SAF-Holland SE (SFQ) Earnings Call Transcript & Summary

Dear ladies and gentlemen, a very warm welcome to our today's Capital Markets Day, and thanks for joining us today. This is Alexander Geis speaking. I am the CEO of the SAF-HOLLAND Group, and my colleagues and I will be updating you today on the status quo of the company, the Haldex integration and give an outlook into 2027. Before we start with Haldex update, please allow me to give you an outlook of our relevant markets in 2023. Outside sources estimate Europe to be a bit weaker in 2023 than last year, whereas I can confirm very strong order intake end of last year and already beginning of this year. Lucky us that we already increased our capacity in our Turkish plant second half of last year. North America, also a bit weaker than last year despite all-time high order intake for trucks and trailers in December last year. Especially here, our capacity expansion in Mexico should help to outgrow the market. Furthermore, we are working on a production shift from U.S. to Mexico for fifth wheels and in the second step for slider suspension boxes. South America to be down 9% in truck and 5% (sic) [ 8% ] in trailer, which should not be the case for us in Brazil since we won some new LTAs from truck and trailer manufacturers and further need to ramp up our production there. China with a negative 50% last year is forecasted to increase by 25% in 2023 for both truck and trailer. Finally, India, with a further strong increase of 14% and 21% for 2023. Important here to mention that we had record sales in India in 2022, thanks to our Axle market share being in the ballpark of 55% and a new plant with 50% higher capacity, which just opened this month. So good market positions, an old truck and trailer parc in EMEA and Americas and our high aftermarket share will support us through 2023. Having said that, I now will give you more insights into our Haldex integration process. And by the way, the Q&A function is already open. So please feel free to put in your questions while we speak. So next page, please. So why does the combination of SAF-HOLLAND and Haldex form a promising fit to achieve a unique role in the commercial vehicle industry? Why is that? Firstly, we offer a unique combination of axle and suspension systems with telematics, trailer EBS and predictive maintenance functions. We are the only one on a global basis who can offer that. Secondly, we are creating or created now an aftermarket powerhouse with increased scale, resilience and profitability. Our SAF-HOLLAND Group aftermarket sales share is increasing from 27% of total sales to now 34%. And last but not least, we offer an attractive asset-light financial profile with EPS accretion from year 1 and a strong synergy potential. Wilfried Trepels will speak about that, synergies for 2023 until 2027. All right. Where do we stand with the Haldex PMI process? This is a busy chart. Let's start on the very left. It's even not mentioned here. Beginning of June after many months of talks, negotiations with the Haldex BOD, we went out with our public offer, as I said, beginning of June. And by mid of August on the 16th, we already secured the 90% threshold, we needed to fix this. In between, we already, with a core team and Roland Berger, our consulting company, helping us with that, started Phase 1 with the key elements of the PMI process. So we worked out the cornerstones of the target setup, defined the target organization and also the future management team. Then before we replaced within an EGM beginning of November, the Haldex BOD. We already started Phase 2 with a further PMI preparation, working out the strategic direction and the integration plan design and also worked out the high-level target operating model for us. Then after we replaced the Haldex BOD, we started Phase 3 with a so-called day 2 preparation. Day 2 is January 1 of this year. So we came up and worked out integration plan, prepared if the implementation start, also made sure that we have the day 2 organization ready, and I will speak about that a little bit later on. Worked out the initial synergy realization for 2023, but also worked out already the synergies until 2027 and also spoke about IT -- common IT systems and the data integration. So if you take now a look on the right side of that chart, you can see this is January until December of 2023. This will be really vital for the further integration and the combination of the companies. Last but not least, I would like to mention that the Polish merger control clearance is still open, but we are really in the final stages of getting the clearance. So I just wanted to mention that. And this also implies that for 2022, we will not be consolidated Haldex and SAF-HOLLAND numbers together. So what are the main focus areas for 2023? I will not read all of this, but just mentioned the most important ones as the implementation of the target organization in all functions in all our regions. The optimization of the legal entity structure. What does that mean? We have a lot of subsidiaries around the globe. And for instance, there is a Haldex in Spain and SAF-HOLLAND in Spain, they are just 10ks away from each other or in Canada, the same, they are 40ks away from each other. So we're going to combine those legal entities. So the harmonization of go-to-market approaches, the integration of the processes, the 2 companies' processes and systems and also very important, the project road map for the IT integration. And last but not least, and very important also that we realize the existing synergies already in this year. Let's speak about the structure. We already started that structure January 1 of this year, and this is nothing new to you. So you can see that we continue reporting in regions that was an easy one because SAF-HOLLAND Group already reported in regions as Haldex. So we will be reporting in Americas, EMEA, APAC and the presidents will have full P&L responsibility supported by lean central functions. Speaking of the people who drive the business. On the upper side, you can see the members of the Management Board or the German [indiscernible]. Starting in the middle, Wilfried Trepels, our interim CFO, who will be staying until the end of March of this year and handing over to our new CFO, Frank Lorenz-Dietz, who just joined us January 1. I'm really happy that the company could win Frank joining us. He's not only a financial expert, but also knows a lot about the automotive and the commercial vehicle industry. On the left lower side, you can see Kent Jones. He joined us in 2019 and he made sure that he could make the turnaround in the Americas for the old SAF-HOLLAND world. He will be the President Americas and also a member of the so-called Executive Committee. Christoph Gunter, who also joined us 2019. He is the President EMEA, Europe, Middle East and Africa. New to the team is Andreas Richter. He's Swedish and a former longtime executive of Haldex. He will be taking care of our region in the APAC region. Then Christoph again in his dual role as CTO, taking care of R&D and innovation. And last but not least, Mathias Carlsson. He is our new Chief Procurement Officer, taking care of our global sourcing activities. Here, I would like to pause a second and hand over to Frank.

Good afternoon, ladies and gentlemen. Thanks, Alex. A warm welcome also from my side. Let me briefly introduce myself. As many of you will be curious, who is the new guy on board? That's me, Frank Lorenz-Dietz. As of January, I'm the new CFO. I'm 49 years old, married and I have 2 almost adult kids. I'm business engineer with both a technical as well as a finance background. On the technical side, I'm focused on electrical engineering and electric machines. Besides finance controlling and production management have been my everyday practice. I consider myself as a team player, but with a strict focus on execution and delivering results. I'd like to call it a no-excuse culture. For the sake of the time, just a couple of words to my professional career. I started in the automotive industry at Bosch Group and spent almost 20 years in several management positions in controlling, finance and IT in Germany and Spain. In doing so, I have gained significant experience in end-to-end cost management and in implementing turnaround and efficiency programs. In 2015, Bosch decided to divest my division. I took up the challenge to join a new company and manage the carve-out financial due diligence and the whole selling process. Our PMI focus that time was to become an independent midsized company. So my job was to build an independent and effective finance, treasury and IT organization. Finally, I had the opportunity to run a new company as the CFO of 2019 onwards. So being very young in this position, it was essential to implement a stringent cash management system in 2020. Our team had to turn around the business to strict cash focus and establish a cash-oriented mindset. And in the end, we were successful. So my experience was not to focus only on short-term initiatives, but to build a sustainable long-term transforming plan and working system. Coming from this automotive background, my focus in the new position is cash. Cash-is-King king, but it's more than an initiative. It has to become part of the group's DNA. SAF-HOLLAND is already on the way of doing so with quite some improvement potential at Haldex. End-to-end cost management must be the focus to generate sufficient gross margin and cost competitiveness. We have a huge potential together with Haldex to become even stronger in our market position. This means a unique position as a system supplier and improve profitability by leveraging the synergy potentials. And finally, leveraging global process standardization and efficiency by consequent S4/HANA implementation in the group is a clear target on my agenda. For sure, it will take some time and effort, but it is a prerequisite. I see 2 targets: first, financial independence, driven by a profitable and cash-generating product portfolio. Second, sustainable and profitable growth based on competitive product cost and a most efficient process landscape. This will form the basis for consistent, attractive returns on capital employed. We will talk about this later. Moreover, this should make us an attractive long-term investment proposition. Ladies and gentlemen, I'm working with a great team here at SAF-HOLLAND during this inspiring times of joining up with Haldex. And I'm very confident we will make this a success story for the company and for you as our shareholders. I'm looking forward to meeting you, most of you in-person during the upcoming weeks, and I would like to hand over now to Wilfried Trepels. He will provide you with a detailed update on the short-term and long-term synergies of the Haldex acquisition. Thank you for the time being. I will talk to you later.

