Innovative Vehicle
Technology
LegisLation and customer requirements ARe the pRincipAl foRces dRiving demAnd in the segments of the globAl vehicle mARket in which hAldex is Active. today, HaLdex Has
A pRoduct poRtfolio in the AReAs of safety, environment and veHicLe dynamics
thAt mAtches, oR exceeds, the RequiRements imposed by society.
mission
Haldex provides proprietary and innovative technology solutions that improve safety, the environment and vehicle dynamics to the glo- bal vehicle industry within specific niches.
We strengthen our competitiveness and develop long-term customer relationships through prod- ucts that offer high performance and low total costs for the customer throughout the product’s service life, ethical business practices and commit- ment to long-term partnerships.
vision
Haldex will be the global vehicle industry’s first choice as a long-term partner.
We will contribute to social development by provid- ing vehicle technology that satisfies our customers and society. By staying on the cutting edge of tech- nology and developing skilled and motivated employees, we will also achieve profitable growth.
values
• Customer first
• Respect for the individual
• Elimination of waste growth niches
• Safety
• Environmment
• Vehicle dynamics
the group in brief
net sales by region 2009
net sales by customer segment 2009
South America, 3%
Europe, 43%
North America, 47%
Asia and Middle East, 7%
Industrial vehicles, 6%
Engines, 13%
Heavy vehicles, 65%
Light vehicles, 16%
HaLdex divisions
market
Europe accounted for 43% of Group sales, North America for 47% and remaining markets for 10%
in 2009. The markets in South America and Asia, particularly China, are showing robust growth, and their importance to the Group is increasing rapidly.
Legislation focusing on traffic safety, the environ- ment and vehicle dynamics, combined with demands
for continuous cost rationalization measures, is the driving force for product development in today’s automotive industry. Demand is also driven by the increase in vehicle production worldwide.
Haldex has a global market presence, with 23 production plants in Sweden, Germany, the UK, Hungary, the US, Mexico, Brazil, India and China.
strategy
Focus on areas in which Haldex can achieve a strong market position based on innovative and leading products aimed at creating a platform for sustain- able growth and healthy profitability.
This strategy includes evaluating struc- tural opportunities to create competi- tive units with favorable prospects.
growth
• Niche strategy: safety, the environ- ment and vehicle dynamics
• Capitalizing on strong position in certain product and market segments, i.e. the aftermarket
• Product development
• Strengthen positions on new markets
• Joint ventures and acquisitions Profitability
• Safeguard the new structural cost level
• Increased production in low-cost countries
• Reduced purchase costs
• World class operation through Haldex Way
• Ensure that large development projects are successful
The Group in brief
Haldex’s global presence
sek 8,403 m sek 250 m 6,004
commerciaL veHicLe systems
develops and manufactures brake systems for heavy trucks, trailers and buses. the product offering covers all primary components and subsystems included in complete air brake systems.
operations are divided into four busi- ness units: Actuators, Air controls, foundation brake and Remanufac- tured products.
HydrauLic systems develops and
manufactures gear and georotor pumps, hydraulic power packs and high-density hydraulic hybrid systems.
the applications include hydraulic lifts and fan drive systems. technology for diesel engines, i.e. pumps for lubrica- ting oil, coolants and diesel fuel, and technology for reducing emissions of exhaust gases from engines.
traction systems develops and
manufactures electronically controll- able systems for all-wheel-drive sys- tems for cars, known as Awd systems.
the system software can be custom- ized to meet each carmaker’s particu- lar desires in terms of driving charac- teristics and traction.
20 –30%
sek 1,406 m
sek 3,134 m
58%
26%
16%
sek 850 m
net sales, group total
50%
15%
haldex’s share of the market served with its current product program is about 15%. the market share is substantially higher in individual product areas and customer seg- ments.
haldex is the market leader for automatic brake adjusters and air suspension for trailers.
business unit hydraulics is a niche player with about 20% of the market share in its market niches. business unit engines is a market leader for oil, fuel and water pumps in north Ame- rica and the rest of the world. haldex’s global market share in these sectors is slightly more than 30%, and just over 40% for oil pumps in north America.
haldex is a market leader in con- trollable Awd systems. the market share in europe exceeds 50%.
sek 5,390 m
employees, average, group total
1,635 2,169
53%
40%
7%
304
4,108
operating income, group total 2)
sek 29 m
neg.
sek 79 m
sek 60 neg. m
sek 47 m
neg.
1) All figures show continuing business, excl garphyttan wire.
2) excluding restructuring costs, one-off items and amortization of acquisition-related surplus values, operating income amounted to sek 155m (92).
HaLdex grouP
contents
The year in brief
Highlights of 2009 1
Report from Joakim Olsson, CEO 2
Important events in 2009 2
haldex operaTions
Strategic orientation 6
The vehicle market 10
three divisions
Commercial Vehicle Systems 16
Hydraulic Systems 20
Traction Systems 24
Haldex in the society
Human Resources 28
Social responsibility 29
Environmental work 30
haldex financial
and corporaTe informaTion
consolidated and Parent company financial statements
Directors’ report 32
Consolidated income statement 39
Consolidated statement of comprehensive income 39
Consolidated balance sheet 40
Changes in Group equity 41
Consolidated cash flow statement 42
Notes, Group 43
Parent Company income statement 60
Parent Company balance sheet 61
Changes in Parent Company equity 62
Parent Company cash flow statement 62
Notes, Parent Company 63
Audit Report 67
corporate governance
Corporate Governance Report 68
Board of Directors and Auditors 76
Executive Committee 76
oTher informaTion
Haldex share 78
Five-year summary and quarterly review 80
Definitions 81
Addresses 82
Haldex web-site: www.haldex.com 84
Financial information 85
Annual General Meeting 85
2009 2008 2007
Net sales, SEK m 5,622 8,403 7,940
Earnings before tax, SEK m 54 –55 222
Earnings after tax, SEK m 75 –43 141
Earnings per share, SEK 2.40 –1.92 6.24
Operating margin1), % –2.3 3.0 3.8
Operating margin, % 2.8 1.1 4.4
Proposed dividend, SEK – – 4.50
Return on capital employed, % 3.9 2.4 8.3
Return on equity, % 4.2 –2.3 7.3
Equity/assets ratio, % 47 29 37
Cash flow from operations, SEK m 189 857 312
Net investments, SEK m 169 392 453
Average number of employees 4,281 6,004 5,519
1) Excluding restructuring costs, nonrecurring items and amortization of acquisition related surplus value.
highlights of 2009
key figures, 3 years
• Sales amounted to SEK 5,622 m (8,403). Adjusted for currency-exchange fluctuations, sales declined 39%.
