Saf-Holland Se

XETRA:SFQ

Earnings Call Transcript

[Stephan Haas]

Good morning, ladies and gentlemen. This is Stephan Haas speaking, Investor Relations. First of all, thank you very much for joining our conference call today of what I understand is a very busy day as far as reporting is concerned. And I really want to make it short and hand over to our CEO, Alex Geis, who will also give you a brief update on the situation at Haldex.

[Alexander Geis, executive]

Thank you. Good morning, everybody. This is Alexander Geis speaking. And today, we can report on a very successful and also eventful third quarter of 2022. It was successful because of the very strong figures we are reporting in a minute and eventful because of our bid on Haldex, which reached more than the needed 90% acceptance rates.

And we, meanwhile, are heavily working on the PMI process with the leadership teams involved on [ rights ] on a global basis. But later on, Wilfried will give you some more details on the Q3 figures of Haldex and also the status quo of the integration process.

So let's start with the SAF-Holland Q3 highlights on the following page, please. We, as a group, achieved a strong sales increase year-over-year, which was mainly driven by a high growth in the Americas, but also APAC region.

And we, meanwhile, in all regions, were able to further pass on prices, also inflationary prices. And we kept our strong focus on our aftermarket with our dedicated teams. And we're able to remain very high, nearly 28% aftermarket share of total sales.

In terms of the Haldex integration, we are on track to create a stronger, more resilient business model, enhanced customer offerings and also earnings profile.

And last but not least, here on that page, October was also quite strong, and therefore, we can raise our sales guidance to now around the upper end of the range of between EUR 1.4 billion to EUR 1.5 billion. Our adjusted EBIT projection we kept unchanged on a conservative 7% to 8% range.

Having said that, please let's move on to the next page to speak about our main KPIs, starting on the left side. EMEA increased sales by nearly 9% in Q3 year-over-year. And as you can see, Americas with a strong 53% increase and also APAC with a strong nearly 49% increase in Q3.

Taking a look on the right side, starting on the upper left on the right side, altogether, group sales reached in Q3 a solid EUR 402 million and a strong adjusted EBIT margin of 9.1%. And we also were able to decrease our net working capital ratio to now 15.9%, but we'll give you a little bit more insight later on.

Our net operating free cash flow was nearly EUR 49 million, and the earnings per share reached EUR 0.36.

Let's take a look on year-to-date sales on the next page. You can see on the upper middle and summing up the year-to-date sales, increased now by 27.1%, adjusted by FX by nearly 20% to now EUR 1.175 billion. And this was driven by both equally OE and aftermarket sales increases.

Taking a look to the different quarters, you can see specifically Q2 was very strong with EUR 403 million, all-time high, but also now Q3 very strong with EUR 402 million since coming, as I said before, coming from all regions, all 3 regions, but mainly from the Americas and the APAC region.

Speaking of the different regions, on the next slide, you can see some pie charts. I would like to start on the upper left side. This was the first 9 months of 2021 and the distribution of the different regions, as you can see and also compare with the pie chart on the upper right side, which is the first 9 months of 2022.

At the EMEA region, last year reached 59%. Now it's 53% of the total sales, of the total group sales. But a huge increase in the Americas from the year before, 32% to now plus 5% to 37%. And also the APAC share increased slightly by nearly 1%, so a little bit shift more away from this huge EMEA region to the second biggest Americas region now, but also APAC.

If you take a look on the lower left side, this is the pie chart showing different sales shares of our former business units. So truck, trailer and aftermarket.

And here you can see quite stable, still now this year, nearly 60% trailer OE share, mainly driven by the Americas, but I will give you some more insights later on. 27.3% is still the aftermarket, very strong.

And nearly 13% of the products coming from the truck business, which is mainly the truck suspensions, but also the fifth wheels. So really unchanged when we speak about the different business lines.

Having said that, speaking a little bit about the gross profit, which we cannot be happy so far because you can see on the upper side that last year, first 9 months, we came in with 17.9, now a slight decrease to 16.7%, mainly coming from all the inflations, but also material.

