | Notes | 03/31/2015 | 12/31/2014 |
|---|---|---|---|
| Assets | |||
| Non-current assets | 383,300 | 363,955 | |
| Goodwill | 53,121 | 50,248 | |
| Intangible assets | 147,381 | 142,363 | |
| Property, plant, and equipment | 125,253 | 116,971 | |
| Investments accounted for using the equity method | 12,248 | 11,805 | |
| Financial assets | 316 | 118 | |
| Other non-current assets | 2,920 | 3,042 | |
| Deferred tax assets | 42,061 | 39,408 | |
| Current assets | 341,411 | 281,241 | |
| Inventories | 135,930 | 122,156 | |
| Trade receivables | 154,549 | 102,964 | |
| Income tax assets | 3,120 | 2,732 | |
| Other current assets | 8,903 | 9,108 | |
| Financial assets | 229 | 116 | |
| Cash and cash equivalents | (8) | 38,680 | 44,165 |
| Total assets | 724,711 | 645,196 | |
| Equity and liabilities Total equity |
(9) | 277,559 | 248,597 |
| Equity attributable to equity holders of the parent | 275,268 | 246,593 | |
| Subscribed share capital | 454 | 454 | |
| Share premium | 268,644 | 268,644 | |
| Legal reserve | 45 | 45 | |
| Other reserve | 436 | 436 | |
| Retained earnings | 17,227 | -773 | |
| Accumulated other comprehensive income | -11,538 | -22,213 | |
| Shares of non-controlling interests | 2,291 | 2,004 | |
| Non-current liabilities | 273,274 | 264,997 | |
| Pensions and other similar benefits | 40,207 | 37,493 | |
| Other provisions | 8,297 | 6,799 | |
| Interest bearing loans and bonds | (11) | 179,592 | 177,797 |
| Finance lease liabilities | 1,880 | 1,773 | |
| Other financial liabilities | – | – | |
| Other liabilities | 702 | 685 | |
| Deferred tax liabilities | 42,596 | 40,450 | |
| Current liabilities | 173,878 | 131,602 | |
| Other provisions | 7,780 | 10,134 | |
| Interest bearing loans and bonds | (11) | 4,689 | 3,543 |
| Finance lease liabilities | 440 | 399 | |
| Trade payables | 123,332 | 94,363 | |
| Income tax liabilities | 12,086 | 4,704 | |
| Other financial liabilities | 208 | 45 | |
| Other liabilities | 25,343 | 18,414 | |
| Total equity and liabilities | 724,711 | 645,196 | |
| Q1/2015 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Attributable to equity holders of the parent | |||||||||
| kEUR | Sub scribed share capital |
Share premium |
Legal reserve |
Other reserve |
Retained earnings |
Accumulated other comprehensive income |
Total amount |
Shares of non controlling interests |
Total equity (Note 9) |
| As of 01/01/2015 | 454 268,644 | 45 | 436 | -773 | -22,213 | 246,593 | 2,004 | 248,597 | |
| Result for the period | – | – | – | – | 18,000 | – | 18,000 | 67 | 18,067 |
| Other comprehensive income |
– | – | – | – | – | 10,675 | 10,675 | 220 | 10,895 |
| Comprehensive income for the period |
– | – | – | – | – | – | 28,675 | 287 | 28,962 |
| As of 03/31/2015 | 454 268,644 | 45 | 436 | 17,227 | -11,538 | 275,268 | 2,291 | 277,559 |
| Q1/2014 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Attributable to equity holders of the parent | |||||||||
| kEUR | Sub scribed share capital |
Share premium |
Legal reserve |
Other reserve |
Retained earnings |
Accumulated other comprehensive income |
Total amount |
Shares of non controlling interests |
Total equity (Note 9) |
| As of 01/01/2014 | 454 | 265,843 | 22 | 436 | -21,145 | -23,424 | 222,186 | – | 222,186 |
| Result for the period | – | – | – | – | 8,336 | – | 8,336 | -76 | 8,260 |
| Other comprehensive income |
– | – | – | – | – | -153 | -153 | – | -153 |
| Comprehensive income for the period |
– | – | – | – | – | – | 8,183 | -76 | 8,107 |
| Addition of shares of non-controlling interests due to mergers |
– | – | – | – | – | – | – | 1,560 | 1,560 |
| As of 03/31/2014 | 454 | 265,843 | 22 | 436 | -12,809 | -23,577 | 230,369 | 1,484 | 231,853 |
002 Company 006 Group Interim Management Report 028 Consolidated Interim Financial Statements
042 Additional Information
Consolidated Statement of Changes in Equity Consolidated Cash Flow Statement
| kEUR | Notes | Q1/2015 | Q1/2014 | |
|---|---|---|---|---|
| Cash flow from operating activities | ||||
| Result before tax | 27,132 | 12,020 | ||