• Earnings after tax amounted to SEK 75 m (loss: 43). Earnings per share amounted to SEK 2.40 (–1.25).
• Operating income and operating margin amounted to SEK 155 m (92) and 2.8% (1.1), respectively.
• The Group reported an adjusted
1)operating loss of SEK 79 m (income: 181) and an adjusted
1)operating margin of minus 1.5% (plus 2.5).
• Cash flow amounted to SEK 20 m (465). Cash flow including the divestiture of Garphyttan Wire amounted to SEK 847 m, which combined with the rights issue reduced the net debt to SEK 985 m (2,323).
• The new share issue implemented during the fourth quarter was subscribed for in full and contributed SEK 504 m to Haldex before deductions for issue expenses.
• The divestment of Garphyttan Wire was completed on June 1, 2009. The selling price was SEK 827 m on a debt-free basis. The transaction gave rise to a capital gain of SEK 411 m.
1) Continuing operations, excluding restructuring costs, nonrecurring items and amortization of acquisition-related surplus values.
Haldex secured its largest ever individual order, worth SEK 4.5 billion, from VW. The order pertains to AWD systems for VW’s new modular platform.
largest order ever
sek 4.5 billion
The cost-reduction program generated savings of approximately SEK 700 m.
cost savings
sek 700 m
hAldex 2009
The year in brief
Report from the CEO
Haldex – excellent potential to create value as demand normalizes
With customer production declining 25 to 60% in critical markets, 2009 was the most trying year in the modern history of Haldex. Our efforts were concentrated on securing synergism from the structural changes of recent years, further reducing our level of costs, improving a positive cash flow and strengthening our capital base. We successfully met the challenges on all fronts and received continued confi- dence from key customers in the form of several very substantial orders. Haldex is a financially stable company today with a sharply improved breakeven point, a favorably positioned product offering and good potential to create value when demand normalizes.
First and foremost, I want to thank all our employees for their fantastic contributions under extremely difficult conditions during 2009. We were forced to make extraordinary efforts and considerable sacrifices during a year that will go down in history as the worst in the entire post-world war II era. Produc- tion of trucks and construction machinery in our main markets was down more than 60%
compared with peak levels in the US during 2006 and Europe in 2007–2008. Production of passenger cars was 25–30% below produc- tion in 2008.
The extreme market conditions strongly impacted our sales and earnings figures:
• Sales after adjustment for changes in exchange rates declined 39% to SEK 5,622 m (8,403).
• Operating income amounted to SEK 155 (92) and the adjusted operating result to a loss of SEK 79 m (income: 181).
• Cash flow, including the divestment of the Wire business, amounted to SEK 847 m.
• Earnings after tax amounted to SEK 75 m (loss: 43) and earnings per share to SEK 2.40 (loss: 1.25).
These figures describe the gravity of the chal- lenges that we and our industry faced and reflect the very hard work performed through- out the entire organization during 2009. We noted some stabilization in demand at a low level toward year-end and we have seen some signs of growing optimism among our cus- tomers in early 2010. If this early trend leads to increased demand, Haldex has the poten- tial for significantly improved results thanks to its sharply reduced cost level.
During 2009, we focused even more sharply on our cost base and cash flow. When the finan- cial crisis accelerated in autumn 2008, we decided to introduce a new cost reduction program and thereby continue the cost-cutting measures we had implemented in preceding years. These efforts were supplemented by
additional programs to reduce capital utiliza- tion and strengthen our cash flow.
Since the middle of 2008, we have reduced our labor force by 35%, or 2,300 employees, not including the divestment of Garphyttan in 2009. A significant portion of the reduc- tion has been due to structural changes, such as consolidation of the CVS distribution net- work in Europe from four units to one, pro- duction shutdowns in the UK and compre- hensive rationalization measures in Hydraulic Systems. Lower costs achieved through per- sonnel and capacity reductions amount to SEK 700 m annually. Restructuring costs in 2009 totaled SEK 64 m. The program will be continued with further improvements tar- geted in 2010.
Operating cash flow totaling SEK 1 billion
We also devoted determined efforts to capital efficiency, with a sharp focus on inventories and materials flow, payments and accounts receivable, and we successfully reduced our working capital by 27%. We also adopted a cautious approach to investments. As a result of these measures and the divestment of Garp- hyttan Wire, cash flow in 2009 amounted to SEK 847 m. Our operating cash flow over the past two years has amounted to a com- bined total of SEK 1 billion. I anticipate continued favorable effects from our cost-
Order from VW for All-Wheel Drive system worth SEK 4.5 billion
The new order, received in April, is the largest single nomination ever of the Haldex Group. The order is an expansion of the existing business with the VW Group.
VW chose Haldex as supplier of AWD technique to be part of their new modular platform concept due in 2012. The AWD-system is the fifth generation of the Haldex AWD-coupling and developed to meet future market requirements on weight, cost and fuel con- sumption.
The new business will gradually replace the existing platforms starting 2012 but also be applicable for other platforms and vehicle models within the product pro- gramme of the customer. The additional platform con- cept will double today’s volumes once fully introduced.
The value of the total business amounts to ca SEK 4.5 billion for a period of approximately 7 years.
Order from Perkins for pumps for new diesel engines
Haldex was nominated for an order of pumps from the diesel engine manufacturer Perkins. The order comprises oil and water pumps for Perkins’ new engines, which meet the emission requirements of the future, and is valued at about SEK 500 million over a five-year period. Deliveries will commence in 2010.
Haldex also secured an order from Perkins regarding water pumps for Perkin’s new elec- tronically controlled engines. The order is val- ued at SEK 75 million over a five-year period.
Production is scheduled to start in 2010.
Divestment of Garphyttan Wire completed
Haldex divestment of its Garphyttan Wire division to Suzuki Metal was completed on IMPORTANT EVENTS IN 2009
HALDEX 2009
The year in brief | Report from the CEO
reduction programs and reduced structural costs, as well as further improvements in key ratios for working capital.