Nevertheless, if we speak now EUR 196.4 million in absolute terms, this is the highest result we ever achieved in the company's history.

And also speaking about the different quarters, please, I would like to draw your attention to the development of the GP in the different quarters, starting with Q1.

We were with a very low 15.7%, increased already to 17% in Q3, but now a further slight increase to 17.3% in Q3. So it's trending in the right direction. And how that works out now with the adjusted EBIT, you can see on the next page.

So having said with all the challenges such as steel prices, COVID, inflation, we increased our adjusted EBIT margin slightly from last year's 7.7% to now 7.8% and in absolute terms from EUR 71 million last year to now EUR 92 million.

Also here, same like GP, please take a look on the different quarters and the development. A very weak 6.4% in Q1 in terms of adjusted EBIT, already ramped up to 8.0% in Q2, and now a very solid 9.1% in this quarter and the last quarter 3.

And this equals specifically in Q3, the 9.1, EUR 36.7 million in absolute terms, which is also here the highest result we ever had in the quarter in the company's history. And this was driven by all the global teams in all regions.

And how the different regions performed, we can see on the next couple of pages, starting here with the biggest region in terms of sales, EMEA.

You can see that EMEA increased sales by 14.5% or organically by 11.7%, now reaching nearly EUR 624 million in sales. And if you also here take a look on the different quarters, we can see that all 3 quarters were quite strong, but specifically second quarter, but also now Q3 with the shutdowns in August in the production facilities here in Europe came in quite strong and much better than the year before.

Speaking of adjusted EBIT of EMEA on the next page, you can see, and this is where we are not so happy so far, a decrease year-to-date from last year's 9.8% to now a 6.3%. But also here, the teams were heavily working on getting the inflationary items, increases back from the market but also took a look on all the cost savings.

So we came in, in the first quarter, and you can see that the lower section of the page, with a very low 4.9% in Q1. Already came in with a 6.2% in Q2, now reaching 7.9% So almost 8% in the last quarter, which was 3%. So the trend is clearly going up in the right direction, and this is good so.

On the next page, we're now coming to a really true turnaround story. Our Americas region, and as you might remember, in 2017 to 2019, we did a plant consolidation, which really went south. We struggled a lot, but you know that. And I have to say, hard work really pays off.

And today, we can report a strong sales increase by 46% to now EUR 439 million year-over-year. And even taking FX out, we came in with a strong 30% sales increase, mainly driven by the trailer OE sales, but also truck and the aftermarket business. It was quite good in this year in all the quarters.

If you take a look on the different quarters, you can see this is really a good increase quarter-over-quarter. So EUR 127 million, the first one, EUR 151 million the second one, now reaching EUR 161 million. And it's going up so far even further.

Just reminding you that beginning of the year, we started a dedicated fifth wheel assembly line for the aftermarket, located in our subsidiary in Mexico. So that helped to increase our aftermarket sales. And also in August, we ramped up our axle and suspension production with great success.

And this is why we see a strong quarter-over-quarter growth. And what that now means for our margins, you can see on the next page, and this is what I'm really happy about, is the year-over-year increase from last year's first 9 months, 5.5% to now 9.4% in 2022. The 41 million in absolute numbers is the best margin result ever we had in that region, and this is a good work, I would say.

Even better is the development in the different quarters. So coming in the first quarter from 7.8% to 9.9% in the second to now a double-digit adjusted EBIT number, and this is the proof that we can do it in that region.

Higher sales, cost savings, but also we did our homework in the different plants and production sites across the Americas. And I have to say that I'm personally very happy with those figures, and the whole Americas team proved that a double-digit EBIT number can be achieved. This was a great teamwork.

Another good thing to report is on the next page, that's the APAC region. Well, this is the smallest region in terms of sales. But nevertheless, we struggled also in the recent years. And here, you can see that our APAC region also developed nicely and increased sales by 41% to now EUR 112 million year-to-date. Organically, sales increased by also a strong 33%.

Same development like in the Americas, quarter-over-quarter increased by increases. You can see, in Q3, we now reached more than 40 million in sales. This was mainly driven by India, Australia, but also our Southeast Asian business came in quite good.