| - | Finance income | (6) | -9,411 | -168 |
| + | Finance expenses | (6) | 2,847 | 3,480 |
| +/- | Share of net profit of investments accounted for using the equity method | -346 | -204 | |
| + | Amortization, depreciation of intangible assets and property, plant, and equipment | 5,213 | 4,684 | |
| + | Allowance of current assets | 1,167 | -295 | |
| +/- | Loss/Gain on disposal of property, plant, and equipment | -34 | 25 | |
| + | Dividends from investments accounted for using the equity method | 18 | 17 | |
| Cash flow before change of net working capital | 26,586 | 19,559 | ||
| +/- | Change in other provisions and pensions | -2,356 | -198 | |
| +/- | Change in inventories | -6,891 | -9,147 | |
| +/- Change in trade receivables and other assets | 1) -44,802 |
1) -33,211 |
||
| +/- | Change in trade payables and other liabilities | 29,718 | 26,926 | |
| Cash flow from operating activities before income tax paid | 2,255 | 3,929 | ||
| - | Income tax paid | (7) | -2,874 | -2,336 |
| Net cash flow from operating activities | -619 | 1,593 | ||
| Cash flow from investing activities | ||||
| - | Purchase of property, plant, and equipment | -5,084 | -3,489 | |
| - | Purchase of intangible assets | -657 | -545 | |
| + | Proceeds from sales of property, plant, and equipment | 171 | 9 | |
| - | Payments for acquisition of subsidiaries net of cash | – | -4,490 | |
| + | Interest received | 11 | 48 | |
| Net cash flow from investing activities | -5,559 | -8,467 | ||
| Cash flow from financing activities | ||||
| - | Payments for finance lease | -106 | -99 | |
| - | Interest paid | -1,002 | -1,509 | |
| - | Repayments of current and non-current financial liabilities | (11) | – | -3,584 |
| +/- | Change in drawings on the credit line and other financing activities | (11) | 708 | 6,001 |
| Net cash flow from financing activities | -400 | 809 | ||
| Net increase in cash and cash equivalents | -6,578 | -6,065 | ||
| +/- | Effect of changes in exchange rates on cash and cash equivalents | 1,093 | 7 | |
| Cash and cash equivalents at the beginning of the period | (8) | 44,165 | 23,856 | |
| Cash and cash equivalents at the end of the period | (8) | 38,680 | 17,798 |
1) As of March 31, 2015, trade receivables in the amount of EUR 22.9 million (previous year: EUR 19.5 million) were sold in the context of a factoring contract. Assuming the legal validity of the receivable, no further rights of recourse exist against SAF-HOLLAND from the sold receivables.
For the period January 1 to March 31, 2015
SAF-HOLLAND S.A. (the "Company") was incorporated on December 21, 2005 under the legal form of a "Société Anonyme" according to Luxembourg law. The registered office of the Company is in Luxembourg. The shares of the Company are listed in the Prime Standard of the Frankfurt Stock Exchange. They have been included in the SDAX since 2010.
The consolidated financial statements of SAF-HOLLAND S.A. and its subsidiaries (the "Group") have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union and in effect as of the closing date.
The consolidated interim financial statements for the first quarter of 2015 have been prepared in accordance with IAS 34 "Interim Financial Reporting". Unless expressly indicated otherwise, the same accounting policies and consolidation methods were applied as in the Group's annual financial statements for the financial year 2014. Therefore, the consolidated interim financial statements should be read in conjunction with the Group's annual financial statements as of December 31, 2014.
In preparing the consolidated interim financial statements, management has to make assumptions and estimates which affect the reported amounts of assets, liabilities, income, expenses, and contingent liabilities as of the reporting date. In certain cases, actual amounts may differ from these assumptions and estimates.
Expenses and income incurred irregularly during the financial year were anticipated or deferred if it would also be appropriate to take them into account at the end of the financial year.