To overcome the length and depth of the current crisis and strengthen the Haldex Group’s business opportunities when the mar- kets start to recover, the Board of Directors decided to implement a new rights issue total- ing SEK 500 m. The issue was oversubscribed and fully guaranteed by shareholders, thereby clearly reflecting confidence in the future of Haldex. As a result, we achieved significant improvements in our financial key ratios, and in cash flow: the equity/assets ratio was increased from 29% to 47%, and net debt was reduced from SEK 2,323 m to SEK 985 m.
Haldex now has the financial stability and stra- tegic flexibility needed to proceed aggressively when the crisis finally turns toward recovery.
The difficult year in 2009 also produced many good examples of strong sales efforts and our customers’ continued appreciation of our products and solutions. Haldex booked the largest order in its history when the Volkswagen Group selected our fifth-generation four-wheel drive system for its new modular platform, which is scheduled to enter production in 2012.
Valued at approximately SEK 4.5 billion over a seven-year period, the order is an extension of our existing program for Volkswagen.
We also received several orders for hydrau- lic units and pumps from leading international
producers of trucks, a large order for fuel pumps for a new fuel-injection system devel- oped as a joint venture between Cummins of the US and Scania of Sweden and, during the third quarter, we initiated deliveries of a sub- stantial order for brake cylinders to a major North American truck manufacturer.
Our ability in the face of tough competi- tive conditions to continue to win large orders from both new and old customers by offering state-of-the-art products and solutions illus- trates the strength of the Haldex brand, as well as the skills and expertise in development and production that we have maintained dur- ing these difficult times. Our fundamental strategy is based on long-term trends in global demand: truck manufacturers and users are demanding increasingly safe and reliable transports, while society is imposing demands on the truck industry to reduce its negative impact on the environment, and truck drivers want more comfortable trucks, improved vehicle dynamics and safety; in other words, more driving enjoyment.
Haldex’s position at the cutting edge of development has been strengthened during the market turbulence of recent years. We have shifted the emphasis of our operations closer to the essence of our business strategies and focused the Group by divesting Garphyttan at a favorable price and acquiring Concentric, which is now well integrated in the Group.
June 1, 2009. the sales price amounted to sek 827 million on a cash and debt free basis.
with the divestment haldex took a further step to optimize the group structure and thereby become more focused on technologi- cal leadership within niches for the global vehicle industry with strong growth potential.
order from stiLL for pumps
the order received from still, one of europe’s largest manufacturers of forklifts,
is for pumps that power the steering, lifting and tilt functions on electric lift trucks.
the pump family, known as calma (wqii), is extremely quiet with up to 85% less noise, and is also distinguished by low energy con- sumption. calma is primarily intended for various electrically powered vehicles, includ- ing forklift trucks, aerial work platforms and other mobile equipment.
the calma pumps were launched by haldex in early 2009 and were developed in partner- ship with the university of technology in dresden, germany. the order is valued at sek 80 million over a five-year period.
order worth seK 750 million from a european truck maker
A european truck manufacturer choose hal- dex as a supplier of modulAir, a modulair air-
drying and air-distribution product. the order has a total value of about sek 750 million over a period of approximately 10 years, with pro- duction commencing in 2011. the nomination of modulAir to a new truck platform is an important and strategic breakthrough for haldex’s newly developed air-management system and will further strengthen haldex’s position in the european truck market.
emission-based business opportunities
haldex’s strategic focus on meeting and exceeding society’s increasingly strict envi- ronmental demands has been successful.
several major contracts were secured during 2009 for haldex products and technologies for next-generation diesel engines that meet stricter environmental requirements.
imPortant events in 2009
hAldex 2009 Report from the ceo | The year in brief
Acquisitions have given us increased skills and technology that have made our Hydraulic Sys- tems Division one of the diesel market’s leading suppliers of pumps and solutions for engines that reduce emissions and fuel consumption.
During 2009, the division completed develop- ment of a new generation of its successful Alf- dex concept, and booked development orders for variable-control oil and water pumps, an area that represents a potentially very large future market. Both products are technological cutting-edge solutions that meet the continu- ously upgraded environmental demands of our customers. With substantial cost-cutting mea- sures and strongly positioned products and solutions, our “new” Hydraulic Systems Divi- sion meets all the requirements for business growth with good profitability when demand once again starts to gain momentum.
Leading position in key markets Our largest division, CVS, holds a leading global position in key market sectors for brake and air suspension systems for trucks, trailers and buses. With our value-added products, such as automatic brake adjusters, actuators, ABS/EBS and air-suspension products, we have a strong position in the OEM market as well as in the important aftermarket.
CVS continues to focus on growing its business within the niches and products where the company has a strong market posi- tion today, and where there are strong possi- bilities to maintain and reach high profitabil- ity. Significant progress has also been achieved in building a strong position in emerging markets such as China, India and Brazil, which are characterized by strong and grow- ing demand. Several confirmations of the
future potential of the CVS Division’s devel- opment initiatives were received in 2009. A strategic breakthrough was noted in the Euro- pean truck market through a large order booked during the year for Modulair, a mod- ular-based product program for air-drying and air distribution. The order confirms the success of our focus on innovative and inte- grated products based on mechatronics. Sig- nificant potential also lies in the new develop- ment of the modular system for compressed air-based disc brakes, which we are conduct- ing in partnership with customers.
During the year, the continued efforts to improve the business led to a substantially leaner and more efficient organization. CVS has today a much lower breakeven level and an attractive offering of value-added products for significantly enhanced profitability in a normalized market.
The Traction Systems Division’s SEK 4.5 billion order from the Volkswagen Group illus- trates Haldex’s leading global position in terms of functionality and performance for all-wheel- drive (AWD) systems. We are the main source for innovative product development of elec- tronically controlled systems – AWD systems that meet customer demands for increased safety and low energy consumption and costs.
We continue to maintain a rapid rate of prod- uct development in close cooperation with major global customers. We are complement- ing AWD with the FXD system, which improves two-wheel drive with better traction, road handling and stability. During 2009, we developed and tested a full-scale prototype for new AWD solutions based on hybrid technolo- gies, which has an exciting future in view of the greater demands for fuel conservation.
