SAF-Holland (SFQ) H1 2024 earnings summary

Executive summary

• Q2 2024 sales declined 8.7% year-over-year to EUR 507 million, mainly due to weaker OE demand, but profitability improved with adjusted EBIT margin rising to 10.7% and strong aftermarket growth; acquisitions (IMS Group, Tecma, Assali Stefen) expanded the product portfolio and regional footprint.

• Gross profit rose 15.4% to €223.6 million in H1 2024, with margin up to 22.1%, driven by a higher share of aftermarket business and strict cost management.

• Adjusted EBIT increased 9.1% to €102.8 million in H1, with margin improving to 10.2%; net income attributable to shareholders rose 35.3% to €50.3 million.

• Operating free cash flow was strong at EUR 56.8 million in Q2 and EUR 44.3 million for H1; leverage improved to 1.8x, below the 2024 target.

• Aftermarket business share of sales increased to 38% in Q2 and 36.7% in H1, offsetting declines in original equipment segments.

Financial highlights

• Q2 2024 sales: EUR 507 million, down 8.7% year-over-year; H1 2024 sales: €1,012.5 million, down 2.3%; organic sales down 10.8% in Q2 and 9.5% in H1.

• Adjusted EBIT margin: 10.7% in Q2, up 1.1 percentage points year-over-year; 10.2% for H1 2024.

• Adjusted EBITDA margin improved to 13.8% in Q2 and 13.1% in H1.

• Net working capital ratio: 15.8% at end of June, up from 14.1% at year-end 2023.

• ROCE at end of Q2: 22.6%, reflecting efficient capital use.

Outlook and guidance

• FY 2024 sales expected at around EUR 2 billion (prior year: EUR 2,106.2 million); adjusted EBIT margin guidance raised to around 10% (previously 9.0–9.5%).

• CapEx ratio for 2024 capped at 3% of sales.

• Second half sales expected to be slightly lower than first half, reflecting weaker OE markets; recovery in North American and European markets expected by early 2025.