Speaking of EBIT, you can see that we, from last year's 2%, were able to increase to also a double-digit EBIT number to 10.2% now or in absolute terms, EUR 11.5 million, also a great success, happy with that. And also the distribution and the development quarter-over-quarter after we struggled the last recent years, but also '21, a solid 10.1% in Q1. Double-digit also in Q2 and in Q3.

So good efforts by the teams. It paid off. And as you can see, this was also very good and stable development in the APAC region.

Now here, I would like to pause a bit and hand over to Wilfried for more insights into the financials.

[Wilfried Trepels, executive]

Yes, good morning, ladies and gentlemen. Coming on the next slide to the financials, and we start with group reconciliation EBIT to adjusted EBIT. What we can see here is that we have, in total, additional depreciation from purchase price allocation as well as restructuring and transaction costs and impairment.

If you take all these numbers together, we end up here in Q3 2022 with EUR 9.7 million. The EUR 2.4 million purchase price allocation is well known. It's more or less the same number as it was also in the last quarters and the last years.

Then we have EUR 4.8 million, a big chunk going to the Haldex acquisition or which is related to the Haldex acquisition. And then we have checked in China. We have checked all assets and the valuation of all assets. So we went through line item by line item.

And we have decided to write off EUR 2 million of the Chinese assets. That was EUR 1.2 million with regard to leasehold improvements. So within the building, what we have spent there, in this rent building.

And we have another EUR 0.8 million written off of the capitalized cost for the SAP introduction in China and then additional EUR 0.5 million other costs. So in total EUR 9.7 million.

Coming now to the next slide, which shows the group profit and loss statement. Alex has already elaborated about the top line as well as the gross profit and the EBIT development. I would like to make two remarks here.

One remark is that we have quite often the question on the table regarding our energy prices. I said in the past that we are not that energy intensive. And I hope I said that the government will come up with the right steps to make sure that the companies in the future get this development of energy costs under control. So the government has delivered so far.

What does it mean for SAF-Holland here? In 2022, we are expecting energy costs of around about 1.3% of total sales. And in 2023, it will be lower due to the measures of the government. It will be then approximately 1.0% of total sales in 2023.

Secondly, I would like to draw your attention because we have not yet heard so much about the SG&A development. You see the numbers here on the left-hand side in the two columns, where we compare the first 9 months 2022 and 2021.

If you take the EUR 122 million in the first 9 months of 2022, and we have there, round about, [ EUR 15 million ] one-off costs, especially for the integration of Haldex, then we would end up with a percentage of 9.3% total SG&A of sales.

If we do the same then with the numbers of 2021 and we take the round about EUR 104 million and we deduct here also the one-off costs regarding restructuring, which was round about EUR 7 million, we would end up with EUR 97 million, which is then 10.5% of total sales.

So overall, we have managed our SG&A quite well, and we are minus 1.2% points of sales compared if we are going to compare the first 9 months.

If we now turn to the next slide, we see the equity development. First of all, when we look to the numbers, the equity has significantly improved since December 2021 by, in total, EUR 97.4 million. Where is this coming from?

First of all, earnings increased the equity by EUR 47.7 million. Then FX effects helped. We have a very strong dollar development. Also here, translation helped with EUR 65.6 million.

And we had the negative, was a dampening effect of minus EUR 15.9 million for the dividend. So this together gives you the EUR 97.4 million.

So what about the equity ratio? The equity ratio went down if we compare the numbers of June with the numbers of September from 37.3% down to 32.2%. Biggest reason or the main reasons, very simply speaking, is due to the Haldex transaction. Without the Haldex transaction, the equity ratio would have been around 40%.

Also here, perhaps a word to an expected capital increase, we have had agreed with the banks in the course of the financing of Haldex acquisition to increase our equity by x percent, or let's say it implied most likely 10%.

With our strong self-financing, which we are showing also quite good here in this quarter, we will achieve a leverage of below 3 at the end of this year on a pro forma basis when we put both numbers SAF-Holland and Haldex together. And we have also further power, I will come to this later, with respect to the self financing.