This shows that Haldex has expertise, innova- tive skills and customer confidence as a source of development and production of critical technologies in tune with central demand trends in the global vehicle industry. During 2009, we also made key structural changes, sharply reduced our costs, strengthened our finances and booked critical future orders for business growth in the coming years. In sum- mary, we are favorably positioned for profit- able growth when a market reversal occurs
imPortant events in 2009
order for hydraulic power units
haldex secured an order for a new series of hydraulic power units from one of the world’s leading suppliers of forklifts and inventory-logistics solutions.
these hydraulic units were specifically developed for the customer and are intended for use in the company’s walkie/
walkie stacker (pedestrian pallet trucks).
they were designed to satisfy demands for reduced noise levels and precision maneu- vering. manufacturing commenced at year- end 2009, and the products will be launched in order of model until year-end 2011.
the order is valued at approximately sek 110 million over a five-year period.
Haldex partners a us customer
haldex reached an agreement with a cus- tomer to provide remanufactured products to the company from the haldex facility in marion (usA). haldex is supplying the com- pany with the cooperation and support of one of its large warehouse distributor cus- tomers. use of remanufactured products is relatively new for the customer. but after close inspection of the marion facility and road testing of its products, the company was convinced of the cost-effectiveness of haldex remanufactured products.
Pump order secured
for cummins scania joint venture
haldex won an order for a range of xpi fuel transfer pumps for a new high-pressure injection system developed by a cummins scania joint venture for heavy duty engines built by both companies. the contract will be worth a total of usd 25 million through 2014. production will begin in 2010.
hAldex 2009
The year in brief | Report from the ceo
and demand once again starts to rise after the lowest production level in nearly 40 years.
market outlook for 2010
Although the market prospects remain diffi- cult to forecast, the stabilization of financial markets and clear signs of a return to macro- economic growth in the major industrial mar- kets create conditions for recovery of demand in the vehicle industry. Haldex believes that market conditions will remain challenging,
and customer confidence.»
«Haldex has expertise, innovative skills
imPortant events in 2009
but a return to growth from extremely low levels may be expected in the North American and European markets. Haldex’s cost base is much lower following the comprehensive structural and cost-cutting measures that have been implemented over the past two years.
Further improvements are possible at a slower pace during 2010. Haldex has potential for improved profitability in pace with the nor- malization of market demand.
Stockholm, March 17, 2010
Joakim Olsson CEO and President
agreements with cnHtc and iveco in china
Agreements concerning deliveries of water pumps for diesel engines were reached with two large truck manufacturers in china, cnhtc (the largest heavy truck company in china) and iveco china.
the orders are valued at sek 150 million over five years. manufacturing started in the second half of 2009.
agreements for actuators
An agreement was reached with a major north American truck maker concerning an order for haldex actuators as standard equipment in their trucks. the order value amounts to approxi- mately sek 200 million over five years.
hAldex 2009 Report from the ceo | The year in brief
strategic orientation
mission, vision, strategies and objectives
strategies for growth and profitability
Profitability has the highest priority in the Group’s strategy. In parallel, continued robust growth is an important prerequisite for success. To achieve its financial objectives for growth and profitability, Haldex applies the following strategies:
growth
• Niche strategy for increased growth, through a focus on products with higher growth potential than for the vehicle market as a whole. For Haldex, this involves products that improve safety, the environment and vehicle dynamics.
• Capitalizing on a strong position in certain product and market segments, i.e. the aftermarket.
• Increased competitiveness through product development is a central element in Haldex’s strategy. This involves both new product development and efforts to create new applications for our existing products.
• Strengthening positions in new markets is essential for growth. This will be achieved through goal-oriented expansion, primarily in China, but also in other countries such as India, Brazil, Russia and countries in Eastern Europe.
vision
Haldex will be the global vehicle industry’s first choice as a long-term partner. We shall contribute to social improvements by providing vehicle technology that satisfies both customers and society. We shall also achieve profitable growth by staying at the cutting edge
of technology and developing skilled and motivated employees.
values
Customer first Respect for the individual
Elimination of waste
optimizing the group structure
To achieve sustainable growth, healthy profitability and increased shareholder value, Haldex focuses on areas in which the Group can secure a strong market position based on innovative market-leading products.
Haldex conducts its operations through Commercial Vehicle Systems Division (CVS), Hydraulic Systems Division and Traction Systems Division. As a feature of
mission
Haldex is a provider of proprietary and innovative systems
and solutions that improve safety, the environment and vehicle dynamics
within specific niches to the global vehicle industry.
We strengthen our competitiveness and create long-term customer relations through highly skilled employees, high-performance products, low total costs for the customer throughout the product’s
service life, ethical business practices and a commitment to
long-term partnerships.
growth niches
environment
haldex pursues a strategy of meeting and exceeding society’s increasingly stringent environmental requirements. haldex continues to be a step ahead in key areas and offers a portfolio of competitive products that contribute to more efficient emis- sion control and superior fuel economy.
Read more about the environment on page 11
vehicle dynamics
products that enchance driving characteristics are increasingly important for vehicle manufacturers. driving characteristics and vehicle dynamics are a key differentiation factor and a part of the brand. haldex is a market leader in controllable Awd systems and at the leading edge of development of such systems.
Read more about vehicle dynamics on page 12
safety
innovative new products and functions that enhance vehicle safety generate growth exceeding that of the vehicle market as a whole. this trend is being driven by increasing demand from customers and new legislation aimed at improving traffic safety. haldex pursues development in cooperation with cus- tomers to meet and exceed their expectations regarding inno- vation in this area.
Read more about safety on page 10
hAldex 2009
Haldex operations | strategic orientation
trucks/trailers/Buses
BAE, Daewoo Bus, Daimler, Dongfeng Motor, Eicher, Ford, First Auto Works, Freight- liner, General Motors, Hino, Hyundai, Isuzu, Iveco, Kamaz, MAN, Navistar, Oshkosh, Paccar, Renault Trucks, Scania, TATA, Volkswagen, Volvo, Arvin Meritor, Bendix Spicer, Bosch, BPW, CICM, Dana, Gigant, Great Dane, Guerra&Facchini, Hendrickson, Jindo,
Kögel, Krone, Randon, SAF, Schmitz, Stoughton, TRW, Utility, Wabash
Haldex’s largest customers
cars
Ford (Ford, Volvo), Lamborghini, Land Rover, General Motors (SAAB, Opel, Buick, Cadillac), Volkswagen (Audi, Bugatti, SEAT, Skoda, VW)
material handling
Atlet, Crown, Jungheinrich, Linde (Still, OM Pimespo), NACCO (Hyster, Yale), Rocla, Toyota (BT, Raymond, Prime Mover)
braking systems for trucks, trailers & buses
hydraulic systems & components for trucks
trucks, trailers and buses
hydraulic lifting, drive & positioning systems for forklift trucks
material handling Haldex’s innovative solutions
• Haldex continuously analyzes opportunities for strategic company acquisitions, while simultaneously launching other forms of cooperation. Developing new technologies and more rapidly establishing positions in new markets are key goals in Haldex’s acquisition strategy.