Good afternoon, ladies and gentlemen. My name is Wilfried Trepels. I'm the interim CFO of SAF-HOLLAND, and I worked for SAF-HOLLAND already from 2005 until 2016 as the CFO. I'm now here to present to you the update of the financial integration synergies potential for 2023 and to 2027. Synergies, ladies and gentlemen, is not a simple buzzword. In transactions like this, synergies are very often conjured up, but also very often. They do not appear or materialize. On the next pages, we want to prove that the entire management team has the absolute will and ambition to realize the following synergies. We have identified in a bottom-up process, EUR 17.4 million net synergies. On the left-hand side, you see how the synergies in euro are composed regarding the degree of firmness or hardness. EUR 3.4 million identified EUR 15.7 million quantified and EUR 2.4 million approved. What are the numbers based on? On the right-hand side of the chart, you see here 2 synergy types, cost synergies, on the one hand side and growth synergies on the other hand side. Starting with the cost synergies. General and administration, EUR 5.3 million in the first year. One example, delisting cost almost being EUR 1 million. Sales expenses, EUR 2.1 million; R&D expenses, EUR 2.3 million, both based on the joint use of infrastructure and resources. Operations efficiencies, EUR 1.1 million. Procurement, the most important one, especially when it comes to the midterm perspective. Here, the joint use of supplier base and more purchasing power will give us synergies of roundabout EUR 4 million, right, in the first year. Next are the synergies from the growth. OE cross-selling contributing EUR 2.5 million, aftermarket gross selling EUR 2.5 million and joint aftermarket initiatives like, for instance, the second brand extension EUR 1.5 million. So in total, based on 67 single measures, which the teams on both sides, Haldex and SAF-HOLLAND have created here, we are going to achieve EUR 21.4 million of synergies. Now coming to the next slide. That is our commitment here for 2023. Starting with EUR 21 million gross bottom-up synergies, then deducting EUR 3 million to EUR 5 million transformation costs, one-off costs. We are ending up here with net synergies of EUR 17 million. Due to the fact that we are at the beginning of the process to realize the synergies, we believe it's fair and wise to incorporate a 35% risk buffer, which is roundabout EUR 6 million. So finally, we commit EUR 10 million to EUR 12 million net synergies to be realized in 2023, and this is in line with our top-down approach, which we have communicated when we started the process to take over Haldex. This slide shows the different categories, cross-selling synergies, EUR 4 million to EUR 5 million. The rest are cost synergies and the biggest part of the synergies are in SG&A due to the disproportionately high SG&A ratio on the Haldex side. On the next slide, we see the regions, how the regions are going to realize the synergies. Americas synergies, EUR 6 million to EUR 8 million, high footprint overlap and cross-selling opportunities are here the main drivers. EUR 5 million to EUR 7 million EMEA synergies and here also, the cross-selling is one of the topics as well as synergy potential in the overheads. Then we see in the APAC synergies, lower numbers due to: a, smaller business; b, fragmented markets; and c, already lean structures over there. So now, what is the full scope of all synergies? Based on the total now 153 single measures, we have identified in the bottom-up process EUR 52.5 million of synergies. Also here on the left-hand side, you see the split according to the degree of firmness or hardness. And on the right-hand side, the split according to the synergy types. General administration with EUR 10 million is the second biggest one, followed by procurement. Procurement is the biggest one with EUR 10.6 million, and OE cross-selling the third biggest one with EUR 9.5 million. Altogether, this sums up to EUR 52.5 million of total synergies. On the next slide, our commitment for the midterm development. Also here, starting with EUR 52.5 million synergies, we have implemented a risk buffer, and we believe that this is also here a fair approach. Due to the midterm planning horizon, we have chosen a risk buffer in a spend of EUR 20 million to EUR 25 million. Finally, we are committing based on 153 seriously evaluated measures to achieve EUR 25 million to EUR 35 million synergies within the next 4 to 5 years. Next slide shows again the split into the different positions. And on the next slide, you find the split into the regions, more or less the same picture as we have seen for 2023. So in a nutshell, this means that risk-adjusted synergies, we are committed for EUR 10 million to EUR 12 million for the year 2023 and midterm EUR 25 million to EUR 35 million. Now the ultimate question, I would say, are these synergies sufficient or appropriate? We think the Haldex integration is expected to be EPS accretive, generating a positive ROI as of 2023. Based on the investment of round about EUR 300 million into Haldex, we have calculated the financing costs. You find them on the left-hand side with approximately EUR 12 million per annum. Then we need to add the one-off transformation costs as one-off costs, EUR 3 million to EUR 5 million and end up with total cost 2023 of EUR 15 million (sic) [ EUR 16 million ] to EUR 17 million. And this is quite similar, the same number which we are getting out of the gross synergies in 2023. So a perfect fit. And these synergies will increase significantly midterm to EUR 25 million to EUR 35 million. So consequently, I can say, considering the expected additional net income contributed by Haldex, here one will already come in EPS accretive. And now ladies and gentlemen, I would like to hand over to my colleagues, Christoph Gunter and Fredrik Seglö.

Good afternoon, and warm welcome. As an introduction to the R&D session. Thank you very much, Wilfried for the overview on the synergies. We would like to give you an overview now how R&D contributes, how innovation contributes to those growth synergies that we just saw. I would like to give an overview about, yes, the know-how impact that we have from the merger of the 2 companies, how that impacts synergies in innovation in a positive case, how the road maps, the product road maps are affected by the merger of the 2 companies by the increase of know-how and how we fulfill the megatrends of the commercial vehicle industry and the products in the future. We that's me, Christoph Gunter, President EMEA and CTO of the company since 2019. And...

My name is Fredrik Seglö. I'm responsible globally for SAF-HOLLAND since 1st of January and have hold the same position within Haldex in the past.