And therefore, also in the following months, we are expecting great internal support. So there is no equity increase to be expected because it's not necessary, and it will not happen.

Coming now to the net working capital, and as I said already before, a little bit more here regarding the self-financing of the company. So first of all, if we look to the numbers, net working capital decreased only slightly in Q3. But on the other hand side, we have sustained strong sales growth.

So the inventory level still is determined by too high safety stocks. We are still working on that to bring that down also to change the brain of our people.

We have had big problems in the last 18 to 24 months with the situation in the supply chain. And therefore, inventory was necessary. But now these days are over, and we have now to work strong on reducing the inventory levels.

Sequentially, we have done it better. So we came down from almost high 17.4% at the end of June and now down to 15.9%, which is a good development with 150 basis points less.

Cash-is-King program is really something what everybody in our company is going for, and focus is clearly to reduce the days inventory outstanding. I said that from June to December, we are aiming to reduce our net working capital by at least EUR 50 million. And further EUR 30 million are to come then in the next month in 2023.

A word to the Haldex numbers, we do not have still the full power on Haldex, but we have some numbers now available. And we clearly see here that also Haldex is not really good managing their net working capital.

And at least we see potential of additional 25 million because we believe that in the first step, we can bring the net working capital down. It was around 25% end of June, and 5% points less is our first target. More to come.

Coming now to the next slide, where you see the development of the components of the networking relevant numbers.

Inventories [ works ] to the inventories because it shows no further progress. But when we look to the numbers month to month, that we have reduced from August coming the inventories by around EUR 16 million. So that is the first step, which is going into the right direction.

And you see also that the days of inventories outstanding are going down from 72 to 68. Not a big step, but there is more to come. And we are focusing on the inventory development on a daily basis, you can say, and we are controlling that quite intensive.

Turning now to the next slide where we see the cash flows and the development of the cash flows. So first of all, when we look on into the middle of this slide, you see the quarterly development. The strong quarterly development, minus EUR 5.2 million, then EUR 24 million now. We are talking about 50 -- almost EUR 55 million which we have generated in the third quarter.

If we look on the left-hand side, we see the accumulated numbers. EUR 21.3 million in the first 9 months of 2021. And now in the first 9 months of 2022, EUR 73.5 million.

So what is the main difference here? We have increased it by EUR 50 million, around EUR 50 million. EUR 30 million is coming from net working capital management, and EUR 20 million are coming from additional earnings, respectively, depreciation.

If we now look to the development from net cash flow from operating activities down to the net free cash flow from operating activities, which is shown here on the base of this slide, you see that accumulated numbers are going down from EUR 73.5 million to EUR 57.5 million as well as quarterly development does.

And it's always the CapEx number, which you find on the right-hand side. In the first 9 months, it was EUR 16 million and a little bit over proportionally EUR 6 million in the third quarter.

So coming now to the last slide for the SAF-Holland numbers, that is the net debt to EBITDA development here. And due to the fact that we have the Haldex acquisition on board of our balance sheet, but the profit and loss statement is still without the EBITDA numbers, so we have here for better comparability, we have here adjusted the net debt number for the second quarter slightly.

And we have done that also for the fourth quarter -- sorry, for the third quarter. And that is to show the SAF-Holland operational performance. So without the Haldex acquisition, we would have been at 1.1. That shows clearly the strong self-financing of the company.

And the second message here is that also for the future, we are working to reduce the net debt significantly. And our target is clearly to achieve a number of 2.0 or below in the last quarter of 2024.

So that's it about the SAF-Holland numbers. I'm coming now in the next chapter to some Haldex financials, not a full-blown picture but some numbers. And first of all, I would like to give you a status about the acquisition.

So the development of Haldex top line as well as profit is quite good. I come to this in a minute. We see strong sales increase year-on-year and quarter-on-quarter. And we see that is very, very important, the sequential improvement of the EBIT margin.

The SAF-Holland offer was made, and we got 96.14% of the total numbers of the outstanding shares. The company is in the meanwhile delisted. That happened on the 19th of September 2022, and we are now working on the squeeze out to achieve 100% of the Haldex shares.