The consolidated interim financial statements and the Group Interim Management Report have neither been audited nor reviewed by an auditing firm.
Seasonal effects during the year can result in variations in sales and the resulting profits. Please see the Group Interim Management Report for further details regarding earnings development.
There were no changes to the scope of consolidation compared to the consolidated financial statements as of December 31, 2014.
Corporate Information Significant Accounting Policies Seasonal Effects Scope of Consolidation Segment Information
For management purposes, the Group is organized into customer-oriented Business Units based on their products and services. The three reportable core segments are the Business Units Trailer Systems, Powered Vehicle Systems, and Aftermarket. There has been no change in the division of segments since December 31, 2014. For more information, please see the Notes to the Consolidated Financial Statement for the financial year 2014.
Management assesses the performance of the operating segments based on adjusted EBIT. The reconciliation from operating result to adjusted EBIT is provided as follows:
| kEUR | Q1/2015 | Q1/2014 |
|---|---|---|
| Operating result | 20,222 | 15,128 |
| Share of net profit of investments accounted for using the equity method | 346 | 204 |
| EBIT | 20,568 | 15,332 |
| Additional depreciation and amortization from PPA | 1,607 | 1,507 |
| Restructuring and integration costs and non-period expenses | 403 | 251 |
| Adjusted EBIT | 22,578 | 17,090 |
Information on segment sales and earnings for the period from January 1 to March 31, 2015:
| Q1/2015 | ||||
|---|---|---|---|---|
| Business Units | ||||
| kEUR | Trailer Systems | Powered Vehicle Systems |
Aftermarket | Consolidated |
| Sales | 159,628 | 45,266 | 66,110 | 271,004 |
| Adjusted EBIT | 9,264 | 2,991 | 10,323 | 22,578 |
| Q1/2014 | ||||||
|---|---|---|---|---|---|---|
| Business Units | ||||||
| kEUR | Trailer Systems | Powered Vehicle Systems |
Aftermarket | Consolidated | ||
| Sales | 140,935 | 36,515 | 57,838 | 235,288 | ||
| Adjusted EBIT | 5,440 | 2,069 | 9,581 | 17,090 |
Please see the Group Interim Management Report regarding earnings development of the segments.
Finance income and expenses consist of the following:
| FINANCE INCOME | |||||
|---|---|---|---|---|---|
| Q1/2015 | Q1/2014 | ||||
| 8,840 | 131 | ||||
| 308 | – | ||||
| 23 | 33 | ||||
| 240 | 4 | ||||
| 9,411 | 168 | ||||
Foreign exchange gains on foreign currency loans primarily comprise unrealized foreign exchange gains on intercompany-foreign currency loans translated at the period-end exchange rate.
1) Includes the non-cash interest expense of kEUR 155 for the convertible bond.
The amortization of transaction costs of kEUR -130 (previous year: kEUR -164) represents the contract closing fees recognized as expenses in the period in accordance with the effective interest method.
Finance expenses in connection with derivative financial instruments in the previous year mainly include the reclassification to the financial result of the cash flow hedge reserve recorded in equity of kEUR 565 through profit or loss. The recycling of the cash flow hedge reserve results from the early repayment of interest rate swaps in the context of the refinancing in October 2012. The cash flow hedge reserve has been released to the finance result using the effective interest method over the original term of the swaps.
The major components of income taxes are as follows:
| kEUR | Q1/2015 | Q1/2014 |
|---|---|---|
| Current income taxes | -7,351 | -2,328 |
| Deferred income taxes | -1,714 | -1,432 |
| Income taxes reported in the result for the period | -9,065 | -3,760 |
037
Finance Result Income Taxes Cash and Cash Equivalents Equity Other Provisions
The effective income tax rate in the first quarter of 2015 was 33.40%. The variance between the effective income tax rate and the Group´s income tax rate of 30.60% (previous year: 30.70%) is mainly attributable to non-deductible expenses and unused tax loss carry forwards.
| kEUR | 03/31/2015 | 12/31/2014 |
|---|---|---|
| Cash on hand, cash at banks and checks | 38,674 | 44,160 |
| Short-term deposits | 6 | 5 |
| Total | 38,680 | 44,165 |
The Company's subscribed share capital is unchanged from December 31, 2014 and still amounted to EUR 453,611.12 on March 31, 2015. It consists of 45,361,112 ordinary shares with a par value of EUR 0.01 and is fully paid-in.