Many of you that followed us that followed, yes, the rationale of the merger and the acquisition know this chart showing the product polio of SAF-HOLLAND here in orange and the former Haldex portfolio, the Haldex brand portfolio in blue. You can see starting from the truck, the product, especially the fifth wheels on the SAF-HOLLAND side and the axle and suspension systems contributing to a major part of our sales volume on the trailer side. Then looking at the Haldex portfolio with the disc brakes, especially also entering the truck market, but very strong that also on the trailer side with the valves, the trailer EBS and the trailer air disc brake really covering in the future, having a very complementary product portfolio and covering the whole range of products below the chassis as a combined company. The impact is on the one hand side, the increase of content SAF-HOLLAND with axle and suspension systems already been very strong in terms of content for the trailer builders combining it now with a break in chassis control and the EBS systems from Haldex. That's a significant growth in terms of content to the trailers. The know-how I mentioned, bringing together the mechanical know-how from the axle and suspension systems, for example, combining it with the trailer EBS, the mechatronics know-how from Haldex. And gaining as a third point market access by growing our content and having the right partners on the trailer wheel and the purchasing side really growing here the market access for the combined company. But it's not all about growth of the content. It's all about the value add and the system know-how that we will grow by combining these 2 very strong brands, these 2 very strong companies and offering future technology and as that future value-add to our customers. What that means and how we drive the product road maps, you can see from the megatrends. The megatrends are not new. Both companies have derived their product road maps from these megatrends that accompany the whole commercial vehicle industry for the past years. It's all about electrification, digitization, automated driving and traffic safety that are the reasons for the transformation of the commercial vehicle industry for the past. I said they are there for many years, and they have not changed significantly. Now have they changed significantly for us due to the merger of the 2 companies. Now have the drivers. You can see them here in the middle, they have not changed, and they remain the same. What has changed significantly for us is what you see on the lower side of the chart and explained here for each and every one of the megatrends. With the merger and the combination of the know-how of the 2 companies, we can offer now for the electrification, more intelligence with access to the trailer EBS data. We can do the recuperation that from SAF-HOLLAND side, we started working on already 4 to 5 years ago. We can now offer significant more intelligence can do intelligent recuperation at the right time. For example, when trucks and trailers go downhill when they are breaking, and Fredrik Seglö will say something to that in the next slides. On the digitalization as well, seeing here the combination of axle and suspension systems being a major part, being a major, yes, contributed to the value of a trailer, for example, combining this with a mechatronics know-how that is coming on board from the Haldex side. We can offer predictive maintenance functionality in the future for many wear and tear parts can increase, therefore, our aftermarket share significantly and/or offer a value add for our customers also on the OE side. The automated driving, also there, we can see and can offer new functionality that no one else in the industry can offer. With the combination of the 2 companies, we have access to the mechanical conjunction of truck and trailer with the fifth wheels and the kingpins coming from the SAF-HOLLAND side and the communication. And the interface is there. So the digital interface between the truck and the trailer, that's yes, dominated, that's the know-how from the Haldex side, with the mechatronics know-how with the trailer EBS know-how, access on the truck EBS and the can communication. So bringing together here the mechanical side with fifth wheels and kingpins with the CAN and interface communication from Haldex is a significant value add for our development capabilities on the automated driving. And last but not least, a new trend on board that we communicated from SAF-HOLLAND side, the traffic safety due to the product portfolio from Haldex, coming with trailer EBS, the brake and chassis control, but also the trailer air disc brakes. And here, the driver really the regional legislation, especially in regions like Asia, China and also the U.S. where the increase of traffic safety leads to an increased population of trailer air disc brake that I'm sure Kent will comment on also later on. These are not only dreams or positive thinking. You can see on this chart because here you actually see the proof of the products we offer already today and those we are working on. I will show you 2 slides later that you can see we have those already in the portfolio. Starting with the electrification. We already have electrified trailer axles on board. We have Combined this asset now with the trailer EBS know-how to do the recuperation more intelligent in the future. You see the digitization. We bring on board the telematics know-how from SAF-HOLLAND with excellent activities that we acquired 4 or 5 years ago. We have the trailer EV, as I said, we have the communication interface between truck and trailer. So with many parts that we can digitize and we have the know-how to digitize also the mechanical components, adding sensors, but very important, not only adding sensors, but using existing know-how, existing data from the trailer from the trailer EBS and analyzing it. Also this is something Fredrik will go into detail. The automated coupling, I described already the interface between truck and trailer together with the kingpin and the fifth wheels, but also here the reversing the automated reversing coming from the Haldex side helps us with that know-how to realize automated driving and automated driving in the future. And last but not least, I mentioned already vehicle safety with air disc brakes. Also here, the trailer EBS plays a big roll. So you can really say, I wanted to show this slide to let you know to prove that we have those products really on board and that we provide that functionality in the future based on the know-how these 2 companies are combined. And the most important or very important for me is this brings us competitive advantage. And the synergies that Wilfried showed on the growth perspective is also based on a big part on this chart on the know-how you see here that the 2 companies provided can give to our customers. Here, you can really see the value add that we are providing. On the top part, you see the market access that we have. So 2 fleets and 2 the OEs. That's improving by combining the 2 companies because SAF-Holland is very strong, especially in the small and medium OEs has good access also to the fleet, but also the big trailer OEs. Combining this with the Haldex portfolio, especially the trailer EBS, there's big potential for growth, big potential for synergies to grow in the future. And more important than for the R&D side is the know-how that I mentioned already. You can see here the different aspects of know-how starting by break and chassis control, going through telematics and the wheel hubs, the wheel disc, and you can see that in each of these, we are improving our know-how position significantly, and it's what is not shown here, Alex said it in the beginning. Globally, we are the only provider of systems for trucks and trailer that could provide this know-how to their customers. So there is a significant value-add from my point of view by the combination of these 2 companies and that we combine for the future. I'll hand over to Fredrik, who will give us an overview of the main product road maps, covering the megatrends. Fredrik, floor is yours.

Thank you very much, Christoph. So let's talk about the electrification to start with. We all know that it is extremely important to support the CO2 reduction and the noise reduction in the years to come. All legislations and regulations coming up, which forces the industry to go in this direction. And then within SAF-HOLLAND already today, we have e-Axle for energy recuperation, which, of course, is an extremely good contributor on trailers, especially if you have a reefer trailer, which is powered by diesel aggregate today. You can replace that with an electrical energy source to power and thereby, we are significantly reducing the CO2 emissions. Adding to that, with the EBS system from Haldex, we can take this to the next level in terms of intelligent brake blending where we are mixing the regenerative braking from the axle with the friction brake in a good proportion. And that combination, as mentioned already here is very unique for the new setup here with SAF-HOLLAND. And that setup is from a product perspective, already existing today with the E-axle for recuperation and EBS. So we're now starting to merge the engineering teams to work closer together, how we can optimize the control of the braking in any positive way. Looking into the next step here, we have also the TRAKe , which is for the traction support. Of course, if you have topology, which is [ Hilli ], you can get support from a driven trailer axle, which is extremely useful for the whole combination. So going downhill, you can save the energy on the trailer in the batteries. And then when going uphill, you get good support from the electrician axle. And that also in combination with the intelligent control of the EBS makes, so say, the difference where SAF-HOLLAND has a huge competitive edge and added value to the customer. If we take the next megatrend, connectivity. Also here, we have the EBS being, so to say, the hub of information in a trailer today, we have already accessed brake data, suspension data and combining that now with the already existing trailer master from SAF-HOLLAND, which transfers the information, the intelligence to the fleets through the fleet management system gives also a very strong and competitive edge, so we can take the data from the system. We can package it. We can make good analysis. And by the end of the day, of course, the aim is here to keep down the maintenance cost by having a preventive maintenance approach, and making sure that we are keeping the uptime as high as possible for the fleet. Taking you to the next step. We have the smart steel approach that we can -- with additional sensors as we do have the complete axle suspension, brakes and suspension control in our hands. We can further optimize preventive maintenance, support and features and value add going forward. So this is really a unique position, which we have in our hands here. Thirdly, automatic driving is also extremely important for the future to make the driver to make, let's say, the vehicle less dependent on the driver in certain situations from a safety perspective, from an efficiency perspective. And as mentioned already, SAF-HOLLAND has already an approach and a technology for automated coupling, which means that the driver doesn't have to go out and make the coupling or decoupling manually. And by combining this with the EBS system again. We can also here add additional value by making sure that we have the brake release in the right sequence, and that itself should be, should say, a real benefit and a comfort for the drivers and make sure that everything is handled in a safe and efficient way. By that, I am closing the R&D part of this presentation, and I am handing over to Kent Jones for the Americas.