A word to the Polish merger control clearance because this is important to understand why we are not yet showing consolidated numbers. The merger control clearance from the Polish competition authority is currently still outstanding. The Polish authority has not expressed concerns that the takeover would significantly restrict the competition in Poland.

It has stated though that the case is complex as the relevant markets are interrelated and the parties to the transaction have different roles in these markets. And Polish authority intends to better understand these relationships prior to their clearance decision.

As no competition issues have been identified so far neither by the German nor by the U.S. authorities, we believe and are very confident that the unconditional clearance we're granted and -- will be granted in the next few weeks.

And this, ladies and gentlemen, is the moment when we get this clearance that we have to consolidate Haldex into SAF-Holland's numbers. So right this day where we get the approval from the Polish authorities.

Coming now to some numbers of Haldex, first of all, the development of sales and the adjusted EBIT. And as I said already at the beginning, we see here nice growth quarter-by-quarter, plus 14% in the first quarter, plus 22% in the second quarter, plus 21% in the third quarter. And of course, this is not only volume, that is also driven by price increases and FX effects.

And what we can note, we see that later on the next couple of slides, that the America region has overproportionately supported the sales growth as well as the aftermarket business.

Looking now to the earnings, and let's take here the adjusted EBIT as well as we do on the SAF-Holland side. And also here, a very nice further sequential improvement is shown, starting in Q4 2021. There, the EBIT margin was 5.0%, then in the first quarter, this year, 6.3%, relating to 8.2% and now 9.9% in the third quarter, a very promising development.

On the next slide, we see the sales development first by region and then by business units. The first one, it's more or less the same development, as you see on the SAF-Holland side. The Americas share is growing from 51.5% to 59.3%.

The second message, which is a good message because the aftermarket is the resilient backbone of our business, the aftermarket was 51.8% in the third quarter in 2021 and is now going to amazing 53% in the third quarter of '22. So very remarkable, and that is good for the development of the combined company.

Last not least, we see on the next slide the numbers as they have shown the numbers to the financial community also in the past. This is a little bit different than what we see on the SAF-Holland side.

So the sales accumulated, on the right-hand side, increased from EUR 337,200 to EUR 401,200, which is 19%, which is okay. The gross margin and debt is nice to see when we look to the Q3 numbers and compare them with the last year. So in the last 3 months, we have achieved on the Haldex side gross profit margin of 28.8% compared to 26.2% which is more than 2.5 percent points. Very good development.

And the last words to the tax development here, where we look to the numbers that says not so much. But when we calculate the tax in percent of sales, we see here a quite stable development, which is between 27% and 28%.

So that's it about the Haldex numbers. I would say, a solid third quarter. And I would now like to hand over to Alex for the outlook of SAF-Holland.

[Alexander Geis, executive]

Yes, thank you, Wilfried. And everybody, how do we see the development of trailer and truck production for the full year of 2022?

Starting on the left side, upper left side with EMEA. You can see we expect the overall trailer market to come in with a slightly decrease of 5% coming from an all-time high in 2021. Truck, a slight increase by 3%. North America, very bullish in both trailer, plus 25%, but also trucks with a 17% increase.

And here also, I can report, I travel a lot in the states, leading truck OE customers but also trailer OE customers, and they are all fully picked far into half year of 2023, and the orders are coming in, and we are also fully booked.

And as I explained before, we ramped up some production plans, specifically the axle, but also suspension plans for further capacity increase, which is happening so far.

Brazil, trailer market, minus 10%. Where we are strong is the truck market. You can see it's even compared to 2021, but coming from an all-time high also there in Brazil. So we are quite happy with the development of our company, KLL, which is specialized on truck and bus suspensions down in Brazil.

China, well, minus nearly 50% in both trailer and truck. We have to say, that's not so much a big burden for us since our China business is still small compared to the overall group sales. So that is not a big burden. And India, a bullish 91% in trailer, but also 53% in trucks.

