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October 26, 2020 1:00 PM, EDT

Haldex Posts Q3 Net Loss as Production Falters in Key Markets

Haldex brake adjustersHaldex brake adjusters on a factory production line. The manufacturer posted an approximate loss of $11.8 million on revenue of $110 million in the third quarter. (Haldex)

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Braking systems and air-suspension supplier Haldex reported a net loss on lower revenue in the third quarter, as its results fell along with production declines in its truck and trailer markets due to the novel coronavirus pandemic.

For the period ended Sept. 30, the Landskrona, Sweden-based company — which reports in krona — posted an approximate net loss of $11.8 million, or a loss of 25 cents per share, on revenue of $110 million. That compared with net profit of $4.2 million, or 9 cents, on revenue of $146 million a year earlier.

“Uncertainty over the market trend for the remainder of 2020 remains high given the current spread of COVID-19. The industry anticipates that there will be a strong recovery in 2021, but that it will take a few more years to return to 2019 levels,” Haldex CEO Helene Svahn said in the earnings release.

CEO Helene Svahn

Svahn

The aftermarket showed stability and recovery, she said, but was nevertheless down 9%. It was helped by consistently high capacity utilization in the existing-vehicle fleet, and that led to increased demand for servicing and spare parts.

The trailer segment also improved substantially compared with the second quarter, but sales were 18% lower than in the third quarter of 2019, she said.

“The goal is to strengthen our position as a global niche player,” Svahn said.

A highlight in the quarter was an extension of a contract with Gigant GmbH, a German manufacturer of trailer axles. Haldex will supply Gigant with their disc brake systems for heavy vehicles. Gigant is a member of the Krone commercial vehicle group.

Meanwhile, she noted customers’ focus on electric operation was strengthened, and investments in the development of autonomous vehicles have been given lower priority.

“Our investments in new technology must reflect our customers’ priorities, and in the current situation, we have decided to postpone the development of FABV and increased our focus on developing the electromechanical braking system for heavy vehicles,” she said, referring to fast-acting brake valves.

Customers are showing great interest in EMB, she said, and at the end of September, Haldex signed a contract with an unnamed global truck manufacturer based in Europe for a test.

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“The order has a marginal impact on income but is strategically important. With this contract, we have two global OEMs based in Europe evaluating EMB, and a number of test installations in China. The outcome from each test installation will be known within a few years from the start of testing, and we hope to launch EMB in China in 2021,” Svahn said.

The company reported it expects to launch its new electronic braking system in the first quarter of 2021.

In the third quarter, its adjusted operating margin excluding investments in new technology, was 6.6% compared with 7.4% a year earlier.

“In line with our objective to attain an adjusted operating margin of 10%, the board decided to extend the existing savings program by $11.4 million. We now have to work out the details for the increased savings,” Svahn said.

Haldex noted a higher operating margin drives the cash flow and the possibility of investing in new technology.

Its North American unit, Haldex Brake Products, is headquartered in Kansas City, Mo.

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