Thank you, Fredrik and Christoph. Very exciting news coming in the R&D of these 2 exciting companies. My name is Kent Jones. I'm the President of the Americas region for SAF-HOLLAND. And I've been with the company since 2019 and -- but I've spent 25 years in the commercial vehicle space. So practically my entire career. So let me give you an introduction to the Americas regions, discuss the market conditions and synergy opportunities. Firstly, let me take you left to right in this introduction. The Americas is what it sounds like. It is Canada, the U.S. Mexico and Latin America and South America, mostly dominated by Brazil. The North American market, U.S., Canada, Mexico, is a unified market common vehicle OEMs, common trailer OEMs, and we service that market very well. The Brazilian and South American market has additional strength here with the acquisition of Haldex and primarily services at European-style trucks. We're headquartered in Muskegon, Michigan, Western Michigan, long-time headquarters of the Holland company before the acquisition. We have 15 production plants, 7 aftermarket distribution centers and 3 R&D facilities. So perfectly placed to be able to service customers in this region and quite a portfolio of products as we'll see in the middle section. We have 7 different major product line portfolio. So we have a quite expansive product line for both truck and trailer. As you can see in the numbers, we are generally 1, 2 or 3 in every market that we serve. That's a great position to be in. The Haldex name and Haldex brand in North America is dominant in automatic brake adjusters and actuators with #1 position, and it has been this way for many decades. We're the #1 in couplers, connecting trucks and trailers in multiple trailer applications and off-highway, #1 for many, many decades and fifth wheel application with the famous Holland brand, #1 in landing gear considering OEM and aftermarket with a high-volume production line, #2 in kingpins, connecting trucks and trailers. And the last 2 items in air disc brake and trailer axle and suspensions is really the growth factor for the Americas. The air disc brake opportunities that come from the Haldex side in combination with the system selling for axle and trailer suspension in a growing market for increased safety for air disc brake is a tremendous opportunity for our company and value for our shareholders. On the right-hand side, you'll see some descriptive statistics through the third quarter of 2022. So SAF-HOLLAND with EUR 439 million and Haldex for EUR 230 million, 2 very, very strong brands with good market positions, 2, 3 quarters. You'll also see improving from past reports, and good strength in adjusted EBIT margins of 9.4% and 11.9% for Haldex. This, I think, presents the Americas as a very strong contributing region for our overall global financial health and financial balance. And then from an employee perspective, SAF-HOLLAND with over 1,600 employees and Haldex with around 900 is a substantial base. Let's go to the next page, please, and do a bit of view of where are these plants and distribution centers located. So let's look at the U.S. That's the highest concentration in the largest market. In The -- so the headquarters in Western Michigan in Holland. But we have OEM plans to serve all the OEM customers from original equipment assembly plants in the Midwest, in the South and aftermarket distribution centers to have products to our customers in most places within 24 hours and in all places within 48 hours. On the left-hand side, we have 2 manufacturing operations in Brazil; one from SAF-HOLLAND, one from Haldex, one in the south, one in the north. System selling there will commence immediately, and we see good opportunities to serve the South American market. And then in Mexico, we have a substantial footprint in Mexico now. 50% of all trucks in North America are produced in Mexico. Haldex has a manufacturing plant in Monterrey. This is the largest manufacturing plant a substantial footprint to service customers. We have an aftermarket distribution center and trailer assembly plant in Querétaro in the South and a new greenfield operation for expanded manufacturing capacity in Piedras Negras, a border city to expand manufacturing capacity for fifth wheels and additional product lines in the future. So SAF-HOLLAND and Haldex combination is an outstanding position to be able to service the North American and South American markets. Okay. Let's talk a little bit about in the Americas on the next page. What are these efficiency opportunities between these 2 companies? And how do we find ourselves being able to achieve those? Well, as has been mentioned many times, it certainly exists in this presentation and in the Americas, bringing both of these product portfolios together in the Americas. We're nearly 100% complementary, the Haldex products are integrated into the SAF-HOLLAND systems, and we'll be able to increase our content per truck and our content per trailer for every single sales opportunity that we have. When we combine the extended sales networks and the extended customer networks of both Haldex and SAF-HOLLAND, cross-selling opportunity really brings additional value. And something that's unique in the North American market and doesn't exist as much in the rest of the world is this concept of fleet specification. The fleets can specify by brand, by engineering type, what product that they want on their vehicle in most conditions. They can pick exactly what fifth wheel feature or brand they want what axle and suspension they want on their trailers. It's a very custom truck market and trailer market that exists. And most of the revenue of the OEM revenue of SAF-HOLLAND and of Haldex is generated by fleet specification. What does this mean? Well, it's customer stickiness. It has a repeated specification year after year. It's not always decided by an OEM engineering and purchasing bid. And it often results in higher margins with higher features, and that's a long-lasting opportunity for additional aftermarket annuity. As mentioned on the midterm benefit, we'll have more content per truck. We're already seeing opportunities that are emerging as we're booking out 2023. Growth in the OEM truck market, growth in the trailer market. But here's an interesting feature of this. The aftermarket business of both of these powerhouses in North America will be much, much higher, approximately 45%, 50% portfolio of OEM to aftermarket. And this will smooth through the very destructive business cycles of the Americas. In the past, it's not uncommon to see OEM business cycles go plus/minus 30%. During COVID, it was plus/minus 50% with the aftermarket being much more stable, this will decrease the business cycle volatility to perhaps plus/minus 50%. That really helps to manage long-term planning and longer-term earnings. These premium fleet specs, as I said earlier, yield higher margins, longer-term aftermarket opportunities and customer stickiness. Okay. And lastly, let me give you an update as the current view for market trends. As Frank mentioned earlier, we do see some softness happening in 2023. Right now, the order intake that took place in the end of 2022 is very impressive and at all-time highs. Most trailer and truck OEMs are booked out for the first half of 2023. And therefore, we as a high-spec opportunity in many of these marketplaces with as high as 25% to 50%, 60% market shares are also booked out. Second half of 2023 is what we're keeping our eye on in what relative to interest rates, inflation rates and could perhaps shrink moderately in the second half of the year, by 4% and 5%, respectively. We'll keep a close eye on this and run the business accordingly. The SAF-HOLLAND opportunity for structural growth in the air disc brake opportunity, as mentioned by Christoph, much like has happened in Europe, is a tremendous upside opportunity. Air disc market shares on trucks have been around 40% on trailers has been around 10%, and there's tremendous upside for our company. We'll be announcing in -- within 30 days a spec option opportunity on one of the major truck OEMs as releasing our brake, and we're very excited about that and our customers are excited about that. Inflation in the Americas has been very hot. Many commodities in steel, transportation, energy has been out of control and very volatile for the last 2 years. We're seeing some moderation of that, and that's good to see coming into the marketplace for a continued economic run. We'll keep a close eye and manage the business accordingly. As mentioned earlier, like we did through the COVID downturn. We have a strong management team in the Americas to manage this. And then how will we use this technology advantage we have, the systems integration of the brake components in SAF-HOLLAND and axles and trailers and chassis will bring additional strength to our customers. And then in the advanced technology area that Fredrik reviewed with you, I would say that North America will have as much of a lead in the E-axle technology and in the automated coupling technology. We are positioned wonderfully for this with our TRAKr and TRAKe lines, and we will be doing a customer demonstration of this in upcoming TMC fleet show in 30 days. The automated coupler technology with SAF-HOLLAND having the market share lead brings the opportunity for terminal tractor customers, and many of the roads in the West are being prepped for autonomous driving and this automated coupling technology will be required, and we're in the prime position for this in North America. And then lastly, in North America, Haldex has had a position in remanufactured products for multiple years. This really is the ultimate form of recycling. And I have extensive experience in remanufacturing myself in my past. This is a very good business. It creates very good margins, very environmentally sustaining. We're looking for additional products in this product line of remanufacturing. It brings good cost solutions and high-quality OEM engineering to the aftermarket. And this will be a continued long-term growth in the new company. Thank you.