The company`s reserves – namely the share premium, the legal reserve and other reserves – are unchanged from December 31, 2014.
Changes in accumulated other comprehensive income consist of the following:
| Before tax amount | Tax expense | Net of tax amount | ||||
|---|---|---|---|---|---|---|
| kEUR | Q1/2015 | Q1/2014 | Q1/2015 | Q1/2014 | Q1/2015 | Q1/2014 |
| Exchange differences on translation of foreign operations |
10,895 | -441 | – | – | 10,895 | -441 |
| Changes in fair values of derivatives designated as hedges, recognized in equity |
– | 396 | – | -108 | – | 288 |
| Total | 10,895 | -45 | – | -108 | 10,895 | -153 |
As a result of meeting the underlying performance targets of the phantom share plan as of December 31, 2014, payments were made under the plan in the first quarter 2015. The provision recognized in the previous year for this purpose of EUR 2.3 million was utilized in the reporting period in this context.
| Non-current | Current | Total | ||||
|---|---|---|---|---|---|---|
| kEUR | 03/31/2015 | 12/31/2014 | 03/31/2015 | 12/31/2014 | 03/31/2015 | 12/31/2014 |
| Interest bearing bank loans | 9,725 | 8,178 | – | – | 9,725 | 8,178 |
| Convertible bond | 96,621 | 96,436 | – | – | 96,621 | 96,436 |
| Bond | 75,000 | 75,000 | – | – | 75,000 | 75,000 |
| Financing costs | -1,860 | -1,931 | -506 | -505 | -2,366 | -2,436 |
| Bank overdrafts | – | – | – | – | – | – |
| Accrued interests | – | – | 4,995 | 4,000 | 4,995 | 4,000 |
| Other loans | 106 | 114 | 200 | 48 | 306 | 162 |
| Total | 179,592 | 177,797 | 4,689 | 3,543 | 184,281 | 181,340 |
The following table summarizes the determination of overall liquidity defined as available undrawn credit lines measured at the period-end exchange rate plus available cash and cash equivalents:
| 03/31/2015 | ||||||
|---|---|---|---|---|---|---|
| kEUR | Amount drawn valued as at the period-end exchange rate |
Agreed credit lines valued as at the period-end exchange rate |
Cash and cash equivalents |
Total liquidity | ||
| Facility A | 6,315 | 85,000 | – | 78,685 | ||
| Facility B | – | 23,038 | – | 23,038 | ||
| Other Facility | 3,410 | 1) 6,012 |
38,680 | 41,282 | ||
| Total | 9,725 | 114,050 | 38,680 | 143,005 |
| 12/31/2014 | ||||||
|---|---|---|---|---|---|---|
| kEUR | Amount drawn valued as at the period-end exchange rate |
Agreed credit lines valued as at the period-end exchange rate |
Cash and cash equivalents |
Total liquidity | ||
| Facility A | 5,822 | 85,000 | – | 79,178 | ||
| Facility B | – | 20,568 | – | 20,568 | ||
| Other Facility | 2,356 | 5,360 1) |
44,165 | 47,169 | ||
| Total | 8,178 | 110,928 | 44,165 | 146,915 |
1) Bilateral credit line for the activities of the Group in China.
