Hello, and welcome to the Haldex Q2 Report 2021. Throughout the call, all participants will be in listen-only mode, and afterwards, there will be a Q&A session. Today, I'm pleased to present CEO, Jean-Luc Desire, and CFO, Lottie Saks. Please go ahead with your meeting. Good morning. My name is Jean-Luc Desire, I'm the new CEO of Haldex. I've been in this position since the 14th of June. With me, I have Lottie Saks, who is the Chief Financial Officer of Haldex, I'm pretty sure you know her pretty well. What's today on the agenda? I'm on the slide number two. We will have four points of presentation. First, I will start with a couple of words about myself, where I'm coming from, what I want to focus upon in the days and weeks to come. Second point of the agenda, I will talk about the market dynamics how we're performing in this market condition. Lottie will take the lead and present some financial data about our Q2 performance. At the end, I will wrap up and give some perspective about where we're heading with the company, and we will open up the microphone for Q&A. Let us go now to slide number three. First, what I would like to say is I'm very much pleased and honored to join the Haldex Group. The Haldex Group has been around for a very long time and has a very strong DNA in terms of technical innovation, and it's quite impressive to join such a group. At the same time, what I want to do here right away is to give credit to the former management team to have achieved a pretty significant turnaround over the last quarters based on basically two pillars. Number one is a fixed cost adjustment of the company, and second, to be selective in terms of R&D and development. What I can already say is that those two pillars will be kept moving forward. Having said that, about myself, I've been in the automotive world for more than 20 years. I worked more than 10 years at Peugeot Citroën, the French OE. I worked also at WABCO for four years, and then at Tenneco for four years as well. I've had assignments in the U.S., in Iran, in China, in France, in Belgium, and now in Sweden, so a pretty global experience in the automotive world, both regionally and from a company's perspective. What am I going to do and what have I been doing since I joined the company? Basically, to do four things. The first one is to meet customers. Of course, to understand the customer needs and making sure that we can create the differentiation and the value proposition that our customers are looking for is number one on my agenda. Second, to focus on performance management. What do I mean by that? Is to make sure that the 2,000 team members of Haldex know what each and every one of them need to deliver. That they have clear targets, clear KPIs, that's performance management. That's really one area of focus for me. Beyond that is to make sure that people, beyond the objective they have, that they can be developed and they can perform even at a better level. This is people development, and that's an area of focus. Customers, performance management, people development, and on top of that, of course, who do we want to be in 2025? What are the product lines that we want to focus upon? What are the value proposition, the differentiation we want to bring to the market? This is strategy, and we're working on that, and I will be pleased and delighted to present that in the second half of 2021. Let's go now to slide number four and talk about our Q2 performance. First figure, 42% year-over-year increase in terms of sales from Q2 2020 - Q2 2021. 5% growth versus Q1 2021. What we see here is a continuous strong market recovery following the post-COVID crisis. This sales increase is split as such, so +48% in the America, +52% in Europe, and in Asia, it's a negative growth of -10%. Beyond this regional outlook, we can see this increase in terms of sales flowing through all the customer segments we have, so trailer, truck, and aftermarket, with an overproportion growth in the OE segment. Beyond those sales values, what are the key facts we would like to highlight for Q2? The first one is the important registration of the JV we have with the FAST Group in China. You know that FAST is a key player in China with Chinese OEs, and it's going to help us to leverage growth on the ADB from 2022. Q2 has been characterized with some constraints in terms of supply chain and with some uncertainty in terms of semiconductors. We've been dealing with that, and I'm confident that we have the right mitigation actions to see some drastic improvements from Q3. Last but not least, we have been awarded a significant program in terms of ADAS brakes from a world-leading OE. We're very pleased about this nomination. Let me go now to slide number five. Slide number five shows the bridge from Q2 2020- Q2 2021. Beyond the 42% organic growth I've already talked about, what you can see on the two graphs on the right side is the evolution product line by product line and region to region. On the product line, +39% on the truck side, +69% on the trailer. I will come back to that when we deep dive into region. +29% on the aftermarket. The regional numbers have already been mentioned. I would suggest to go directly to the slide number seven, where we have the summary of the first half of the year results. The trend is a little bit like the one of Q2, but with lower orders of magnitude in terms of figures. If we look on the top right graph, we see on the truck side +12%, trailer +32%, and aftermarket +13%. On the regional side, the trend quite similar to Q2, maybe one remarkable