SAF-Holland financials underscore resilient business model

Equipment specialist, SAF-Holland, has posted its latest preliminary unaudited financial results for FY2020.

SAF-Holland SE Chairman of the Management Board, Alexander Geis, said the business closed the 2020 financial year with a strong fourth quarter in a challenging market environment.

“With Group sales of slightly more than €250 million (previous year: €275.5 million) we generated an adjusted EBIT margin of over 8.0 per cent in the fourth quarter, thereby clearly exceeding the pre-Covid-19 figure of the same quarter of the previous year of 4.7 per cent.”

Geis said the figures underscore the resilience of SAF-Holland’s business model.

“The extensive program launched at the end of September 2019 to sustainably reduce selling and administrative expenses made a significant contribution to our pleasing financial performance,” he said.

“With the successful restructuring of our North American and Asian production network, we are entering the future in a much stronger position and have thus created a solid foundation for achieving the financial targets defined in our new medium-term strategy 2025.

“The development of the order intake in the EMEA and Americas regions leads us to expect a good start to the 2021 financial year.”

Adjusted EBIT margin was reported to be roughly at the same level as the previous year despite Covid-19.

Due to market conditions and Covid-19, group sales in FY2020 came to €959.5 million, 25.3 per cent below the previous year’s level of €1,284.2 million. Sales in the OE business decreased by 29.8 per cent or €285.7 million to €673.4 million in the reporting period from January to December 2020. The share of total sales accounted for by the OE business therefore decreased from 74.7 per cent to 70.2 per cent. By contrast, sales in the spare parts business only decreased by 12.0 per cent or €38.9 million to €286.2 million. The share of the spare parts business in total sales increased from 25.3 per cent to 29.8 per cent accordingly.

Despite a decline in sales, SAF-Holland generated an adjusted EBIT margin that is slightly above the margin guidance, which was raised in November 2020 to 5.0 to 6.0 per cent (previous year 6.2 per cent). The higher proportion of the high-margin spare parts business in total sales and sustained savings in selling and administrative expenses had a positive impact.

SAF-Holland’s capex ratio for FY2020 was 2.5 per cent.

Additions to property, plant and equipment and intangible assets totalled €24.5 million in the financial year 2020 (previous year: €53.0 million). The capex ratio decreased accordingly, from 4.1 per cent to 2.5 per cent, lying within the mid-term target of approximately 2.5 per cent.

Net working capital ratio significantly improved – high operating free cash flow.

The net working capital ratio, measured as the ratio of net working capital to group sales over the last 12 months, improved significantly year-on-year from 14.3 per cent to 11.9 per cent. A sharp decrease in inventories and trade receivables was accompanied by slightly lower trade payables. This was countered by the decline in 12-month sales due to market conditions and Covid-19.

Overall, the positive contribution made by net working capital management led to a significant improvement in the net cash flow from operating activities. In combination with a sharp fall in the net cash outflow from investing activities for property, plant and equipment and intangible assets, operating free cash flow exceeded the 100-million-euro mark for the first time. Correspondingly, net financial debt as of 31 December 2020 was scaled back significantly.

“The high operating free cash flow reflects the success of the measures taken to optimise net working capital and also our disciplined investment policy,” said SAF-Holland SE CFO, Inka Koljonen.

“We will continue to work hard on our cost structures and continue to pursue and extend our Cash-is-King project to achieve sustainable cash surpluses and a leverage ratio in the target corridor of 2-3x EBITDA.”

SAF-Holland SE publishes its full set of audited consolidated financial statements and its annual report 2020 containing the outlook for the 2021 financial year on 25 March 2021.

Last month, SAF-Holland updated its digital spare parts platform.