Yes. Thank you, Kent, for that overview of the Americas. It's always great to see the success story of that region over the past years. Bringing us to the region EMEA. I'd like to give you an overview of where do we stand here in terms of the integration? What kind of synergies do we see? But first of all, let's start with what is it when we talk about the region EMEA. I got you through from left to right, you can see, yes, EMEA is the leading region for Europe, Middle East and Africa. So that's all that we cover here from our headquarters in Bessenbach, and I'll show you what production sites that belongs on which production sites belong to this region that we are steering from here in Bessenbach, on the next slide. The region that compromises 9 production sites now altogether, 7 coming from the SAF-HOLLAND side, 2 new onboard with the Haldex production sites and very important for the distribution and our service to the customer aftermarket warehouses that you see here, and we describe them here at the aftermarket warehouses. That's what they are on the one hand side, but they are also our hubs for the local salespeople in the different countries all around Europe from where we serve the local customers because if you want to understand the trailer industry, it's a very local business, especially with a small medium customers. They want to be served in their local language. They want to have somebody that comes with it if there's a technical issue. If they have a bigger fleet with a problem, somebody needs to be there on-site explaining, helping repairing. And that's one of the major and key strengths as I have followed that we now want to apply also then to the Haldex portfolio. That's why these locations are so important and crucial for our business. Three R&D activities that, yes, support the 6 major product lines that you see here that in the middle, and I'd like to guide you through those. First of all, yes, the trailer axle and suspension systems, the SAF-HOLLAND major sales contributor in the region EMEA with, yes, also more than 300,000 axles produced in 2022. That's really high production numbers and great success to see the market share development in the region over the past decade. Then from the Haldex portfolio, the automated brake adjusters with roughly 340,000 produced and sold in EMEA in 2022. The fifth wheels from -- that we produce in Singen close to like constant with more than 55,000 units produced in 2022. Then the Trailer Air Disc Brakes from Haldex with a strong market growth over the past years shown here as market position 2 to 3, and I can tell you that with the contract signed and in place and ramping up in 2023, the 500,000 Air Disc Brakes produced in 2022 will increase again significantly and we will cement our market position here at least to #2. And then Trailer EBS, that's a field of growth, especially in combination with the sales structure of SAF-Holland, 60,000 produced in 2022 in the Hungarian production site, Szentlorinckata and this is really where we aim to grow in terms of growth synergies, and I'll come to that on the next slide. Last but not least, not shown here with the market position, the telematics. Telematics is a very diversified market. We have more than 30,000 telematics out there in the field running on trailers but it's hard to define the market position since as said, it's a very scattered market, a lot of companies offering telematic systems. So that's why we didn't dare to put here a market position. What is the combined business. You can see here up on sales with the year-to-date September figures for 2022. So 1/4 is coming as an add-on from the Haldex side, growing the region again significantly. That's very good and the adjusted EBIT margin that has suffered, especially in the first half of 2022 in the EMEA region due to the increased material prices and the price increases that we needed to make on the customer side and there's room for improvement. We put that here already in the box. You see the Haldex figure. This is not where we see ourselves for the future. We want to improve that margin situation here in EMEA significantly. And I think we have very good chances to do so with the processes and methods that we use at SAF-Holland on the one hand side, on the synergy side, from the cost point of view. But we talked around about, especially in the R&D section already about the synergies in terms of growth potential. So by increasing sales, we make use then of the SG&A we have, and we need more sales in order to cover that. So there's good potential here to improve that figure. The number of employees was 1,500 from the SAF-Holland side and 755 from the Haldex side. Also here, you can see that there is probably room for improvement, especially on the SG&A side to keep that growth on the employee side to a moderate level. Coming to the production sites. We talked already about, yes, 7 production sites from the SAF-Holland side. So the major production site for the axle and suspension system that's Bessenbach, that's three plants will produce the whole range of axle and suspension systems coming from the mass production as we call it, a 9-ton intra-disc axles, but we also produce the whole range of disks here in Bessenbach, so steering axles, [indiscernible] axles, all kind of drum brake axles. So really a whole portfolio, if you want to have it axle and suspension system in EMEA, this is where you can get the whole range. Duzce, as Alex mentioned before, as an add-on to that, that is growing significantly in the importance of our -- yes, production network here in EMEA growing up to produce 1/3 of all the axle and suspension systems in EMEA, so really a significant footprint. This has started successfully a couple of years ago and has found it's place in the SAF-Holland production footprint and as said, growing significantly at a great value add. We then have Singen, Flero and Nave compromising or combined to what we call the truck business unit. So here, we produce the fifth wheels but also the Orlandi portfolio, as we called it, with the coupling systems, we combined these under one leadership within the region to the truck business unit, as we call it, to have a significant sales volume here and one face also to our truck customers on this side so that we have a sales force here really dedicated only to the truck people, to the truck customers. Yes, selling the whole portfolio of SAF-Holland Group and as an add-on in the future then also the air disc brakes that we provide for the truck customers. The 2 new production sites within that network are Landskrona, the former headquarter of Haldex where with a highly automated production of the air disc brake. I was fairly impressed when we saw it for the first time, myself, knowing many air disc brake productions over the world. Really have a very good impression of that production side. There's a lot of automation being done over the past years to, on the one hand side, reduce the cost in the production process, but also to improve quality. The air disc brake is a highly safety-relevant product, and we really have to make sure to have the right product in the field and with a high automation and a very robust and good quality systems in place in Landskrona that has a very good feeling about the quality coming out of that plant. And also Szentlorinckata as a footprint from the Haldex side, also in Eastern Europe, where on the one hand side, the automated brake adjusters, the actuators are produced rather mechanical products, but also in one part of the production side, the new generation 4 for trailer EBS. So the mechatronic components, the mechatronic products that, as you saw on the R&D side, play a crucial role in the future growth, if we talk about growth synergies, not only for EMEA, but also for the other regions and the whole group. Yes, looking at the efficiency measures and the midterm benefits of those. On the one side, we have the growth synergies that you see here on the left side. So the cross-selling opportunities between SAF-Holland and Haldex. And what do I mean with that? That's really mainly making use of the sales force, the very good customer connection of SAF-Holland which is quite unique for an industrial German company, as SAF-Holland is very customer-centric, has a very good relation to the medium, small OEs, also the big trailer OEs and we can really leverage this unique market position, this unique access to those customers to also market the Haldex portfolio in a better way than this might have been possible for Haldex in the past. We can strengthen our market power with increased system supplies. So on the one hand side, we have the access. On the other hand, we increase our content. We can really supply systems as a combination of the brake and chassis control. So brake and chassis control is the combination of the trailer EBS portfolio and the conventional valves needed for a braking system from Haldex and then the excellent suspension systems from SAF-Holland and we saw it on the R&D side before when we showed the overview of the product with that we are the only supplier in Europe and also globally that can provide this portfolio as a system to a trailer OE around the world. We talked about the aftermarket. I talked about the warehouses. So on the one hand side, the locations we make use of, but on the other hand, the aftermarket powerhouse, Alex mentioned in the beginning statement. So with the aftermarket supply, we can grow our portfolio to our distributors, but on the other hand, grow also with the second brands. The second brand from SAF-Holland, the past in Sauer combining it with the GRAU portfolio that Haldex was marketing or is marketing still in the market. And yes, the content I talked about that we increased the truck and trailer markets, but also the aftermarket distributors play a major role in the growth synergies. On the efficiency side, I'd like to highlight then the consolidation of the sales footprint. Alex talked about the example from the Spanish office, and this is not only true for Spain. We have it in all the major markets in Europe where we have the 18 aftermarket warehouses that we talked about, the 18 sales point around EMEA where we are now looking into where does Haldex have an office, where does SAF-Holland has an office, and we are looking into it is done. We are in the consolidation of that and moving it to the best location from a logistics point of view, from a know-how point of view, and creating here a joint team between SAF-Holland and Haldex and paying close attention not to lose any know-how and or customer access. And also on the efficiency side, we have efficiency on the product development. That on the one hand side is run globally in the CTO role, but we also have our regional development teams. So also here, we look into the efficiency on that side. What are the midterm benefits. Yes the joint access to the customers with an increased content, increased volume value per trailer gives us even better leverage and better position towards our customers. So you can already tell that when you come as a SAF-Holland representative, we represent a big amount of money for what they are purchasing for the whole trailer. So we usually talk to the owners, to the head of purchases and have a very good access to those customers in a very good connection. So bringing now the Haldex portfolio, which, from the past was from a value point of view, a little smaller. We can take that on board in those discussions and have a very good access and possibility to combine that in a system and discuss that with those owners and with those head of purchasing in order to leverage that postage. We have an increased content per trailer as said, I talked about the warehouse structure that -- where we see great midterm benefits, the strength in aftermarket exposure. So -- also in EMEA, we will increase the aftermarket share due to the combination of the two companies and the air disc brake projects ramping up at major trailer and truck OEs are also improving our position. Talking about the markets. We see and we saw on the introduction that we were counting from the external information we get with a lower market volume. We are still counting with a lower market volume compared to 2022 on the truck and the trailer side. Orders coming in at the moment, though, are very good. We see a high order income. So we are really hoping either to push the possible downturn -- not downturn, but a possible dip of the market out to the possible latest point in time or the dip might even not be such a dip, but just a slowing down of the market. So the current outlook is quite positive from an order intake point of view. With the upcoming product developments that we saw and the positioning especially at small and medium OEs, let us look quite positive into the future and that we can compensate those market developments may be better than the market is running. How will we utilize the technology. I talked about that. We have the megatrends that we can serve very well. We have the technology in order to provide, really value-add to the customer and with that, I'm really looking forward to the development of the combined company, not only globally, but especially for the region EMEA, where we can offer, yes, better systems, more valuable systems with the market access and the technology we can offer in the future. And that said, I'll hand over to Andreas Richter, who will give you an overview of the activities in Asia.