Profitability
• The cost structure is being improved by means of structural and efficiency- enhancing measures. An increasing share of production is being located in low-cost countries. This reduces costs and brings important parts of production closer to our strategic markets and customers.
• In order to increase profitability, Haldex strives to reduce purchasing costs, mainly by increasing the proportion of procurements from low-cost countries.
• Productivity is being improved through continued implementation and deve- lopment of the Haldex Way management system.
• The organization’s efficiency is being improved through increased competen- cies and more distinct lines of control and responsibility.
• Making sure that large development projects are profitable.
the Group strategy, Haldex continuously evaluates its operations and a variety of structural opportunities for strengthening the competitiveness of its various units.
These could take the form of cooperation with other companies, supplementary acquisitions or divestments. The acquisition of Concentric during 2008 was an initial step in Haldex’s strategic plan for optimizing the Group structure and cre-
ating a strong Hydraulic Systems Division. Another step towards a more focused business was taken during 2009 when the Garphyttan Wire division was divested.
industrial construction/
off-road vehicles
hydraulic lifting, drive & positioning systems for construction/farm machinery
& work platforms
fuel transfer lubrication cooling
emmissions reduction
engines
electronically controllable systems for four-wheel-drive vehicles (Awd)
cars
industrial construction/off road vehicles
Agco, Bobcat, Case New Holland, Caterpillar, John Deere, Doosan, Dynapac, Genie, Grove, JCB, JLG, Komatsu, Liebherr, O&K, Pinguely & Haulotte, Manitowoc,
Skyjack, Terex, Vögele, Wayhausen, Volvo
engines
Caterpillar, Cummins, DAF, Daimler, Detroit Diesel, Deutz, Iveco, JCB, John Deere, Scania, Volvo, Tata Cummins
financial objectives
To better reflect the conditions in Haldex’s markets and the long-term nature of its business, financial objectives are expressed as average values over a business cycle.
the group’s overall objectives are:
• return on capital employed of 15%
• annual growth of 6%
the group also has the following secondary goals:
• profit margin of 7%
• capital turnover rate of 2.5
The objectives apply to the Group as a whole. Targets for the various busi- ness areas may differ depending on capital structure, degree of refinement or other business- related conditions. The return on capital employed has been less than 15% in the past five years. Efficiency efforts to strengthen Haldex’s profitability remain one of management’s main priorities.
hAldex 2009 strategic orientation | Haldex operations
positioned for growth
Haldex’s mission and strategic orientation position the Group for growth. Asia, Eastern Europe and South America are markets with major requirements and characterized by robust growth. In countries such as China and India, the pace of social development is cur- rently rapid. At the same time, climate issues and other challenges are placing greater demands on all of us to assume a global responsibility for reducing energy consump- tion and achieving a better and safer environ- ment. In parallel with greater global com- merce, which is driving increased transport requirements, the Western World’s infrastruc- ture is being expanded and upgraded. For Haldex, this trend is creating strong driving forces for business growth.
We develop and deliver products that improve safety, the environment and the dynamics of vehicles used in the transport and infrastructure sectors. In the world’s new and expansive markets, investments in these sec- tors are vital for growth and social welfare. In traditional industrialized countries, the trans- port and vehicle sectors must assume a greater responsibility for improving the environment and increasing safety. As a result of Haldex’s expertise in the form of technologies for satis- fying the demands deriving from future legis- lation and the driving forces underlying improved fuel economy and increased safety, the Group is extremely well positioned to meet the demands of the global vehicle industry.
1 global presence and world-leading customers Haldex has a global presence and its custom- ers include world-leading vehicle manufactur- ers, which is a strategic strength. The Group has production operations distributed among 23 production plants and nine development units in North America, South America, Europe and Asia.
We are favorably positioned and able to offer proprietary products that focus on the environment, safety and vehicle dynamics. All of these features and characteristics are strate- gically important to our customers and pro- vide considerable growth potential. Haldex is positioned on the cutting edge of technology in all areas, but without being an inventor. We develop and commercialize innovations, often in partnership with our customers, to provide maximum customer value. Serving world- leading customers in all product areas subjects the company to considerable demands, while also signifying recognition of Haldex as a lead- ing global manufacturer and market driver within its market segments.
2 Product development and world-leading products
Product development is a key driving force for organic growth and is a decisive success factor for Haldex. The Group specializes in trans-
forming innovations into profitable, world- leading products in its niches. Investments in product development have increased steadily and made a pioneering contribution to the vehicle industry’s technological advancement in all-wheel drive and disc brakes and in clean- ing and increasing the efficiency of engines and hydraulics.
In 2009, development costs accounted for almost 5% of sales. Product development is a key factor in Haldex’s strategy for being able to offer products in high-growth niches of the global vehicle market. An important prerequi- site is the ability to develop technical solutions that satisfy customer requirements arising several years into the future, while having the product planning that facilitates efficient and profitable sales of new products. With its model for innovative product development, Haldex will be able to offer a series of new and attrac- tive products to the market in the years ahead.
3 competencies of managers and other employees
Continuously operating at the leading edge of technological development and having world- leading customers exposes the competencies of both individual employees and the organi- zation as a whole to stringent requirements.
Based on the skills and efforts of its employ- ees, Haldex aims to develop a high-perfor- mance, world-class organization that continu-
hAldex 2009
Haldex operations | strategic orientation
ously strives to improve operations in accor- dance with the internal management system, Haldex Way. Determining factors are how well this work is organized and ensuring that each employee is given opportunities to utilize his or her full potential.
Management and HR work is governed by the following aims:
• To continuously develop our ability. By constantly raising the competency level of the organization and creating conditions that enable us to remain innovative and by continuously learning and improving our operations, we generate a distinct competi- tive edge over our competitors.
• To continuously improve as managers. By increasing our ability to manage people and the organization, in both the short and the long term and in a generally more complex business, conditions are created for Haldex to become a high-performance company.