Here's a friendly reminder that we bought a company called York in 2018. We gave them more freedom. We are ramping up further capacity. And due to the massive increases in developments and investments in the ring roads but also in the other infrastructure, we are really good underway with nearly 55% to 60% market share in trailer and suspend -- trailer axles and suspensions. So I'm very happy about that.

So having said that, what does that mean for us as a group? And now on this page, I would like to summarize and finalize with our outlook for 2022. And I already mentioned before, that the Management Board now forecast group sales for the full year of 2022 at around the upper end of the forecast range of between EUR 1.4 billion to EUR 1.5 billion.

Unchanged is the company's -- or the company projects and adjusted EBIT margin of between 7% to 8% points and a CapEx ratio of between 2% to 2.5% of sales, more likely around 2%, a little bit more than 2%.

Having said that, I would like to finalize with thanking everybody for listening. And I think we are now open for questions you might have. Thank you.

[Operator]

The first question comes from Nicolai Kempf from Deutsche Bank.

[Nicolai Kempf, analyst]

It's Nicolai Kempf from Deutsche Bank. We appreciate the momentum, it looks pretty good also the color on Haldex. My first question would be on labor costs. As you know, labor units are pushing for about 7% to 8% higher wages. What kind of headwind do you expect for this next year?

[Alexander Geis, executive]

Well, Nicolai, this is Alex speaking. Of course, we are thinking that there might be something coming. You know that the parties are still in discussion between a one-time payment of EUR 3,000, plus a moderate increase. But we will see how that comes in.

We are somehow calculating with ballpark of a little bit more than 5% for the next year. But we are also and the teams on all the sites, not only in Germany, where this increase would be happening, all the teams worldwide are working on efficiency gains.

And we invested heavily also in further automization in the company to be able to drive more products through our production lines with less labor, of course.

And nevertheless, I also have to say that, and as a reminder, in 2016, we ramped up our Turkish facility for axles, for train axles specifically for Europe. We further ramped up the production there, capacity there in the first half year, but also in the last quarter with a further increase of about 40% to 50% in quantity. So that also helps to navigate through those increases to come.

So we are supplying, and this is contractually fixed with all our customers or most of our customers that we can decide whether we're going to ship from the German production facilities or the Turkish production facilities.

[Wilfried Trepels, executive]

And if I may add here, we have decided in the U.S. to change step-by-step. And the first good step is the move here to Mexico. We have decided to establish here a new facility for standard fifth wheel in Mexico.

And when we compare here the numbers, out of my head, the labor costs in North America, around USD 26. And when we look to Mexico, we are looking more at the number which is still high single digit.

So what we do, and that is clearly the message, yes, we see increases on the one hand side, but we are also trying to mitigate this with other measures. I hope that answers your question.

[Nicolai Kempf, analyst]

And just my final one. Last time, you've often managed how far you're kind of booked out over the next quarters. Can we get some color here of how far you're booked out for trucks and trailers in Europe maybe?

[Alexander Geis, executive]

Well, in Europe, when we speak Europe, we are -- so this year, we are fully booked. We are also fully booked into Q1 of next year. And it depends a little bit if we speak German production or the Turkish production. So Turkish production is already booked into Q2 of next year.

And as I said, the first couple of weeks in '23 are fully booked also here in the German plant. Orders are coming in. We will see at what pace this will continue.

On the truck side, it's a little bit more optimistic. I have to say, orders are flying in because we still have a lot of European truck manufacturers.

They are not producing at full steam because they are still waiting for some components, mainly also semiconductors to come in, which we now can confirm from the Haldex side because we can sell many more trailer EBS if we would have more semiconductors.

So there is still a shortage going on, but truck is a little bit more booked out than the trailer production side.

[Nicolai Kempf, analyst]

Thank you, and congrats on the good results.

[Operator]

The next question comes from Jorge Gonzalez Sadornil.

[Jorge González Sadornil, analyst]

My first question is just to get a clarification about the working capital levels for the end of the year. I couldn't hear it properly. So Wilfried, do you mind to repeat me what are the levels for the end of the year? I'm not sure if you were saying that EUR 50 million below third quarter but -- or EUR 30 million. I didn't catch that.