Thank you, Christoph for handing over. And my name is Andreas Richter, and we will now look into the APAC region. If we start from the left side, the combined companies have a really good coverage in the region. You see India and China, the two big company -- countries, we're now India's pass, even passing China and population and with heavy investment in road transportation. Korea, Indonesia, Australia and also in Singapore, giving us a very good footprint in this region. Five production plants, four production distribution centers and also four R&D facilities to support the technologies that are needed in the region. If I go to the middle, our product lines combined has a very good positioning in the region as such. With the trailer axles in India, clearly the #1 with over 50% of market share. In the ABA in India, we are #2, ABA, the automatic brake adjuster. In Korea, we're also #1 with the automatic brake adjuster, leveling valves in China. Fifth wheels, couplings and truck suspension in Australia. So you can see the spread of our products -- combined products throughout the whole region. If we start to look at the sales, you can see that the SAF-Holland portion in the regions is significant. Haldex is smaller. At this point, we are still suffering quite a lot from the COVID situation in China. This region is also used very much for internal production of parts for the other regions in these factories. The adjusted EBIT margin has to be improved within Haldex to the levels of where SAF-Holland has been over the years and are nicely showing month over month. The number of employees in the countries are a bit high on the side of Haldex, and that is something we will look into as well because we still believe that there are synergies effect in this to gain. So oversight where we have our plants in the region. Nashik, India is a joint venture that Haldex holds with the company, Anand, up in Nashik, North of Mumbai. SAF-Holland has a site for axles in Pune, south of Mumbai, but between the sites, they're only around 200 kilometers, which is a nice distance if you want to cooperate in great synergies. In China, the Haldex plant is in Suzhou, China. The SAF-Holland plant is in Yangzho, China. Again, only 200 kilometers in between, which allows a good cooperation. Haldex also has a newly established joint venture up in Xianyang with the group Fast for production of disc brakes. This joint venture is still in its first steps to come into the market, and we will hopefully see good progress during the year. But in the region, we also have distribution center, as mentioned before. Japan Korea, Singapore, Australia, is good distribution centers for the whole region as well. The benefits in the regions are to be found within the distribution network. When we have mapped the company's distribution network will have, there is some overlap, but not too much. This will allow us to grow faster when cross-selling into each other's entities. SAF-Holland for example, has the benefit now to have the Haldex Korean site to penetrate the Korean market, where SAF-Holland in the past, has been a strong player. And SAF-Holland will, of course, in India benefit for actually having a good supplier and Haldex joint venture in Nashik to sell products into that joint venture. We have already started to look into that, and that is already starting up as we speak here. Selling to the plant in Pune, where we have just stepping into, as earlier mentioned, a completely new plant, which has an increased capacity of 50%. Just last week, I visited it, and it's really good to see that it's already ramping up, ramping up by small production already done because we need the volume. We can sell what we produce in this plant. And I will come back to why. Why the market trend? There is a further -- a general further expansion of trucks with 14% and trailer of 21%. And that is driven by two things. One thing is, of course, that the roads are getting better and better. Consumption is better, vehicles travel faster, needs more technology product. But it's also driven that government has put in incitament to get out older vehicle to be replaced by new ones. Incitament, yes. If you replace your old vehicle with a new one, you can get up to 17% incitament to buy the new vehicle, which will further drive growth in this area. And with a new plant, we are ready to meet this opportunity. China is coming out of a very bad situation with COVID, but we project a 25% increase in the truck and trailer production. So we see that we still have the COVID risks in the country, but we also have the opportunity with a Fast joint venture, where we see the first steps of introducing and producing the spreads for this market. The two companies is benefiting from all these expansion in these emerging countries. Better roads, faster vehicles need better products on these vehicles. We have those technologies. When we combine the Haldex and the SAF-Holland technology knowledge that delivers real benefits for our customers. The trailer ABS and EBS, which we have, that is combining those with the axles, selling to the customer and giving the package to these customers is giving these benefit. Not every customer out there knows exactly what he's needing. So we can package actually a trailer kit to go with axles and the trailer manufacturer can focus on the chassis itself and getting all the parts from us. That's a real benefit for the new company. So this is really a good opportunities for these two companies to come together, grow in this region. Thank you very much. And with this, I will hand over to our CEO again, Alex Geis. Thank you.

All right. Thanks for the APAC overview. Ladies and gentlemen, let's talk about the status quo and the future of a combined group. Starting with the sales. On the left side, this is 2021. You can see, SAF-Holland stand-alone achieved sales of roughly EUR 1.25 billion in 2021 and Haldex roughly EUR 450 million in '21. In the middle, you can see 2022 SAF-Holland on his own, 1.5 -- estimate EUR 1.5 billion and Haldex roughly EUR 500 million. As I said, that's the estimation for 2022. We are targeting as a company an organic growth by the year 2027 of in between EUR 2.4 billion to EUR 2.5 billion, and that would mean we would outgrow the market. This is mainly driven by an increased content per vehicle, further market share gains, the structural growth in the Americas, combined with the increasing contribution from new products, driven by the mega trends and a huge cross-selling potential. You already heard that a couple of times, but this is really good. We have a lot of medium and small-sized customers. They are happy to get everything from one source, and this will drive our sales. How does the adjusted EBIT look like on the next page, ladies and gentlemen, on the left side, starting with the past. 2021, SAF-Holland alone, 7.5% adjusted EBIT. In 2022, we gave a guidance of an adjusted EBIT of in between 7% to 8%, and the consensus is at the moment at 7.8%. In the year or by the year 2027, we are targeting a solid conservative 9% to 9.5% adjusted EBIT margin which is powered by the aftermarket powerhouse with increased sales to roughly now 1/3 of total group sales. The increased market power, we spoke about that, the full leverage of the synergies, the production process efficiencies, the footprint moving from the States to Mexico and also a strengthened unique technological offer for predictive maintenance. This is an asset we can offer our customers. Having said that, I pause and let Frank talk about net working capital, ROCE and CapEx.

Yes. Thanks, Alex. In line with the solid profit margin, the overall cash generation will remain our key focus. We target for further net working capital reduction and Cash is King. This must remain in the DNA of our management. Looking into the numbers with 14.8% and 15.9% of sales, SAF-Holland is not that bad. There is some potential at Haldex, you see in the chart. We target for the long term for 2027 on a level of 15% to 16% of sales. We will achieve this by further reduction on the inventory levels coming from the normalized supply chains. We will improve the potential of Haldex's net working capital ratio, which is, as you see, significantly higher. And we also have to implement the SAF-Holland standards and an active net working capital management program in the whole group. With this, we will achieve the 15% to 16%. As mentioned in my introduction, talking about ROCE, return on capital employed, looking into SAF-Holland alone, you see 15.7% and 17.7%. This is a good level. Including the transaction of Haldex, we estimate -- September '22 numbers, we estimate a level of 12.9%. Our target for the long run is at least 15% ROCE to be achieved in 2027 latest. Last but not least, talking about capital spending, CapEx, SAF-Holland within 2% to 2.5% of sales CapEx ratio is a real asset-light company. This is really good. Haldex comes in with a higher vertical integration. This implies a slightly higher CapEx ratio as compared to SAF-Holland. But on the long-term target, we see a maximum CapEx ratio for the combined group at maximum at 3% of sales. And this is driven by scheduled production capacity increase for air disc brakes as well as for trailer EBS. Having said this, I hand over to Stephan and we enter now in the Q&A session.