element related to Asia where we see a flat figure, which is a combination of a positive in Q1 and a negative in Q2. Let me go now directly to the slide number eight and the deep dive about America. The markets has shown a strong recovery, Q2 2020 - Q2 2021. +128% for the truck OE and +23% on the trailer OE. In this market, you can see our performance on the truck side, +125%, so exactly in line with the market. On the trailer side, +1 08%, so a significant gain of market share versus the market growth, which is perfectly in line with our strategy to be a system supplier for the trailer market. On top of this good mix in terms of truck, trailer, we can mention that we've been successful in the extension of two long-term agreements on the OE side with Daimler and PACCAR, so which is a good sign and moving forward. As you know, we want to keep a good balance between OE and aftermarket. When we are growing on the OE side, we want to make sure that at the same time, we're growing on the aftermarket to keep the mix between those two markets at the same level. We see a good trend in terms of volume until the end of 2021. Let me go now to the next slide, on the slide number nine, related to Europe. From a market side, a little bit like America, for the truck, +65%, in terms of market evolution, and for the trailer market, +16%. A little bit like in the Americas, on the truck we're more or less with +61% at the market evolution. On the trailer side, we are significantly above the market with 68% quarter-over-quarter growth. As well, the strategy to focus on trailer and being the system supplier on trailer is paying off. Beyond those values, two elements about Europe for Q2. The first one is related to the good progress we're making on the EBS Gen4. You know this product line is the brain, more or less, of the trailer, controlling the brakes. At the same time, we position this EBS Gen4 to be the center of communication to the outside world with the communication module being built up in this EBS. As a coincidence, I was at a customer two days ago, and the customer is very pleased about this open architecture approach we're having on the EBS Gen4. Really for us to suggest to our customers that we are the gateway for them to collect the data on the trailer and to send this to the cloud. Very pleased about this product that I will present at the SOLUTRANS gathering in November. In terms of product, that's number one. Number two, I've already talked about the win at a major OE in Europe during Q2. Let me now go into the APAC region on the slide number 10. Dynamic of the market, very different there. As you know, the COVID impacted Asia in Q1 2020. Yes, Q2 2020 - Q2 2021 shows, in terms of market, -11% for the truck side and +9% on the trailer. In this market, on the truck side, we're doing -29%, and trailer, more or less in line with the market. We are under pressure in APAC on the OE side, where we're facing more and more competition on our legacy products. To react to that, what we're doing is to have this JV with FAST, as we want to grow in this expanding market related to ADAS brake, and we're expecting sales starting from 2022. Of course, the other pillar of growth on the OE side for Asia, and particularly China, is the electrification trend. Electric buses, electric trucks will come into the market very soon, are going to ramp up. For those particular products, our electric braking system, so EMB, is the perfect product to equip those new electric devices. I'm pleased to inform that we have been homologated in China, so it's a significant milestone. We have been homologated in China to equip one customer with our product, so it's been recognized as a safe product. That's it for the regional overview, and now I will pass on the floor to Lottie and to talk about the financial figures. Let's go to the slide 12, please. Yes. As Jean-Luc mentioned, we in the quarter had a very strong sales development, but margins were negatively impacted by the constraints in supply chain. Strong market recovery resulted in an organic sales increase of 42%. Gross margin improved with 1.4 percentage points versus Q1 previous year, reaching 27.5%. Compared to previous quarter, however, gross margin decreased by 3.6 percentage points, explained by the impact from raw material surcharges and increased freight costs. In addition, sales mix and share of aftermarket was more favorable in Q1 than Q2, and volumes also slightly higher. Long-term savings program continued to be effective. Positive contribution from the programs were SEK 65 million. In the second quarter, business activities picked up and are now conducted at a more normal level. As a result of this, we start to see the prior communicated negative reverse effects of last year's short-term savings program. Increased activity level had an offsetting effect of SEK 28 million, including furloughs, I should say, leading to a net saving of SEK 27 million in the quarter. Adjusted operating margin reached 7.2%, which is an impressive improvement from previous year, -0.3%. Our results included negative currency effects of SEK 9 million. In the quarter, we also had a minor non-recurring item of SEK 3 million related to the strategic overview that Jean-Luc was referring to, that is currently ongoing and will be presented second half of the year. Our strong focus on protecting our cash flow continued, despite that we have challenges in our supply chain. We generated a positive operating cash flow in the period amounting to SEK 19 million, to be compared to SEK -96 million