Earnings conference call. Q4 and Full year 2014

(1)

Earnings conference call

Q4 and Full year 2014

(2)

(3)

Innovative Vehicle Solutions

Business Highlights

Q4 2014

 Sales growth of 10% (currency adjusted) with

net sales reaching SEK 1,092 (908) million.

 Operating margin of 9.3 (7.3) %, excluding

one-off items.

 Operating income, excluding one-off items,

increased to SEK 101 (66) million.

(4)

Business Highlights

Full year 2014

 Disc brake contracts with several European

trailer manufacturers with an estimated value of SEK 650 million from 2014 to 2017.

 Increased market share for disc brakes in

Europe.

 Last phase of the restructuring program now

being implemented after German union negotiations being finalized.

 New R&D center in Pune, India.

 Construction of the new R&D center at MIRA

(5)

Innovative Vehicle Solutions

Business Highlights

Full year 2014

 Sales growth of 8% (currency adjusted) with

net sales reaching SEK 4,380 (3,920) million.

 Operating margin of 9.3 (7.3) %, excluding

one-off items.

 Operating income, excluding one-off items,

SEK 408 (281) million.

 Earnings per share increased to SEK 2.32

(0.80).

 Cash flow from operations of SEK 435 (282)

million.

 Proposed dividend of SEK 3.00 (2.00) per

share.

(6)

(7)

(8)

(9)

Build rates – Heavy truck

Thousands of units

North America official build rates increased by 22% in 2014 compared to 2013. The North American

market is expected to increase by 12% in 2015.

Europe official build rates decreased

by 9% in 2014 compared to 2013. The European market is expected to

grow with 4% in 2015.  China  Europe  North America  India  Brazil

(10)

Build rates - Trailer

Thousands of units  China  Europe  North America  India  Brazil

North America official build rates indicating a increase of 17% in 2014 compared to 2013. The North

American market is expected to increase with 4% in 2015.

European build rates are 8% higher in 2014 compared to 2013. The European market is expected to grow with 3% in 2015.

(11)

(12)

Q4/14 Q4/13 2014 2013

Net sales, SEK million 1,092 908 4,380 3,920

Growth, currency adjusted 10% 6% 8% 3%

Sales, Haldex Group

Currency adjusted growth of

10% in Q4 and growth of 8%

in 2014.

SEK m Net sales

(13)

Sales per region

SEK m _{SEK m}

Europe North America

1/13 2/13 3/13 4/13 1/14 2/14 3/14 4/14 1/13 2/13 3/13 4/13 1/14 2/14 3/14 4/14

SEK m _{SEK m}

Asia & Middle East South America

1/13 2/13 3/13 4/13 1/14 2/14 3/14 4/14 1/13 2/13 3/13 4/13 1/14 2/14 3/14 4/14

SEK million Q4/14 Q4/13 change1

Europe 360 339 5%

North America 584 446 15%

Asia & Middle East 104 80 19%

South America 44 43 1%

1_{currency adjusted}

SEK million 2014 2013 change1

Europe 1,522 1,386 6%

North America 2,280 2,019 8%

Asia & Middle East 376 313 15%

(14)

Sales per product line

Foundation Brake: Wheel-end

products for brake actuation and lining wear adjustment.

Air Controls: Products to

dehumidify, clean and control compressed air in the brake system. SEK m Sales Foundation Brake Air Controls 1/13 2/13 3/13 4/13 1/14 2/14 3/14 4/14 1_{currency adjusted}

SEK million Q4/14 Q4/13 change1 ₂₀₁₄ ₂₀₁₃ _change1

Foundation Brake 611 490 14% 2,420 2,107 11%

(15)

Sales per customer category

Largest growth in the truck category in Q4, mainly driven by good sales

growth in North America. For the full year, the trailer category represents the largest growth, partly driven by

increased disc brake revenue in Europe. 2014: 29% Truck 29% Trailer 42% Aftermarket 1_{currency adjusted}

SEK million Q4/14 Q4/13 change1 ₂₀₁₄ ₂₀₁₃ _change1

Truck 323 251 17% 1,276 1,117 10%

Trailer 312 256 14% 1,269 1,087 13%

(16)

(17)

Earnings

Operating margin excluding one-off items at record high 9.3% in 2014, and at 9.3% also in Q4.