So ladies and gentlemen, we are starting with the Q&A questions. Please feel free to type it into your screen. You have a Q&A till available on your screen. So make sure you use it. We already got a couple of questions coming in. And the first one I'd like to delegate to Wilfried Trepels. The question being, don't you think that the 10% margin is achievable by 2027, assuming you will realize the stated midterm synergies, which would account for up to EUR 35 million which is already almost 1.5 point margin improvement. So please, Wilfried.

Yes, as Alex already mentioned a couple of minutes ago, it's a conservative approach to achieve 9% to 9.5%. And I mean if you have -- taking a look into the past, we have achieved already 10% in Europe. Last year, we have achieved also 10% in North America as well as in APAC. So that is not out of range. So the comment would be if all markets were in a solid shape at the same time and very often, they don't do that, we would not rule out the 10% completely. But we are setting targets and we have taken here as we always do, a conservative and cautious proposition. And I think that's it.

Anything to add from the CEO side?

Well, you basically said already everything. Well, you know us in between, we are staying conservative and then we over-deliver. So we feel very comfortable with the 9% to 9.5%. And as Wilfried said, it's not impossible to reach the target of 10% plus.

So next question. When will you publish guidance for the joint company probably meaning the combined unit of SAF-Holland and Haldex already on a consolidated basis.

Yes. So that depends, of course, from the Polish antitrust authorities that we need the approval there. And finally, we believe that we will get that quite soon, and then we can start consolidating both companies. We are going to publish our full year reporting on the 30th of March. And there you can expect that you also will get the numbers from the Haldex Group, but stand-alone. And that will be also the right point of time to give you a consolidated outlook for the year 2023.

Our next question comes from Klaus Ringel, ODDO BHF Bank. From when on do you plan to consolidate Haldex into SAF-Holland Group? Has basically been answered already. Here comes the fifty thousand dollar-question. When will the consent of the Polish antitrust authorities happen? Is there still a risk that the transaction could fail to be closed at all? Maybe Alex?

I got to take that over. Well, we are really in the final stages now. We got a lot of questions. They take their job really serious and we had -- they handed in a lot of questions which we got to answer or which we answered. We are in the final stage now and there's also the question now here on the screen, I can see that. Is there still a risk the transaction could fail to be closed? Absolutely not. There is no question about this. But as I said, they take the job very serious. The last answer -- the last question has been answered, and we are hoping to get it in a really short period of time.

Next question comes from Nicolai Kempf, Deutsche Bank. He says thanks for the presentation. Welcome, obviously. How do the targets look like in 2023 specifically? So he is asking for development of the current year.

Well, we will be publishing our financial -- full financial numbers on March 30. That's basically on my next page here, or closing remarks. And also there, we will be publishing our hopefully, consolidated group targets for the year 2023.

So a follow-up question here. How do you intend to defend Haldex's independent aftermarket market share against cheaper third-party suppliers? Will there be a cheaper second brand for Haldex and how far progressed is this.

So I will answer this for EMEA. There is a second brand. So it's called GRAU. So we have the GRAU brand on the Haldex side. We have Sauer brand on the SAF-Holland side. We are currently looking into merging these. How do we defend our market share? I mean there's patents out there. If you look, for example, on friction material, when a new disc brake is integrated, usually have patents around those also around the wear and tear parts. So this is a way also to secure the growth in the aftermarket. This is something that we are looking into always when we do new product refreshments, new product cycles, this is true for the SAF-Holland side, but also for the Haldex side and yes, we are looking into growing also the second brands now in the combined offerings. I talked about before, the improved position also towards the aftermarket distributors, and this is for sure a way of growing also the second brands that are existing on both sides on the Haldex and on the SAF-Holland.

Financial question, maybe for the CFO. With your combined debt and cash position as of fiscal year 2022 and the idea is to have Haldex already in a consolidated view. So what happens if Haldex joins SAF-Holland on the debt side.

Yes, we are in the middle of preparing our financial statements so far. So I can't give you now an exact number. But as I said already before in the last year that we believe that we will come in around EUR 500 million and that the net debt to EBITDA ratio will be below 3, and I said that I'm going to expect that this will be around 2.7.

And the follow-up question with regards to the technicalities of how the synergies are being derived. Why did you apply the 35% risk buffer after saying we will deliver these synergies. So what's the point behind the 35% risk buffer. Maybe Wilfried again?

Yes, the risk buffer is the 35% because we know that we are at the beginning. We are in January. We have to deliver this within the next couple of months. And there are always some hurdles and sometimes also additional costs, which we have not expected to achieve the synergies, and that's the reason why we have such a risk buffer implemented. And also for 2027 or, let's say, better medium term, then we have increased it to about 40% to 50% due to the fact that this is further down the road, another 4 to 5 years. That is the reason why we have implemented such a risk buffer.

Question for Alex. Could you please give an approximate split of sales by geography for the long-term 2027 target? So what's the rough idea? What are your assumptions in the U.S. in terms of air disc and pneumatic suspension share? Maybe also Kent could comment then on the technical side.

Well, this is a lot of questions. I tried to answer the first one. What's the split, the split at the moment is roughly 50% is EMEA, 40% is the Americas, 10% is the APAC region with the combination of the two companies moved a little bit from Europe towards the Americas more in the ballpark like 47% to 42%, 43% and 10% APAC. We are very strong in the two big regions, EMEA and Americas, of course, we would like to grow that business as well. But we will also outgrow our sales in the APAC region. Mainly in India, where we are very well positioned. You saw that before and also in the China region and in the rest of Asia. So the split I cannot tell at the moment for 2027 exact but it will be an increase also in the APAC region, but also a further increase in the Americas region.

Kent would you follow up with the pneumatic suspension shares? Any ideas on that?

Yes. In the Americas, the air disc share, I said it in my presentation, for truck and trailer are different. The truck side of the business is 40% to 50% and growing at a nice rate over that time frame. We, as I mentioned, are releasing our products into this space, and we'll gain share over the next years. On the trailer side, for air disc break, it's quite low, it's 10%. We, I would say, are a large market share player of that 10% with the way that we have gone to market in the past, and we will continue to increase that over time. I would suspect over the next decade, that will increase as much as 50%. The split in trailer suspensions for pneumatic versus mechanical or air versus mechanical has been approximately 50-50. We have been dominant position share in the mechanical side and growing on the air side in those markets such as refrigerated trailers. So yes, that's the market share. I suspect that will remain the same over the next years, honestly. The mechanical has properties of lower cost of upfront initial cost, lower maintenance costs over time, [indiscernible], doesn't need the air ride then it's often not spec just because it has an overall life cycle benefit.

Another question. How fast could you improve the margin of Haldex's European and Asian business. Maybe one comment from Wilfried on the trend situation and the guys can follow up from the regions.

I would put that directly to the regions.

Well, I guess, Wilfried has shown the commitment for 2023 when during his presentation, we've shown how much synergies we see in 2023, what we committed to, that added up then to the total synergies on a global level added by the regional synergies we saw on the one hand side, but then also on the overall structure. And these synergies are mainly the commitment we gave from the regions for 2023, and we gave also an outlook for 2027 of what cost synergies we see on the one hand side, so the combined synergies on the cost side and also on the growth side. And they will, for sure, in 2023, improve the margin situation in the EMEA region.

Asia?

The answer is similar as to what Christoph just said. In Haldex, there is a significant portion of the operations in China. And we are stuck in COVID a bit yet. And only 3 weeks ago, almost 50% of the workforce were infected by COVID and could not come to work. If I should say luckily, it was the same situation with our customers. So we didn't cause any issue with that, but we didn't get out the volume. So we will work on this, and it's a clear plan to get up to the higher numbers, and we will need a healthy country and getting back to work again. And so throughout '23, we will see improvements. Thank you.

So question with regard to the aftermarket and how it's going to be trending until 2027. Alex, could you provide us with a rough estimate of the weight of the aftermarket in adjusted EBIT after the integration of Haldex. And what do you expect for sales and adjusted EBIT also share-wise in the next couple of years?