in previous year. The strong net income implied earnings per share of SEK 1.11 million, compared to SEK -2.95 million last year. Also important to mention is that after reporting period end, we secured our long-term financing, which is now prolonged to April 2023. Moving to slide 13. The quarterly EBIT bridge. If we look at that, we had an adjusted EBIT in Q2 of SEK 82 million, which was a strong improvement, again, against last year of SEK -3 million. The sales increase of 42% or SEK 366 million FX adjusted impacted gross profit and EBIT positively by approximately SEK 130 million. This is the main driver for the improved earnings. As OEM sales picked up from very low levels previous year, aftermarket share decreased to 49.8% compared to 55.5% in Q1 2020. Sales mix in general was slightly negative. Material price increases amounted to SEK 24 million, but were partly offset by savings activities of SEK 6 million. The price increases obviously were primarily driven by the raw material prices on iron and steel. In Q2, long-term savings programs amounted to SEK 55 million related to footprint optimization, reduced headcount, and long-term price levels on spend. Of total saving, SEK 34 million was related to operating costs and SEK 21 million related to gross profit, i.e., COGS. Increased activity levels compared to prior year implied reverse effect of part of previous year's short-term savings program and amounted to SEK 28 million. Other increases in cost largely relates to increased freight cost. This is a residual including currency and some other items. We do see that freight cost is a concern for us also going forward. We have defined a task force that will focus on this, both in term to reducing the premium freight, but more importantly, increase efficiency in our freight pattern in general. This is a really strong focus and we have tight follow-up on these measures. We can say that we do expect the level of cost to come down going forward, but we still see this as a risk that we cannot in full mitigate. Moving to slide 14. Looking at the same bridge for the first half year, we have a growth of 19% or SEK 380 million impacting EBIT positively by SEK 132 million. Again, we have the same pattern of reduced aftermarket share from 53% in 2020 to 50.2% in 2021. Material price increases for the first half year is SEK 35 million and is partly offset by savings initiatives of SEK 11 million. Cost reductions for the total first half year amounted to SEK 115 million. One-time cost for the first half year is net positive with SEK 24 million. If you recall, in Q1, we had the result of the sale of our building in Kansas City, U.S. We also do have costs related to the strategic overview of the company. Moving to slide 15. I think by now this summary of our long-term strategic savings programs is familiar. The total amount is SEK 300 million, and we have estimated non-recurring costs, of which we expect none to hit our P&L this year. We provided for that at year-end. We are now starting to execute on the cost-based adjustment two program launched in Q3. We do see additional headcount reductions during the quarter for this program. If we move to slide 16, we can see an overview here. The long-term savings programs continue to deliver. Specifically, the Footprint Optimization Program clearly shows the effect through higher gross margin%. Also worth mentioning is that part of the cost-based adjustment one and two also impact gross profit margin. In 2020, the total for the long-term structure savings programs was realized SEK 69 million. In Q2, the amount was SEK 55 million. Again, we also see the negative reverse effect of the short-term savings program. What we can say for the full year that we communicated last year that we expected that full program to have a negative reverse effect this year, given that COVID and the activity was still in Q2, more or less on the same level as last year, we have savings related to that also for Q1. As I said, during Q2, we can now see that if you look at the cost-based adjustment increase, and we had further reduction during the quarter. At the same time, the impact of footprint problems and cost-based adjustment one was diminishing in the quarter. That is, of course, according to plan. We do still expect the vast part of a savings program to be implemented in 2021. However, we execute implementation with consideration to the current strained supply chain situations impact on the company as a whole. In total, we estimate the savings from long-term savings programs to generate SEK 160 million gross and SEK 120 million something net of negative reverse effect of short-term savings programs in 2021. Continue to work with improving the efficiency of the company is a key focus, and we're also going to be that going forward. I just want to stress and reiterate that we are fully committed to deliver on the SEK 300 million savings program. Moving to slide 17. Looking at the quarter result in perspective, it's evident that our savings initiative proved to be efficient and that we can deliver a profitability level that is on a very good level put into historical perspective. This is despite the temporary challenging supply chain and raw material situation we experienced during the quarter. Moving to the financial position on slide 19. Inventory levels continued to increase during the second quarter and was higher than previous year. This was partly driven by the higher sales year-over-year, but in addition, as in 1st quarter, the increase was caused by lack of components and