SAF-Holland ETR: SFQ reported a “solid start of the year” in the first quarter of 2026, supported by recovering demand in Europe and improving momentum in Asia Pacific, while North America remained weak, management said on the company’s earnings call.
Group sales totaled about EUR 452 million, representing organic growth of 5.6% year-over-year. The company cited recovery trends in EMEA and APAC, offset by continued softness in the Americas across both truck and trailer segments and foreign exchange headwinds. Adjusted EBIT margin came in at 9.4% and adjusted EBITDA margin at 13%, both described as broadly stable. Operating free cash flow was around EUR 45 million, and leverage improved to 2.2x net debt to EBITDA, primarily due to cash generation.
Sales growth led by EMEA and APAC as FX weighs on reported revenue
Management said the first quarter benefited from “ongoing recovery in the European OE market,” while APAC markets showed a “clear sequential improvement.” Despite a foreign exchange headwind of about 5%, reported group sales reached EUR 451.7 million, “slightly exceeding the prior year level,” the company said.
EMEA increased its share of group sales to around 52%, driven by improved European trailer and truck OE demand. APAC contributed 13% of group sales after revenues rose by almost 9%, supported by “solid demand growth in India and Australia.” In contrast, North American production remained subdued, though management pointed to “early signs of stabilization.”
By customer segment, trailer OE sales grew around 6% and accounted for 52% of group sales, while truck OE represented 11% of revenue, reflecting the “still cautious market environment” in North America, particularly the U.S. The aftermarket business accounted for 37% of group sales and was described as resilient.
Margins steady as cost discipline offsets mixed regional performance
Management attributed the group’s 9.4% adjusted EBIT margin to continued cost discipline, particularly in SG&A, supported by “first positive contributions from the efficiency program in indirect functions.” The company said its margin performance demonstrated the “robustness and scalability” of its operating model even with a mixed market backdrop.
In EMEA, organic sales grew 8% in Q1 2026. Adjusted EBIT increased around 16% year-over-year, despite a slightly adverse mix from the growing OE share. Management credited “positive scale effects and continued strict cost management,” including the indirect efficiency program launched last year. The company added that geopolitical developments, including the conflict in the Middle East, had not had a material impact on the order book so far.
In the Americas, organic sales declined 2.5% year-over-year, and the company cited subdued OE demand in truck and trailer markets amid uncertainty around U.S. tariff policy and industry discussions tied to EPA 2027. Foreign exchange reduced reported sales by 8.5%. Management said retroactive price adjustments implemented in Q4 2025 “fully offset additional tariff related costs,” resulting in a stable pricing and cost position in Q1 2026. Adjusted EBIT was impacted by lower fixed cost absorption on softer volumes but mitigated by SG&A cost discipline. The segment still delivered a “solid double-digit margin,” management said.
APAC saw demand improve, supported by recovery in the Indian trailer market and solid conditions in Australia and New Zealand. Management noted that exports from India to other Asian markets remained subdued due to tariff frameworks but said the impact on the region was limited. FX reduced reported sales by 13.4%. Adjusted EBIT rose about 8% in line with sales, keeping profitability stable year-over-year. The company also highlighted a “strong operational recovery” in China driven by improved capacity utilization and a targeted efficiency program.
EPS jumps as finance result improves; cash flow strengthens balance sheet
Chief financial officer Frank said reported EBIT rose 2.8% year-over-year to EUR 36.9 million. Adjustments totaled EUR 0.9 million and were “largely coming from legal and transaction-related expenses.” Depreciation and amortization from purchase price allocations declined by EUR 1.2 million year-over-year, primarily due to expiring amortization related to the IMS acquisition.
Below the line, the financial result improved by EUR 10.1 million to minus EUR 5.2 million, driven mainly by lower unrealized FX effects following changes to the company’s intercompany financing structure that reduced FX exposure. Interest expense declined by EUR 1.1 million, or almost 9% year-over-year, which management attributed to external financing optimization. The effective tax rate was 35.3%, and management reiterated an expectation of around 35% for full-year 2026.