042 Additional Information
Interest Bearing Loans and Bonds Financial Assets and Other Financial Liabilities
The fair values and carrying amounts of the financial assets were as follows as of the balance sheet date:
| 03/31/2015 | 12/31/2014 | |||
|---|---|---|---|---|
| kEUR | Fair value | Book value | Fair value | Book value |
| Financial assets measured at cost or amortized costs |
||||
| Cash and cash equivalents | 38,680 | 38,680 | 44,165 | 44,165 |
| Trade receivables | 154,549 | 154,549 | 102,964 | 102,964 |
| Other current assets | 1,005 | 1,005 | 1,089 | 1,089 |
| Derivatives without hedging relationship | 545 | 545 | 234 | 234 |
| Financial liabilites measured at cost or amortized costs |
||||
| Trade payables | 123,332 | 123,332 | 94,363 | 94,363 |
| Interest bearing loans and bonds | 228,896 | 184,281 | 202,067 | 181,340 |
| Finance lease liabilities | 2,320 | 2,320 | 2,172 | 2,172 |
| Derivatives without hedging relationship | 208 | 208 | 45 | 45 |
The following table shows the allocation of financial assets and liabilities measured at fair value to the three hierarchy levels of fair values:
| kEUR | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Interest bearing loans and bonds | 228,896 | – | – | 228,896 |
| Derivative financial assets | – | 545 | – | 545 |
| Derivative financial liabilities | – | 208 | – | 208 |
| 12/31/2014 | ||||
|---|---|---|---|---|
| kEUR | Level 1 | Level 2 | Level 3 | Total |
| Interest bearing loans and bonds | 202,067 | – | – | 202,067 |
| Derivative financial assets | – | 234 | – | 234 |
| Derivative financial liabilities | – | 45 | – | 45 |
As of March 31, 2015, the derivative financial assets contain forward exchange transactions and are used to hedge the risk position arising from the currency fluctuation of the US Dollar, Russian Rubel and South African Rand.
Transactions with related parties and companies in which members of management hold key positions:
| Sales to related parties | Purchases from related parties |
|||
|---|---|---|---|---|
| kEUR | Q1/2015 | Q1/2014 | Q1/2015 | Q1/2014 |
| SAF-HOLLAND Nippon, Ltd. | 391 | 189 | – | – |
| FWI S.A. | – | – | 8,576 | 5,763 |
| Total | 391 | 189 | 8,576 | 5,763 |
| Amounts owed by related parties |
Amounts owed to related parties |
|||
|---|---|---|---|---|
| kEUR | 03/31/2015 | 12/31/2014 | 03/31/2015 | 12/31/2014 |
| SAF-HOLLAND Nippon, Ltd. | 347 | 537 | 207 | 207 |
| FWI S.A. | – | – | 1,661 | 1,419 |
| Total | 347 | 537 | 1,868 | 1,626 |
Please see the Group Interim Management Report for further explanations of the cash flow statement.
At the Annual General Meeting on April 23, 2015, it was decided to distribute a dividend in the amount of EUR 0.32 per share to shareholders from the net profit of the financial year just ended. Total dividend distribution amounts to EUR 14.5 million.
The Board of Directors mandate of Richard W. Muzzy ended as planned with the Annual General Meeting of April 23, 2015. In order to ensure continuity, Martina Merz had already been elected to the Board in the previous year.
No further material events have occurred since the reporting date.
002 Company 006 Group Interim Management Report 028 Consolidated Interim Financial Statements 041
Related Party Disclosures Statement of Cash Flows Events after the Balance Sheet Date
Experience adjustments (the effects of differences between the previous actuarial assumptions and what has actually occurred) and the effects of changes in actuarial assumptions.
Earnings before interest and taxes (EBIT) is adjusted for special items, such as depreciation and amortization from purchase price allocations, impairment of goodwill and intangible assets, reversal of impairment of intangible assets as well as restructuring and integration costs.
For management purposes, the Group is organized into customer-oriented Business Units (Trailer Systems, Powered Vehicle Systems, and Aftermarket).
Cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or groups of assets.
Analysts at renowned banks and investment houses regularly observe and evaluate the development of SAF-HOLLAND S.A.'s shares.
Inventory / cost of sales per day (cost of sales of the quarter / 90 days).
Trade payables / cost of sales per day (cost of sales of the quarter / 90 days).
Trade receivables / sales per day (sales of the quarter / 90 days).
Income tax according to the income statement / earnings before tax x 100.
Equity / total assets x 100.
Amount obtainable from the sale in an arm's length transaction between knowledgeable, willing parties.
Gross profit / sales x 100.
Financial Glossary
I
The standard international accounting rules are intended to make company data more comparable. Under the EU resolution, accounting and reporting at listed companies must be done in accordance with these rules.
The mid-cap-DAX (MDAX) comprises 50 companies that rank immediately below DAX securities in terms of market capitalization and order book volume.
Current assets less cash and cash equivalents less current and non-current other provisions less trade payables less other current liabilities less income tax liabilities.
Factoring where the factor takes on the bad debt risk.
P
Personnel expenses (not including restructuring and integration costs) / average number of employees (not including temporary employees).
Prime Standard is a market segment of the German Stock Exchange that lists German companies which comply with international transparency standards.