increased goods in transit. Inventory in relation to sales improved as number of days inventory amounted to 102 in Q2 compared to 124 in previous year. Working capital increased compared to Q1 and was slightly higher also compared to previous year. Cash conversion days improved to 88 days compared to Q1 2020 of 126 days. Again, stabilizing our supply chain and increase efficiency in inventory management is high on our management agenda for the periods to come. Moving to slide 20. Cash flow showed improvement compared to previous year as well as compared to Q1. Cash flow from operating activities in Q2 was positively impacted by improved earnings. We saw a working capital increase in Q2, but not to the same extent as in Q2 2020. Investment, including capitalization, amounted to SEK 58 million compared to SEK 76 million in the second quarter. Net debt excluding IFRS 16 reduced by SEK 206 million versus Q2 2020. Our focus on becoming financially self-sufficient and strengthen our financial position continue to show results. As already mentioned, new financing is in place and we have secured the financing until April 2023. By that, I hand over back to Jean-Luc. Thanks, Lottie, for those facts and figures related to finance. As explained by Lottie, what we need to do short term is to continue our journey on the cost reduction program with the SEK 300 million initiative that we're having. That's one aspect. The second aspect is for us to manage the shortened turbulence coming from the market in terms of supply chain, and we're doing that, and I expect to see improvement in Q3. Beyond those activities we need to do on a day-to-day, let me please give an update already on the key initiatives that we have from a strategy point of view. First, the positioning on the AD brakes and the reinforcement of our positioning on the truck and trailer side. I talked about major customer wins in Q2 and this FAST JV in 2022. The second is this electromechanical braking initiative, which is absolutely linked to the trend in the market towards electrification. As I mentioned before, we have this homologation receipt for one customer in APAC, and we'll also have this decision from a major OE in Europe to equip one of these demo trucks in the future with our technology, which shows that we are really at the forefront in terms of this product line. We want to build on that and more to come in the following quarters. That's on the OE side, but we want to maintain the same level of mix moving forward between OE and aftermarket. We are considering opportunities to expand our aftermarket business. We are reviewing different options by expanding our product portfolio and/or expanding our coverage in terms of margin. All of that will be consolidated and presented to the market in the second half of 2021. With this presentation, I would open up the floor now for questions that we may have. Thank you. If you do wish to ask a question, please press zero on our telephone keypad. If you do wish to withdraw your question, you can do so by pressing zero on your telephone keypad. There will be a brief pause while questions are being registered. Our first question comes from the line of Kenneth Toll from Carnegie. Please go ahead, your line is open. Yeah, thank you. First, if we go back to the last slide you presented there with the strategic updates. When do you think that the orders for the ADB product, when do you think that could lead to commercial shipments and revenues for your sake? This contract we have won will give sales in 2022. Okay. Great. In China, the electromechanical brakes that you have worked with one customer for a long time, when do you think that will translate into commercial shipments? Yes, that's a good question. Thanks for asking. As mentioned, we have the homologation, so now we could sell the products. We're reviewing the industrialization planning, and we expect the first shipments to happen at the beginning of 2022. Okay. Great. Also with this joint venture you have with FAST in China, how is the sales process looking there? You will start selling products next year, does that mean that you will start approaching OEM customers, and then you have to sell in, and then it takes a couple of years before you get your products into truck models and so on? Do you think you can start commercial shipments also already next year? That's a very good question. Thanks for asking. Yes, that's exactly that. We have built this JV with the FAST Group because the win-win is the FAST Group has the connectivity to the big OEs in China, and we have the technology which is proven to be efficient. That's the reason of the JV. What we're doing now is to exactly do what you're saying, is approaching the OEs in China and to understand the platforms for which we could equip. Yes, basically to start some sales at the end of 2020, March, the point of time in 2022. As soon as we have signed up a contract for this JV, we will let you know. This is what we're doing right now, talking to OEs. Yeah. Okay. Also, if I can go back to the ADB orders that you got from a European truck manufacturer. Are those orders for delivery in Europe or in other regions as well? It's linked to a product line, so it's an order for a product line of that OE, so it's not only for Europe. Okay, great. How large can that be, you think, to put some perspective? Let me put it like this. Is it a dual sourcing? No, it's not dual sourcing. No. Okay. It's not dual sourcing. We have the exclusivity on that product line for that OE. It's not dual sourcing this