SEK

Earnings per share

SEK m Operating income & margin % Income Margin 1/13 2/13 3/13 4/13 1/14 2/14 3/14 4/14 1/13 2/13 3/13 4/13 1/14 2/14 3/14 4/14 Q4/14 Q4/13 change 2014 2013 change

Operating income (excl one-off items), SEK million 101 66 53% 408 281 45%

Operating income, SEK million 32 53 -40% 233 153 52%

Operating margin (excl. one-off items), % 9.3 7.3 2.0 9.3 7.2 2.1

Operating margin, % 3.0 5.9 -2.9 5.3 3.9 1.4

Net income, SEK million 17 12 42% 107 38 182%

Earnings per share, (excl one-off items), SEK 1.33 0.39 241% 5.47 2.94 86%

(18)

Sales & Operating Margin

2011-2014 5.8% 6.4% 6.4% 4.8% 6.0% 5.6% 5.6% 3.9% 5.8% 7.1% 8.4% 7.3% 8.1% 9.7% 10.1% 9.3% 0,0% 2,0% 4,0% 6,0% 8,0% 10,0% 12,0% 600 700 800 900 1 000 1 100 1 200 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Operating Margin Sales, SEK m

(19)

Statement of Financial Position

Dec 2014 vs. Dec 2013

SEK million Dec 31 Dec 31 annual

2014 2013 change Working capital 444 523 -15% Intangible assets 466 450 +4% Capital employed 1,963 1,855 +6% Total assets 2,936 2,486 +18% Equity 1,278 1,152 +11% Net debt -272 -378 -28% Equity ratio, % 44 46

Net debt/Equity ratio, % 21 33

(20)

Cash Flow

Working Capital & Cash Conversion Days

76 76 71 68 ₆₆ ₆₆ 62 ₆₀ 62 59 ₅₇ 56 60 59 63 56 0 10 20 30 40 50 60 70 80 90 0 100 200 300 400 500 600 700 800 900 1 000 1103 1106 1109 1112 1203 1206 1209 1212 1303 1306 1309 1312 1403 1406 1409 1412 Ca sh C on ve rs io n C yc le , d ay s W or kin g C ap ita l, M SE K

Working Capital Cash Conversion Days

1_{excluding one-off items}

SEK million Q4/14 Q3/14 Q2/14 Q1/14

Operating cash flow1 _{208 116} ₁₂₄ ₆

(21)

Field inspection and replacement

program



One of the smaller product lines for actuators in North

America.



In November, Haldex launched a field inspection campaign

due to a diaphragm that could get out of position.



Based on a thorough analysis of the field inspection results,

an additional root cause, that can occur during special

conditions, has been identified.



The field inspection campaign has been extended to

include product replacements.



The number of vehicles is approximately 20,000. The cost is

estimated at SEK 65 million.

(22)

Restructuring program



The final step in the program was completed with the German

union negotiations.



Annual savings of SEK 85 million and total costs of SEK 250

million, with cash effects of approximately SEK 100 million.



SEK 240 million booked as one-off items, of which SEK 112

million in 2014. Two thirds of the payments remain.



The German/Hungary relocation project will be carried out

(23)

(24)

Market outlook 2015



North America

High demand to continue in H1/15.



Europe

A couple of percentage points up.



China

Continue to be somewhat negative.



India

Good improvement.



Brazil

(25)

(26)

Profitable Growth

Future

Profitable growth

Product range

 Fill gaps in the product range on a

regional basis.

 Extend product range with further

variants where applicable.

Aftermarket

 Follow vehicles over lifetime with

competitive offerings.

(27)

Profitable Growth cont.

Future

Profitable growth

2015

M&A

 Acquisitions to complement product

range and/or build stronger customer base/”critical mass” in selective markets.

Simplify customer interface

 Extend and improve E-commerce

platform with relevant solutions for different customer groups.

(28)

Earnings conference call. Q4 and Full year 2014