And then it will be very interesting, Alexander, if you give us some color on your view about the trailer market next year. More or less, the market sources are quite aligned that we're going to see a slight growth in truck or a flattish development.

But I see a lot of differences between different sources for trailer. And it will be interesting to have your opinion on this. I know that it's always difficult to predict these kind of things, but it will be quite interesting.

And finally, is it possible that you give us your view on the last quarter for Haldex? Can you give us some guidance for Haldex's full-year results and maybe the trends for Haldex in 2023?

[Wilfried Trepels, executive]

So I take the first question regarding the net working capital. I said that from June on, so that means if you take the numbers end of the first half, then minus EUR 50 million until the end of the year 2022 and minus EUR 30 million then in 2023. Just SAF-Holland, not Haldex.

For Haldex, I said that Haldex was at a level of 25% net working capital end of June in percent of sales. And I said that our first target is to reduce that in the course of 2023 by 5% points, which is around about EUR 25 million.

[Alexander Geis, executive]

Is that a case in terms of net working capital, Jorge? Then I would take over, this is Alex again. I'll take over the trailer market for 2023 and also try to answer your questions in terms of Haldex.

Let me start with the trailer market and not only focusing on EMEA because our trailer vessels, the 60%, is not only Europe. So basically we are coming from in the year of 2021. If we talk numbers of produced and sold axles, that was the highest number we ever did. But also in this year, we are nearly in terms of produced and sold axles on the same level than last year, just a little bit less, okay?

And if we talk now 2023, I think that the trailer market will not be as strong as it was in '21 and '22. It might be a little bit weaker. But this is natural since coming from an all-time high.

Nevertheless, we see a further increase in the spend of freight. So the freight volume is still going up since more people -- even more people are ordering at [ Amazon ] now on the other online dealers. So this will help us to get more orders in.

This is for Europe, or let's say, continental [ Europe ] when we speak Turkey, that's a different thing because the Turkish market is very bullish, but also the Middle East market is quite strong, given the higher oil price. So there is a lot of investments going on.

When we speak in North America, that's a totally different picture. I explain now twice that we ramped up our axle and suspension production capacity even further. We have nearly 70% market share now on mechanical suspension, and there was a huge shift back from air suspension to mechanical and with the 70% we are participating.

And another big trend is that the container chassis, which were built for North America in the recent years from dominant Chinese manufacturers due to antidumping for import in the United States. There was a huge shift to the U.S. trailer manufacturers or even Mexican trailer manufacturers, and we are now also participating. So this helps us to further increase our trailer sales in 2023, also for North America.

And as I said, I personally spoke with at least -- with the 10 biggest trailer manufacturers in North America, so U.S. and also Mexico. Over the last couple of weeks, they are far booked into second half year of next year.

After this, we'll say, India, I'm very happy with this development because the internal things in India, somebody said it's China like 20 years before. They are ramping up everything and they're spending a lot of money into infrastructure. And with a high market share of 55% to 60%, we are participating.

And last time, I already mentioned that there is a new rule in place that if you have a suspension in the trailer, you can overload by 10%. We're the only ones offering those products, heavy duty air suspension, so quite good.

And we are in the final stage of finishing our production site, which is just across the street or next door. And the plan is to move in, in December, early Q1 of next year. And then we have another 50%, 60% increase capacity. And we are sold out here.

China, I said before, China sales is still low. We changed management team in the first half year. And we now got some promising big orders now from the biggest trailer manufacturer there for air suspension, air disc brake axles. So a couple of 10,000 axles for next year, that's a good start. And we think that the Chinese market is coming back.

Speaking a little bit about Haldex. Well, to be honest, I think we don't want to speak about Q4 numbers of Haldex. We had a lot of face-to-face meetings already with the leadership team. We got Roland Berger as a consulting company for the PMI process. We start already in September, since we are the majority shareholder, of course, with nearly 97% of shares.