• To strengthen our corporate culture. By developing a strong corporate culture that encourages performance and responsibil- ity, we create an attractive workplace for our employees and conditions for continu- ous improvements in our operations and earnings.
of the global vehicle industry.»
«Haldex is well positioned to meet the demands
This can only be achieved through the contri- bution of each employee in the organization and when each individual:
• can act independently, make decisions and act on the basis of his or her ability and in accordance with the company’s norms and values.
• is positively committed to and participates in the development of his or her work and has the capabilities to interact with others for the benefit of both the employee and the company.
4 Productivity and Haldex Way
In order to capitalize on its excellent growth potential, Haldex must improve its cost- effect iveness and increase its productivity.
This work is conducted within the frame- work of the overall management and process improvement system, Haldex Way.
Haldex Way focuses on customer satisfac- tion and the achievement of world-class pro- duction. Haldex Way is based on the lean production philosophy, and the objective is to create a continuous link in flows between cus- tomers, subcontractors, production and prod-
uct development. Haldex Way is an overall management philosophy for the entire value chain, including products, information and future requirements.
Haldex Way creates a shared direction based on active management and a uniform culture, while simultaneously facilitating tan- gible changes and improvements in the Group’s operations.
The concept for Haldex Way is based on three fundamental values:
• Customer first
• Respect for the individual
• Elimination of waste
Customer requirements are the controlling factor for these values. Our customers’ needs form the platform for what we produce – motivated employees are a basic prerequisite for the production of qualitative products – and we strengthen our competitiveness by eliminating all forms of waste. Management within Haldex must go hand-in-hand with the principles of Haldex Way and serve in a manner that provides support, leadership and development.
hAldex 2009 strategic orientation | Haldex operations
the vehicle market
trends and driving forces
safety
Solutions and systems that improve vehicle safety are areas that are expanding faster than the vehicle market as a whole. The primary driving forces underlying this trend are the continuous tightening of standards by law makers in the US, Europe and Asia, and vehicle manufacturers’ aim of offering the market safe vehicles, which is a key element of their identity and brand.
Legislation Braking
The US passed new federal regulations for shorter braking distances for trucks in 2009, entailing a 30% reduction in braking distance for new, heavy trucks compared with current requirement for braking distances.
The regulations will come into effect over a four-year period beginning with 2012 models.
Regulations and enhanced safety measures are also continuously being implemented in emerging markets. China and India passed legislation regarding automatic brake adjusters in 2007, and in China, legislation compliant with the European ECE R-13 equivalent will come into effect at the end of 2010. In 2009, Brazil decided to implement ABS standards for heavy vehicles, which will become effective in 2013.
Electronic stability control
In 2009, the EU passed regulations regarding the electronic stability con- trol of heavy vehicles. The regulations will apply to new truck and trailer models as of the end of 2011 and for all new heavy vehicles by the end of 2014.
The US National Highway Traffic Safety Administration is conducting discussions regarding stability control and automatic emergency braking of trucks to further enhance traffic safety.
customer demands
Offering the market safe vehicles is a key element of the major vehicle manufacturers’ identity and brand. Since subcontractors occupy a key role in the product development effort, vehicle manufacturers expect them to be highly competent and are intensifying their demands for them to continuously offer safer systems and products. The manufacturers’ expec- tations entail the need for a sharp focus on quality among suppliers, if they are to be considered for a partnership, which entails that the companies that can offer a high level of quality and safety in their technology and products have a competitive advantage.
Other trends advancing development include an increase in system integration in the European market, as exemplified by brake and suspen- sion systems for trailers, which to an increasing extent can be combined and can utilize joint control modules. In addition, a consolidation is tak- ing place among the major manufacturers of truck platforms globally, but with a greater variety of local/regional products.
haldex is one of four major global players in brake systems for heavy trucks, trailers and buses.
in terms of product categories, haldex occupies a lead- ing position in the global market for automatic brake adjusters, and has a leading position in the european mar- ket for brake and air-suspension system solutions for the trailer segment. in north America, haldex has a strong position in components for the wheel-brake unit for drum brakes. in recent years, an increasing number of truck makers in the north American market have selected hal- dex products as standard equipment for their vehicles.
sHorter BraKing distances
In North America, over 95% of new trucks have drum brakes. In this market, Haldex is strongly positioned in components for the wheel- brake unit for drum brakes with its automatic brake adjusters and brake cylinders, which are vital components in achieving shorter braking distances and are thus essential to meeting new regulatory requirements. Haldex has the competence and capacity to adapt its components to comply with the client companies’ specifications and increased demands.
In the European market, disc brakes for trucks and trailers domi- nate the market. Haldex offers ModulT, a reliable, robust, new gener- ation disc brake, which is 15% lighter compared with other designs.
In emerging markets, Haldex is well established with production facilities primarily intended for automatic brake adjusters but also other products in India, China and Brazil. Local production in these countries is decisive for meeting local demand in the best possible way.
staBiLity controL
In 2009, Haldex performed extensive tests of stability control for trailers on European test tracks. These tests will provide the founda- tion for adapting the functionality of Haldex’s systems to fulfill new regulatory requirements and to facilitate the approval of its custom- ers’ trailers.
The basis for Haldex’s system solutions in the trailer segment is the electronic brake system EB+ Gen2. In addition to electronic sta- bility control (ESC), EB+ Gen2 also comprises intelligent control of lift axles (ILAS) and a new product generation for raising/lowering trailer chassis (COLAS+), which also includes a roll-on roll-off function for optimal adaptation and safety in connection with, for example, ferry transportation. The system also offers Reset To Ride, Haldex’s pat- ented comfort and safety function for automatic repositioning of the chassis level after loading and unloading. A new function that was introduced in 2009 is what is known as Softdocking. This function detects the distance between the trailer and the ramp when backing a vehicle up toward a loading ramp. This braking system is automati- cally activated when the vehicle has less than 0.5 meters to the ramp and the driver can safely maneuver the vehicle to the loading/
unloading position.
With its strategic focus in the areas of safety, the environment and vehicle dynamics along with its expertise and product port folio, Haldex is positioned to be a highly suitable partner in the work with developing products, which is characterized by safety and a high level of reliability.
