February 14, 2019 / 8:15 AM / 6 days ago

Sweden's Haldex targets 10 pct margin by 2022, earnings drop hits shares

STOCKHOLM, Feb 14 (Reuters) - Haldex expects to reach an operating margin of 10 percent by 2022, excluding investments in new technology, despite a big drop in quarterly core earnings which hit shares in the Swedish brake systems maker.

Haldex, the world number 3 in brake systems for commercial vehicles but far behind market leaders Knorr-Bremse and Wabco, also said on Thursday its autonomous vehicle brake system would be evaluated by a “world-leading” truckmaker.

It expects a development contract at the end of the year, with the truckmaker and Haldex then jointly developing a product which would be manufactured four to five years later.

Haldex, the target of a takeover battle between Germany’s Knorr-Bremse and ZF during 2016 and 2017, reported an adjusted fourth-quarter operating profit of 38 million Swedish crowns ($4 million), down from 66 million in the year-earlier quarter.

Shares in Haldex fell 3.3 percent in early trading.

“The long-term operating margin target of 10 per cent is expected to be achieved in year 2022, excluding investments in new technology,” it said.

Meanwhile its adjusted operating margin more than halved to 3.1 percent in the quarter.

Haldex Chief Executive Ake Bengtsson said that costs had increased more than planned.

“We had predicted a continued increase in direct material costs and new tariffs, but they increased more than expected in Q4”, Bengtsson said. “Costs to meet increased production volumes were also higher than we forecast.”

Haldex said it had implemented measures to relay higher raw material prices and tariffs to customers and streamline its cost structure to improve this year’s operating margin in 2019.

It said it expected 2019 sales to be in line with 2018, while the operating margin, including increased investments in new technology, was seen in line with or higher than the adjusted 2018 margin. ($1 = 9.2441 Swedish crowns) (Reporting by Johannes Hellstrom Editing by Alexander Smith)

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