one. Okay. Sounds interesting. Some thoughts about steel costs and also your own pricing. You mention in the report now that you got hit by steel price increases, but your own price increases have not come to effect yet. In Q3, there will be better balance when your own price increases start to kick in. I imagine that the net effect from higher steel costs will be lower in Q3 than in Q2. Does that also go for Q4? Yes, exactly. This is just in line with what we have communicated before, that in Q2 we would be exposed the most because of the mechanism of the delay between supplier and customer contract index sources. We have communicated the prices. They are in effect from 1st of July. Definitely, this is something that is already sort of trading in Q3. We are mitigating to a large extent. We also, of course, continue to negotiate with our suppliers to push back some of the increases to them. We have good programs in place to mitigate this from Q3, and I think the impact will be even lower in Q4. As we said in the report as well, all in all, including the freight cost, we're not mitigating it in full according to what we know right now. We want to stress that this is a focus area, of course, for us, and also the uncertainty is still high, what's going on in the market. That's why we're a bit cautious on how to guide exactly what we believe at this point in time. Yeah. I'm a bit curious with the sort of disturbances in the sourcing chain of steel and for the OEMs also the semiconductors and so on, and freight and everything, has that influenced your product mix? That maybe you ship more to OEMs customers and less to after market, or is it purely the sort of the changes in the market that OEMs have grown faster than the off the market or, yeah, basically how do you? Yeah, it is exactly like you say. Of course, given how the OEM contracts are constructed with requirements on deliveries and also alternatives, we do need to prioritize those. Yeah. That to some extent is then on the expense of the off the market. Again, this of course also is something that we're working on trying to be serious as much as possible. Okay, great. Yeah. I think that's all from me. Thank you. Thank you. Thank you. Once again, if you do wish to ask a question, please press zero one on telephone keypad now. It seems like we have no more questions from the line. I will hand it back to our speakers. Okay. We actually have a question coming up. Our next question come from the line of Mats Liss from Kepler Cheuvreux. Please go ahead, your line is open. Yeah, I think I thought I made a zero one. Yeah, just coming back to the price increases. Have you sort of, is that all over for all segments, I guess, for aftermarket and trailer and truck producers similarly? Is it sort of any segment that you have? Yes. Thanks for this question, and indeed, it's a real point of focus for the company, this question about aligning the conditions between the suppliers and the customers. Yes, it covers all product lines, but with different mechanisms. On the OE side, we have mechanisms which are linked to indexes like LME or those types of international indexes. For the OE markets, we have that baked in the contracts, and we can follow that like that. For aftermarket, no, it's not. For aftermarket, it's more price increases, which are decided based on what we see and which are communicated to the market like that. It is not a formal link to an independent index like we have on board. Okay. Have you sort of experienced any sort of pre-buy impact that customers try to stock up before the price increases? Is it more like post? No, we have not seen this behavior from our customers in that market. No, we have not seen it. Great. Just about the electromechanical brake there in China, could you offer that in other markets, Europe and the U.S. as well? Absolutely. Yeah. Absolutely. I come from the passenger car industry. In the 2019s, there was exactly the same shift. You might remember that up to the 2019, the assistance of power steering was done with the hydraulic pump. Basically, that's what it does. It was done. Then it was moved to an electric assistance. Here, it's exactly the same. It's exactly the same type of shift of technology. It's going to happen, and it's going to happen first on the electric trucks and electric buses because that's where the value is the highest. All players that you can imagine throughout the world, which are working on electric buses and electric trucks, we're talking to them. China is a little bit more advanced, but without disclosing names, we are in pretty advanced contacts in Europe. We talked about this demo truck, as well in the U.S. with startups as well, new players in the electric trucks world. We're in contact with all of them right now because it's a new technology. Again, it's not if, it's when. That's the question. Do you think that you are a head above or regarding competition in this area of. The best answer to that is the customer answer. When you have one of the biggest OEs in the world selecting our product to showcase this technology on its future electric demo truck, it means something. I would expect, yes, we're well-positioned on this technology. Okay, great. Well, thanks a lot. Thanks. Thanks for your questions. Thank you. That's all from the audio questions. I will hand it back to our speakers. Thanks very much for your time. Thanks to you, the moderator, to have organized this call. We're still at disposal to answer any question moving forward, and we wish you a very good day. Goodbye. Thank you. Bye.