The Group Management Board of SAF-Holland, one of the world's leading suppliers of truck and trailer components, has thoroughly analysed the course of business and the industry-specific framework conditions and adjusted the forecast for the full year 2019.
The analysis showed a clear deviation from the corresponding target figures as a result of the continued deterioration in overall economic conditions – particularly in Europe, China and India – the ongoing global trade disputes and the related impact on the market development for trucks and trailers. The significant year-on-year improvement in earnings in the Americas region during the period from January to August 2019 could compensate only slightly for the lower earnings contributions of the other regions.
In the absence of positive economic and market signals and taking into account potential risks and opportunities, the Group Management Board expects the negative trend of the last months to continue until the end of the year. Furthermore, following a full review of the China operations and further restructuring measures in the course of the ramp-up of the plant in Yangzhou, additional impairments on receivables and inventories are to be expected.
SAF-Holland now expects Group sales for fiscal year 2019 to range from €1,260 million to €1,300 million (previous year €1,301 million), corresponding to a rate of change of zero per cent to minus three per cent (previous expectation: sales growth of four-to-five per cent). The Group Management Board now expects the adjusted EBIT margin in a range of 6.0 per cent to 6.5 per cent for the full year (previous expectation: around the midpoint of the range of seven per cent to eight per cent).
The investment volume is also anticipated to be lower, amounting to between €58 million and €63 million (previous expectation: €68 million to €70 million). SAF-Holland expects the fourth key indicator, net working capital in relation to Group sales, to be in a range of 13 per cent to 14 per cent (previous expectation: 13 per cent).
“Our market environment continued to deteriorate considerably in August,” said SAF-Holland CEO, Alexander Geis.
“As a result of this development, which started in the second quarter, the Group Management Board has decided to significantly step-up cost controls and use instruments for the short term ‘flexibilisation’ of working hours to stabilise the operating result.
Furthermore, projects that have been launched to increase efficiency (operational excellence) and optimise the production network will be systematically implemented,” he said.
“We are fully on track with our program ‘Forward’, which is optimising the production and supply chains, the product portfolio, the aftermarket business and the procurement of materials for the North American plant network,” said SAF-Holland CFO, Dr Heiden.
“I am also optimistic about the consolidation of the Chinese sites into the Greenfield project in Yangzhou,” he said. “In addition, we will further intensify our efforts to improve the operating free cash flow.”
SAF-Holland said in a statement that the Group forecast for the fiscal year 2020 can no longer be maintained. The company plans to announce its guidance for the coming fiscal year with the publication of the final financial figures for the fiscal year 2019.