HaLdex systems and soLutions
hAldex 2009
Haldex operations | the vehicle market
haldex pursues a strategy of meeting and exceeding society’s increas- ingly stringent environmental requirements. haldex remains a step ahead in key areas and offers a portfolio of competitive products that have a major impact on reducing emissions and improving fuel economy.
variaBLe fLoW PumPs
Since Haldex’s technologies are fully developed for the next generation of engines, the Group’s vari- ous products can provide improvements in terms of performance, efficiency and emissions, as required by Euro 6 and regulations beyond EPA 10.
In addition to normal exhaust emissions, the more stringent legislation for engines includes other types of emissions, such as crankcase gases.
By combining Haldex’s variable flow pumps for oil and water, fuel savings exceeding 4% can be generated. The pumps adapt the flow of fluid to
the vehicle’s requirements, thus limiting the energy required for operating the pumps. As a result, both CO2 emissions and fuel consumption are reduced, provid- ing significant benefits for both trucks and passenger cars.
varivent
The environmental benefits offered by Varivent are similar. The EGR (Exhaust Gas Recirculation) is an established method of reducing nitrous oxide emissions and its efficiency is enhanced by Varivent, which uses variable throat technology to pump
exhaust gases more efficiently. This, in turn, means that less energy is wasted in pumping gas through the EGR circuit and so reduces fuel consumption and CO2 emissions.
Extensive engine testing has confirmed fuel savings of 4% for heavy trucks.
The technology is particularly suitable for turbo charging and high EGR flows and can be adapted for individual engine turbocharging and EGR strategies. Naturally, the trend towards reduced fuel con- sumption also applies to gasoline-powered cars. In terms of volume, the engines of the future will be smaller but will generate the same horsepower as current engines. This will be achieved by means of high boost pressures and applying other turbo- strategies and here Varivent has a major contri bution to make.
aLfdex
The Alfdex system offers the market a highly efficient method for separating oil and particulate matter from ventilation gases in the crankcases of diesel engines, also known as crankcase gases. Alfdex is a joint venture based on Alfa Laval’s expertise in centrifugal separa- tion and Haldex’s position as a supplier to the global vehicle industry.
During 2008, a new generation of the Alfdex system was launched, which is up to four times as effective and can handle up to three times the amount of crankcase gases as compared with the current model.
The system uses centrifugal technology to remove particles down to 0,1 g/h or lower in normal driving conditions. With a rotational speed of 7,000–8,000 RPM, particles and oil mist are separated from the gas and returned to the oil sump.
HaLdex systems and soLutions environment
Society’s demands for a cleaner and safer envi- ronment continue to increase. Laws that heighten demands for fuel efficiency and emission reductions are continuously coming into effect in Europe, the US and Asia, a trend that has a direct impact on the vehicle indus- try. In the next decade, legislation will affect the development of diesel engines for trucks and construction equipment. Sub-suppliers and technology companies such as Haldex that develop new, environment-friendly tech- nology will gain a competitive edge by help- ing customers make their vehicles more fuel efficient. Interest in alternative technology, such as hybrid technology, will also increase
trends and driving forces
these efforts. The vehicle industry is facing a global convergence of emission and techno- logy regulations. Europe, Japan and North America are leading the way, with other large cities and regions in the rest of the world fol- lowing suit. The diagram below shows a dis- tinct trend concerning the legislation that has been enacted in the six largest markets in the world. Convergence of emission regulation will lead to standardization of technology, which in turn will result in global product convergence.
Since Haldex and other leading compa- nies in the industry have long anticipated the trend towards technology standardization,
as well as society’s focus on carbon dioxide, these companies’ development activities have focused on fuel efficiency. Reductions in fuel consumption result in a corresponding decrease in CO
2emissions. To achieve com- petitive advantages in the future, the compa- nies in the industry that are focusing on prod- uct development must concentrate on tech- nology that improves engine efficiency and on investigating alternative fuels, fuel weights and aerodynamics. A rapid increase in advanced hybrids for inner-city centers is also anticipated. In addition, a variety of solu- tions for a range of diesel-engine uses will be necessary.
Legislation for emission limits for the worlds 6 largest markets
within brackets: emission limits: nox /pm g/kwh
1) Fuel economy legislation 2015 2) In Beijing, Shanghai 3) NCR (National Capital Region incl. Delhi) usa
eu Japan1) Brazil china2)
india3)
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
(3,3/0,134) (1,5/0,134) (0,27/0,134)
(3,5/0,02) (2,0/0,02)
(2,0/0,27) (0,7/0,01 > ”challenge” (0,27/0,01)
(3,5/0,02)
(5,0/0,1) (2,0/0,02)
(7,0/0,15) (5,0/0,1) (3,5/0,02) (2,0/0,02)
(5,0/0,1) (3,5/0,02)
hAldex 2009 the vehicle market | Haldex operations
veHicLe dynamics
Two primary phenomena represent the driving forces behind the four- wheel-drive market: legislation promoting increased safety and growing consumer demand for enhanced vehicle dynamics.
Demand is naturally primarily affected by sales of four-wheel-drive vehicles, but also by the pace at which simple, mechanical systems are replaced by more advanced electronically adjustable systems.
Legislation for increased safety
As opposed to mechanical four-wheel-drive systems, demand for electron- ically adjustable systems is benefiting from legislation requiring stability systems – ESC – since stability systems can only work together and com- municate with adjustable four-wheel drive systems.
In the US, where most systems remain mechanical, the National High- way Traffic Safety Administration has proposed legislation requiring all passenger cars to be equipped with ESC, since the Administration esti- mates that stability control systems in passenger cars would prevent more than 70% of all single-car accidents in which the cars have overturned.
The figure for SUVs is as high as 84%. The Administration also estimates that up to 10,000 human lives in North America would be saved annually if all passenger cars were equipped with ESC. If the bill is passed, it would make ESC mandatory for all passenger cars not later than 2012.
In Europe, the EU Parliament has agreed that electronic stability con- trol should be mandatory for all new vehicles to increase traffic safety and reduce fuel consumption. In accordance with the new regulations, all new passenger cars and commercial vehicles registered in the EU must be equipped with ESC by year-end 2011. By the end of 2014, the regulations shall apply for all new vehicles. The Council of Ministers has yet to pass the new regulations.
A similar trend is noticeable in emerging markets, whereby such coun- tries as Brazil will ultimately have the same requirements for electronic stability control as the US and EU, which will lead to an increase in the penetration of controllable all-wheel drive systems.
