SAF-HOLLAND S.A., a producer and supplier of key systems and components for the truck and trailer industries, has seen a solid increase in sales over the last financial year, thanks to consistently high demand in Europe.
"2007 was a decisive year for our company. We have reached the targets we set ourselves, and with the merger of SAF and Holland and the initial public offering, we have set a course for sustainable growth," said Rudi Ludwig, CEO of SAF-HOLLAND Group.
In view of the successful financial year, the Board of Directors will recommend to the General Meeting of Shareholders on April 24 that a dividend of 65 cents per share should be paid already for the year of the IPO. This would result in a total dividend payment of $12.4 million.
In the 2007 financial year, consolidated sales rose by 4.5% to $1.2 billion. On a constant currency basis the increase is by 7.9% to $1.3 billion. The strongest growth of 29.2% was achieved in the European markets. With sales of $810 million, the European share of total sales rose continuously over the course of the year to 64%.
The importance of the American market, on the other hand, continued to fall short as expected. Owing to the regulatory framework, and a slowdown in sales triggered by the property crisis in the US, sales reached $455 million in the period, compared to $585 million the previous year. SAF-HOLLAND reacted to this development by adjusting production capacities in the US and reducing personnel. Correspondingly, the number of SAF-HOLLAND employees fell by 9.3% to 2,974 at the end of 2007, compared with 3,279 the previous year.
The trailer business, which represents 68% of group sales showed a continuously positive development in 2007. Against the background of strong growth in transport volumes in Europe, sales in this business unit rose by 16.5% (on a constant currency basis: 18.5%).
Due to the increasing trade flows between eastern and western Europe, SAF-HOLLAND expects the demand to continue to rise strongly in 2008. The gross margin of 12.3% (2006 PF: 14.0%) was affected by increased material costs and an underutilization of production capacities in the US. In the medium term, the company is aiming to bring the gross margin back to its level of 2006. Measures to reduce costs and thus increase profitability have already been introduced over the past financial year.
In the Powered Vehicle Systems business unit (systems for tractors, buses and mobile homes), SAF-HOLLAND was able to further increase its market share in the US. However, the development of sales was significantly marked by the introduction of the ’07 emission standards, and the resulting pull-forward investments made by truck fleet operators in 2005 and 2006. This led to an expected market downturn of approximately 40% in 2007.