And the teams met in all regions, in the Americas. We had two face-to-face meetings here in Europe. We are quite far down the road. We are going to announce a new possible structure or not possibly the new structure of management end of next week to the leadership teams of both companies, and we want to be ready January 1 to start as a new combined company into the future.

And also for an outlook of 2023, let me state that there are a lot of opportunities, selling opportunities, but also a lot of opportunities when it comes to working together, streamlining our sales, our structures in all the regions. So I'm really happy with the development.

And you saw from Wilfried already Q1, Q2, Q3. I have to say, the teams did a good work so far. But now combine all our forces on a global perspective to drive in the region, I think, this is going to be a good year as a new co in '23. And this is basically why we did this, okay, to create a much bigger and stronger company.

[Wilfried Trepels, executive]

I can add some -- let's say, some flavor. We got [ bring ] the IAA, which happened in September, also some impressions from the [ Gomberg ] show where we -- not show, sorry, conference, where we have been in other conferences, where we got also impression from other markets participants.

So the flavor from the IIA was more or less that there is expected change in the order situation for 2023, especially when it comes to the standard trailers. And you need to know that the markets in Europe are split 50/50, 50% standard trailers, 50% specialties.

And in the trailer standard, they said it could be around 20% to 25% minus next year. That was the flavor we got there. And in the specialty areas, a very good development for next year day. We're looking quite -- they were quite happy. As Alex said, some of them were already booked until mid of next year.

Aftermarket was seen to have been quite stable, probably a little bit better than in 2022. And last but not least, I heard on the conference the speech of the CEO of [indiscernible], he was quite positive regarding the truck development. And as Alex said, they had issues or they still have issues with the semiconductor situation. And therefore, there is a certain pent-up demand to be expected next year.

So from this perspective, if we look to the overall group of SAF-Holland, it's looking quite promising for next year.

[Jorge González Sadornil, analyst]

Only a couple of follow-ups on this. So in the APAC region, with the expected growth in India with these new capacities, are you expecting to increase volumes next year? Can you give us some kind of color for that for the India volumes -- for APAC volumes next year?

And regarding trailer, is it the same situation in Americas and EMEA? Are you expecting maybe Americas to be more resilient? Or is it a similar development what you're expecting in Americas compared to Europe?

[Alexander Geis, executive]

Well, India, I can clearly say, this is the biggest facility we have in our APAC region. Very successful operating company we have there in Pune. I said that we are opening our new production end of this year, beginning of next year. And of course, the target is clearly to sell more.

We had some constraints. We could have sold more if we would have had the capacity already in this year. This is why we are ramping up. But the team is not only focused on the Indian subcontinent.

Also, higher share is for export. For instance, we exported a lot to the Southern Hemisphere, specifically in Africa, but now also the team came up with some dedicated suspension components, big components for North America since we cannot ship enough and we cannot build enough. They are also helping and ramp up in the last couple of months to help out our Mexican customers, for instance.

This is underway. And of course, we would like to increase the volumes, and we will be increasing the volumes there. I'm pretty sure, very confident.

And I'm very confident also for the trailer market in North America since we won a lot of market share in the traditional business, which is the mechanical suspension plus the standard axles, but also the air disc brake is coming back on some tenders and increased the air disc brake-fitted axles in North America.

And here, it's a good logistic savings now because the Haldex facility, and the biggest facility we have in North America is Monterrey in Mexico, and there, they assemble nowadays also the air disc break, standard air disc brake, they can do that for us.

That means that we can reduce the net working capital for a combined crew, but also the transit time for the air disc brake, which was before shipped from Sweden to the U.S. It's now from Monterrey being shipped to our facility in North America is, of course, much less in transit time.

So coming from 6 weeks now to maybe 5, 6 days, that helps to further gain momentum and also cut some costs on the weather costs. So I'm quite confident for the trailer development in the Americas.

[Stephan Haas]

So ladies and gentlemen, thank you for taking the time to join our conference call today. As always, if you have any follow-up questions, please feel free to give us a call. And thanks again. Have a nice day. Bye-bye.

[Alexander Geis, executive]

Thank you.

[Wilfried Trepels, executive]

Bye.