If the new ESC regulations are passed in these key markets, this will lead to major overall business opportunities for Haldex, which is one of the leading operators in the market for electronically controllable all- wheel drive systems.
consumer demand for enhanced vehicle dynamics
According to a study by the US analysis company Harris Interactive, slightly more than 30% of all vehicle owners will consider a four-wheel- drive vehicle when purchasing their next vehicle. This means that four- wheel drive systems rank number two out of a total of 67 unique car tech- nologies on car consumers’ wish list.
Consumers cited advantages involving safety and vehicle dynamics as the reasons for considering four-wheel-drive systems. Of the respondents, 50%
said that they perceive four-wheel drive as a positive factor in vehicle dynamics and just over 40% consider it a technology that enhances safety.
US consumers are continuing to reevaluate their preferences in favor of car platforms and segments that promote the transition to adjustable four-wheel-drive systems.
vehicle dynamics: a key differentiation factor
In the face of a trend of increasingly homogeneous car models, vehicle dynamics remain an increasingly key competitive and differentiation fac- tor for carmakers. Four-wheel-drive and electronic braking systems are essential components in advancing vehicle dynamics for various customers and needs.
haldex is one of the world’s three to four leading players in the market for electronically controllable all-wheel- drive systems. the first generation of haldex’s Awd coupling was introduced in 1998 for Audi tt and volkswa- gen golf. subsequently, the development of new genera- tions has continued and the fourth generation was launched in 2008.
Although the mechanical components in haldex’s all- wheel drive system are fundamentally the same for the various cars, vehicle dynamics can be customized through a variety of programming and control systems. the com- bination of mechanics and electronics – mechatronics – provides considerable flexibility, while haldex’s modular approach reduces costs for vehicle manufacturers.
in order to broaden the product portfolio, a system with a controllable differential slip has been developed, which improves the vehicle’s traction and stability when maneuvering at high speeds.
generation i – 1998
The first Haldex coupling comprised a wet multiple disc clutch inte- grated in the rear axle.
cars equipped with generation i:
Audi A3 TT, VW Golf, Bora, Sharan, Beetle, Seat Leon, Alhambra, Skoda Octavia
generation ii – 2002
The second-generation Haldex coupling was equipped with more intelligent software and new valve technology for faster reaction.
cars equipped with generation ii:
Audi A3, TT, Bugatti Veyron, Ford Freestyle, 500, Mercury Montego, Seat Altea, Freetracker
Skoda Octavia, VW Golf, Passat, Multivan, Volvo S40, V50, S60, V70, XC70, S80, XC90 generation iii – 2004
The third generation received more pressure from an electric pump in connection with start, which eliminated wheel spin and in turn improved vehicle dynamics and off-road driving.
cars equipped with generation iii:
Land Rover Freelander, Volvo S60, V70, XC70, S80, XC90
generation iv & xWd– 2007/2008
The faster and lighter Generation IV can also be combined with an additional coupling that controls the torque between the left and right rear wheels – Haldex XWD
cars equipped with generation iv:
Audi A3, TT
Skoda Octavia, Superb, Yeti VW Golf, Passat, Tiguan
Land Rover Freelander
Volvo S60, XC60, V70, XC70, S80, XC90 cars equipped with Haldex xWd:
Saab 9-3 XWD, Opel Insignia Buick Lacrosse, Cadillac SRX generation v
The development of a fifth genera- tion is under way. Estimated produc- tion start: 2012.
HaLdex systems and soLutions
trends and driving forces
hAldex 2009
Haldex operations | the vehicle market
oem and the Aftermarket
oem marKet
The Haldex Group’s customers are predomi- nantly large, global manufacturers of com- mercial and industrial vehicles, diesel engines and passenger cars, also known as Original Equipment Manufacturers (OEM).
trucks, trailers and buses
Manufacturers of heavy trucks, buses and trailers, as well as axle manufacturers for these vehicles (refer also to page 7) comprise a num- ber of large companies at global or regional levels.
The Haldex Commercial Vehicle Systems (CVS) and Hydraulic Systems divisions are suppliers to these OEMs. CVS operates in a market comprising primarily three global competitors, of which Haldex is one (refer also to page 7). Historically, Haldex has a strong position with a market share of about 15% but with strong and leading positions in certain segments.
Growth is occurring in pace with legisla- tion calling for improved environmental and safety features, greater transportation needs and GDP increases, as well as in emerging markets.
Demand for Haldex’s product and system solutions is greatly influenced by the produc- tion levels of OEM manufacturers. At the same time, several important variations often give rise to a different trend in the market served by Haldex, compared with the vehicle market in general:
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truck production trailer production air brake wheel ends
• the market served by Haldex is larger for trucks than for trailers, since trucks are equipped with certain brake products that are not included in trailers.
• the markets in Europe and North America differ in several respects. In Europe, for example, disc brakes are installed in about 75% of all new trucks. The corresponding figure in North America is less than 5%
since drum brakes continue to dominate this market.
material handling, industrial construction and engines
The market for material handling, industrial construction and off-road vehicles is frag- mented with a large number of regional man- ufacturers in addition to global players.
The market for diesel engines is consoli- dated to a number of major, global players (refer also to page 7).
At Haldex, it is primarily the Hydraulic Systems Division that supplies these markets.
The growing segments for products that reduce emissions from diesel engines account for a major portion of growth.
The competition is also fragmented with several players. Haldex Hydraulic Systems is a strong niche manufacturer, with an interest- ing product portfolio that encompasses the attractive emissions-reduction segment. The Hydraulics business unit accounts for approx- imately 20% of the market in its niches, while
the Engines business unit is market leader for oil, fuel and water pumps for diesel engines.
Haldex’s global market share is about 30% in these sectors and slightly more than 40% for oil pumps in North America. The fragmented market situation is encouraging consolidation and organic growth.
cars
Manufacturers of passenger cars are large, global companies (refer also to page 7). Hal- dex Traction Systems supplies AWD systems to these customers.
Manufacturers of four-wheel drive vehicles have been consolidated into a small number of large players. With its technological leader- ship, Haldex is market leader in Europe for adjustable four-wheel drive systems, with a share in excess of 50%, and has the expertise to partner customers for developing new tech- nologies for the future.
The market is characterized by strong, underlying growth thanks to increased pene- tration for four-wheel drive systems also in smaller passenger cars. Demand is impacted to a large extent by the rate at which mechani- cal systems are replaced by more sophisticated adjustable systems.
cont.
hAldex 2009 the vehicle market | Haldex operations