Distribution of the acquisition costs of a business combination to the identifiable assets, liabilities and contingent liabilities of the (acquired) company.
R&D cost and capitalized development cost / sales x 100.
The recoverable amount is the higher of the fair value less cost to sell and the value in use.
S
Sales / average number of employees (including temporary employees).
The small-cap-DAX (SDAX) comprises 50 companies that rank immediately below mid-cap-DAX (MDAX) securities in terms of market capitalization and order book volume. As is the case with DAX, TecDAX and MDAX, the SDAX belongs to the Prime Standard.
Equity in a subsidiary not attributable, directly or indirectly, to a parent.
T
Total cost relating to acquisition, operating and maintenance of an asset.
V
Present value of future cash flows from an asset.
Technical Glossary
| A | F | ||
|---|---|---|---|
| APO | Advanced Planner & Optimizer (IT-System to utilize for supply chain management) |
FEM | Finite Element Method; numerical technique for finding approximate solutions for partial differential equations; often used in industrial engineering |
| B | |||
| BRIC | Brazil, Russia, India, and China | ||
| G | |||
| C | GDP | Gross Domestic Product | |
| CAD | IT-System often used in engineering/ | ||
| product development | I | ||
| Cap | Derivative to hedge against rising | IAS | International Accounting Standards |
| interest rates | IASB | International Accounting Standards | |
| CEO | Chief Executive Officer | Board | |
| CFO | Chief Financial Officer | IFRIC | International Financial Reporting Interpretations Committee |
| IFRS | International Financial Reporting | ||
| D | Standards | ||
| DAX | Deutscher Aktienindex (German stock index) |
IfW | Institut für Weltwirtschaft (German economic organization) |
| DIN | Deutsches Institut für Normung | IR | Investor Relations |
| (German Institute for Standardization) | ISIN | International Securities | |
| Identification Number | |||
| ISO | International Organization for | ||
| E | Standardization | ||
| EBIT | Earnings Before Interest and Taxes | IT | Information Technology |
| EBITDA | Earnings Before Interest, Taxes and | ||
| Depreciation/Amortization | |||
| EDP | Electronic Data Processing | K | |
| kEUR | Thousand Euro |
List of Abbreviations
| M MATS Mio. |
Mid-America Trucking Show Million |
U US USA USD |
United States of America United States of America US-Dollar |
|---|---|---|---|
| N n.a. |
Not applicable | W WKN |
Wertpapierkennnummer (security identification number) |
| O OEM OES |
Original Equipment Manufacturer Original Equipment Service |
WpHG | Wertpapierhandelsgesetz (German Securities Trading Act) |
| P PPA ppm |
Purchase Price Allocation Parts per million |
||
| R R&D |
Research and Development | ||
| S SDAX Swap |
Small-cap-DAX Hedging instrument in which two counterparties agree to exchange contractual rights and obligations (to swap) for a definite existing period of time in the future and at defined conditions |
Financial Calendar
August 6, 2015 Report on Half-year 2015 Results November 5, 2015 Report on Q3 2015 Results
SAF-HOLLAND GmbH Stephan Johann Haas Hauptstraße 26 63856 Bessenbach Germany
Phone: +49 (0)6095 301-617 Fax: +49 (0)6095 301-102
Web: www.safholland.com Email: [email protected]
Financial Calendar and Contact Information Imprint
Responsible: SAF-HOLLAND S.A. 68–70, Boulevard de la Pétrusse L-2320 Luxembourg Luxembourg
Editorial deadline: May 12, 2015 Date of publication: May 13, 2015 Editorial office: blackpoint communications GmbH, Hagen, and SAF-HOLLAND GmbH, Bessenbach Design and realization: wagneralliance Kommunikation GmbH, Offenbach am Main Translated by: MBETraining & Translations, Wiesbaden Photography: Bernd Bodtländer, Frankfurt am Main Getty Images Deutschland GmbH, Munich
This report is also available in German.
This report contains certain statements that are neither reported financial results nor other historical information. This report contains forward-looking statements, which as such are based on certain assumptions and expectations made at the time of publication of the report. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond the Group's ability to control or estimate precisely, such as future market and economic conditions, the behavior of other market participants, the achievement of anticipated synergies, and the actions of government regulators. Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this publication.
SAF-HOLLAND S.A. does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of publication of these materials.
www.safholland.com
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