Let me make a wild guess, this question is coming from Jorge, right? No, we are not giving you any details on the aftermarket. You guys know that we are not reporting in aftermarket truck and trailer anymore since the end of 2015. But you also know that we have the majority of the adjusted EBIT coming from the aftermarket. I said we increased sales aftermarket from 27% to 34% now. So the majority of the profits are coming from the aftermarket. This is why it's so essential that we keep filling the pipeline, the OE pipeline to have a good balance, 2/3 of OE and 1/3 of the aftermarket. To continue this business model and earning good money for the company and for our shareholders.

Another question with regard on the dividend policy of the company looking ahead.

The dividend policy of the company is what it also was before that we are going to distribute 40% to 50% of our net available earnings to our shareholders that remains.

Let me maybe comment on this without saying too much. We had a really very good year last year, the SAF-Holland group. And of course, in a really good year, we are thinking over and have to make a proposal to our Supervisory Board fairly quickly and then come out with our proposal for the dividend to be paid in 2023 for 2022.

What will the impact of wage inflation on margins be? How will the latest wage negotiations affect the company predominantly in Germany.

Yes, we have made a decision in November and December to pay already EUR 1,500 per person out because we said to the workers and to all the other employees. If we have a good month in November and December, we are going to pay that earlier. The latest day to pay it was -- or is the February next year. So we took already the burden of round about EUR 1.7 million in 2022. Furthermore, we have started again further initiatives in -- especially in production to balance at least the increase which we are going to expect to be around about full year effect of 3.5%. And we have started these measures we both together initiated it. And Frank has great experience in production and in these things. So he will bring that further down next year that we are going to achieve these synergies there. And then we are able to balance the higher -- eventually higher sales -- sorry, salary and French benefits.

A question more towards the short term, what kind of growth are you expecting, yes, for 2023? And what would be the contribution of volume effects versus prices? I think we gave some outlook on the markets already, but maybe as a follow-up. And what's your targeted EBIT margin on the medium term, yes?

The targeted adjusted EBIT margin, we said is 9% to 9.5%. And regarding the aftermarket EBIT development, we said that we are not going to release these numbers.

Yes. And the outlook for the guidance for 2023 will be given March 30.

Technical question, are you entitled to the Haldex profit with regard to the fourth quarter of 2022?

Yes, at least we will get dividend if they pay a dividend. But we are not going to consolidate the numbers. So no, we will not see in our official consolidated balance sheet or financial numbers in 2022 the effect from Haldex.

Now a question with regard to net working capital trends. Where is the difference on current net working capital ratio between Haldex and SAF-Holland coming from? What's the reason for that? And what would you consider a normalized level of inventories going forward?

Yes. The difference between SAF-Holland and Haldex is coming from, I think, two main aspects. One aspect is that Haldex is much more vertically integrated than SAF-Holland is. And the second point is that they have not really focused in the past on inventories. And they are still from -- with my impression, they are still stuck in the situation where we all have been the last 2 years, that material was an issue, and we bought everything we could get. Now we have turned -- we have to turn the mentality to do this and to bring that down to a much more better level. And we said that we can take out this year, probably around about 5% points out of the net working capital ratio at Haldex and regarding the targets for the inventory, SAF-Holland has a target of 65 to 68 days, which is 2.5 months and to achieve this would be good. And on the other hand side, we have Haldex and we need to get into more details there, more into the details in the companies and the respective companies to see really what's going on there and on which button we have to bring it down.

How do you expect the commented macro scenario could affect Haldex in comparison with SAF-Holland? And a second question, probably for Alex. Finally, do you expect price increases in 2023 for SAF-Holland and Haldex products. Do you think that would be feasible? Maybe start with Wilfried??

I can do also the first question, no worries. Well, basically, Haldex is in the same industry with the same businesses working. So the effect will be the same like for the SAF-Holland group, same industry, mainly commercial vehicle, a little bit buses. So no special effect or a worse or a bad effect on the Haldex side. We elaborated on the outside fuse on 2023 and how we are overcoming this and how we are going to support also our growth and our margins in 2023. And the second one, well, price increases, we have to, as Wilfried mentioned, also to digest as everybody else in the industry, the wage increases for our people which they need beginning or middle of this year. We also have the same discussions in all the other countries around the globe. It doesn't matter if it's Europe or Central Europe, but also the Americas, India somewhere else. So the same discussion. And I guess, if we have to further increase prices, we have to go into negotiations with our customers but the ultimate end-user is our fleets and you see that the fleets are ordering at the moment, I have to say like help and they keep ordering highest income ever trucks and trailers in December in Americas and also in Europe in December and January to our surprise, I have to say. It's really a bullish market. We are fully booked. We even have to increase capacity in our German plants, and we already did that in our Turkish plant. So we're quite happy. And let's keep the fingers crossed that it continues like this.

Follow-up question with regard to the dividend. Are you planning to pay a dividend for 2022. Also, the debt level has increased to the Haldex acquisition has almost been answered, but maybe as a follow-up. And is a share buyback also a feasible option for you considering the still undemanding valuation of your share?

Yes. Perhaps we are sometimes too traditional. So yes, we have a dividend policy, as I said. And I know that also another interesting point of view is to instead of paying a dividend to buy back the shares. That's not something what we are planning to do. And yes, you're right, the valuation of the share is ridiculous. We agree. And therefore, we are pushing here very hard in Investor Relations, together with the whole management team. We are doing our homework. We are communicating on a frequent level now and telling the story, telling a good story. And when you look to the development of the share price over the last couple of months, then we see that we are getting closer and closer to our peer groups. That is the first step what we want to achieve. And the next step is -- in euros is to achieve the EUR 11 per share and then to win also further investor basis because there are a lot of investors who are not allowed, simply not allowed to invest into companies who have an evaluation, which is below EUR 500 million. And with the EUR 11, we would make that up and we would come to the EUR 500 million and open a new window here. I hope that answers the question.

Here comes a question with regard to the expected market trends on the slide shown. What are the figures related to? Are you showing volumes there? Or are you showing produced units.

Well, basically, this is the same because the shipment volumes and the turnover volumes are the same. When we produce and we only produce to order. So we get an order, we produce, we ship out an invoice the same date. So this refers to the same numbers, but the market trends are coming from the outside sources. And basically, this is the same. Whenever you ship, you invoice and it's the same. We are not like a Siemens that the order is coming in, in 2023, and then you produce and ship somewhere in the following years in '24, '25. So whenever we get an order, we produce, ship and do time and also invoice everything.

Maybe as a reminder, if you have any other question, please type it in. Otherwise, we would come to the final question here regarding price developments. Alex, which product prices, which assume up, flat or down and how do you perceive that in the wake of early 2023 in light of the ongoing strong order intake across the group.

I don't see prices going down. Inflation is still there. The energy cost is there. You have the inflation in wages. Shipping costs are still high. So it will be somewhere around flat to increasing prices. This is my assumption on this.

Okay. So there's no more questions. Thank you for asking these questions. And with this, we close our Q&A session. I'd like to remind you, whenever you have any question as a follow-up, just give us a call on the IR department, then we're always trying to answer these. And with that, I will hand over to Alex once more to deliver the closing remarks for today's Capital Markets Brush-up.

All right. Ladies and gentlemen, we are building the future stronger together. In 2023, our focus lies on integration and transformation with the significant potential of the combined group. We do have a competitive advantage of the major competitors in EMEA. Our product offering is an enabler to exploit the megatrends with unique predictive maintenance and smart functions. And we offer a high-quality, resilient asset-light business model featuring profitable growth and strong and consistent returns. We will be announcing our SAF-Holland preliminary figures for the fiscal year 2022 on February 15 and will be presenting, as we said before, our fiscal year 2022, SAF-Holland and Haldex stand-alone figures and the '23 outlook of the joint group on March 30. Everybody, thanks for taking the time and listening to us today. Stay healthy, and thanks for your trust. Thank you.