SAF-HOLLAND S.A. achieved an adjusted operating result nearly at break-even point in the first half of 2009, with June the first month of the year to show a profit.
The Group is beginning to benefit from the cost-reduction and restructuring activities initiated due to weak business conditions.
The day-to-day business of the company has been unaffected by the ongoing negotiations with the banks on the company’s financing arrangements. The trustee model proposed by the banks primarily affects the interests of owners and financing banks.
“SAF-HOLLAND is benefitting from our decisive cost-reduction initiatives,” said Dr. Reiner Beutel, CEO of SAF-HOLLAND Group GmbH. “Both in June and July, a positive monthly operating result was achieved. In addition, liquidity has continuously improved. It is not only on the cost side where positive signs are visible: the truck market in the USA also seems to be stabilizing and our global Aftermarket business has been showing an upswing since March. We are confident that this positive development in North America and in the Aftermarket will continue. Our efforts will pay off even more, if demand sustainably increases. Finalizing the negotiations with the banks, whether on the basis of the currently proposed “trustee model”, would also sustainably support and financially secure the operating business.”
Demand for trucks, trailers, components and replacement parts continues to suffer from high inventories of unsold vehicles and under-utilized fleets and equipment. As a result, Group sales fell in the first half of the year by more than 50% to EUR $304 million. The decline primarily affected business in Europe, with a drop of 67.9% to EUR $150 million. In North America, sales went down by only 16.3% to $140 million.
A decline in sales of up to 90%, related mainly to plant closures by our customers, was experienced by the Trailer Systems Business Unit. Since June, however, sales have increased but at a low rate. The company has started itsown axle production in the USA, replacing purchased axles from external manufacturers. The Group also received its first orders for axle systems with disc brakes which offer reduced braking distances over drum brakes. The company expects business to benefit from new braking regulations which take effect in 2011 and require that braking distances for new trucks be reduced by 30%.
In the first half of 2009, the Aftermarket Business Unit again assisted in stabilizing sales of the Group. Since March, demand has revived in Europe and North America. The acquisition of the former Georg Fischer Verkehrstechnik showed positive effects due to the broader product portfolio. In addition, new orders were generated in the Middle Eastern states and the worldwide services network is continuously being extended.