Reported EPS increased 57% year-over-year to EUR 0.45, while adjusted EPS rose nearly 38% to EUR 0.61. Frank added that, adjusting all unrealized FX effects per the company’s dividend definition, EPS improved 4.2% versus the prior year.
Operating cash flow was EUR 44.8 million, reflecting the operating result and favorable working capital development. Capital expenditures were EUR 5.1 million, or 1.1% of sales, with investments focused on automation, modernization, and “targeted equipment additions” aligned with the company’s Drive 2030 ambition to grow to more than EUR 3 billion in revenue by 2030.
Net working capital improved to 17.1% of sales, within the company’s 16%-18% target corridor. Management cited extended supplier payment terms and strict inventory management, partially offset by higher trade receivables stemming from a “structurally different customer mix,” which was partly mitigated by higher factoring volumes of EUR 8 million.
Leverage improved to 2.2x at the end of March 2026. Frank said gross debt rose moderately following issuance of a EUR 100 million promissory note loan, mainly used to refinance roughly EUR 93 million of maturities due in March 2027. Cash and cash equivalents increased by approximately EUR 34 million, despite EUR 6.2 million deployed under the share buyback program. The company also extended its revolving credit facility by EUR 75 million to EUR 325 million, which was undrawn at quarter-end.
Guidance confirmed; management updates market expectations
Management confirmed full-year 2026 guidance unchanged across key performance indicators, while acknowledging uncertainty tied to geopolitics, including the conflict in the Middle East. “From today’s perspective, we do not see any material impact on SAF-Holland and therefore remain comfortably with our current outlook,” management said.
On market expectations, the company said Europe and APAC showed encouraging recovery signs early in the year, while North America remained cautious due to uncertainty around EPA 2027 and USMCA discussions. Management said it expects North American trailer markets to be largely stable in 2026 and upgraded its outlook for the Class 8 truck market to growth of 0%-10%+. In Brazil, management now expects a 5%-10% market decline for 2026 amid high interest rates. In EMEA, trailer markets were expected to be steady to moderately positive, while heavy trucks could grow up to 10%.
Q&A: Aftermarket stability, M&A selectivity, and APAC ambitions
During the question-and-answer session, management pushed back on a question suggesting the aftermarket had been in decline. Management said aftermarket demand was “very stable” in EMEA and North America and pointed to driven miles in Europe as a factor affecting volumes over a longer timeframe, given reduced industry transportation tied to weakness in the automotive sector. Management also emphasized that FX—particularly translating U.S. dollar sales into euros—was a key factor when comparing across periods. Pricing in the U.S. aftermarket, including tariff pass-throughs, was described as intact, and management said there was “no issue in margin.”
On M&A, management reaffirmed its “firepower” and referenced prior comments about up to EUR 1.5 billion of capacity, but said the company is being selective and does not intend to overpay. Management said it is assessing multiple targets and using the share buyback program as an interim capital allocation while it searches for the right fit.
On APAC, management said India remains the largest portion of the company’s Asia business, and it highlighted capacity to increase output following a facility move and modernization in recent years. Management reiterated a longer-term ambition for APAC to represent 20%-25% of group sales by 2030 to create a more balanced regional mix. The company also said it has consolidated its management structure in China by bringing together the former Haldex and SAF teams “under one roof,” which management said is improving traction in sales and profitability.
Asked about U.S. trends, management said order intake and invoicing in the first quarter were “slightly promising,” with improving truck OE order intake continuing into the second quarter, but emphasized uncertainty tied to tariffs, EPA 2027, and fuel prices. Management also said it does not expect a significant mix shift away from aftermarket as OE improves, noting the installed base of vehicles continues to require service and repair.
About SAF-Holland ETR: SFQ
SAF-Holland SE manufactures and supplies chassis-related assemblies and components for trailers, trucks, semi-trailers, and buses. The company offers axle and air suspension systems, fifth wheels, hweel systems, coupling systems, kingpins, and landing gears, as well as ball races, braking and EBS systems, lighting systems, and disc brakes. It markets its products under the SAF, Holland, Neway, KLL, V.Orlandi, TrailerMaster, and York brands. The company serves original equipment manufacturers. It primarily operates in Europe, the Middle East, Africa, the Americas, and the Asia Pacific.
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