Dr. Reiner Beutel, CEO of SAF-HOLLAND Group GmbH: “The Aftermarket Business Unit is an important growth driver that has made a significant contribution to the stabilization of the entire company. The strategic profile will now be further refined and focused on international markets. We continue to anticipate dynamic development in the spare parts business.”

The Aftermarket Business Unit of SAF-HOLLAND supplies products for the aftermarket parts business of vehicle manufacturers, dealer organizations and independent workshops. Since trucks and trailers are only profitable when they are on the road, SAF-HOLLAND strives to offer its customers prompt and professional access to replacement parts and service. To do this, the Group is rapidly expanding its number of parts and service centers, which are now established in Europe, America, Asia, Australia and Africa. Most recently, SAF-HOLLAND concluded cooperative agreements with manufacturers Scania and Volvo in Europe. The continued success of the  parts business has had a stabilizing effect on the Group. In addition, the unit has also been less affected by the weak economic situation than the trailer and truck OEM business. Since as early as March 2009, demand in the business unit has been increasing, both in Europe and North America. In the past, development in this business unit has been an important early indicator of future market development in the Truck and Trailer business.

Company Profile:
With about EUR 800 million in sales and over 2,000 employees, SAF-HOLLAND S.A. is one of the worldwide leading manufacturers and suppliers of premium product systems and components primarily for trailers as well as trucks, buses and recreational vehicles. The product range encompasses axle and suspension systems, fifth wheels, couplers, kingpins and landing legs. SAF-HOLLAND customers include the majority of large truck and trailer producers all over the world. The products are sold to Original Equipment Manufacturers (OEMs) and Original Equipment Suppliers (OESs) by means of a global service and distribution network and via aftermarket channels directly to the end users and service garages. SAF-HOLLAND has therefore established itself as one of the few manufacturers in its sector that is internationally positioned with an extensive product range and a broad service network. SAF-HOLLAND S.A. has been listed in the Prime Standard of the Frankfurt Stock Exchange since July 2007.

“We are very pleased with this new, strategically important cooperation. The Scania service centers are the ideal addition to our global service network. We are making good progress in the expansion of our global service centers and can offer our customers a prompt, reliable and comprehensive service”, said Dr. Reiner Beutel, CEO of SAF-HOLLAND Group.

The Aftermarket business unit supplies replacement parts to vehicle manufacturers, dealer organizations and independent workshops and fleet operators. SAF-HOLLAND’s service network currently includes service centers in Europe, America, Asia, Africa and Australia.

After technical and commercial training at Renault and after successfully completing his studies in communications science (MBA), Svend Koch began his career at Daimler-Benz AG. This subsequently led him to various managerial positions in the areas of sales and marketing at Mercedes-Benz before he joined SAF-HOLLAND in 2001 as Service Manager. In this role, he was responsible for global Aftermarket service, the service network, complaints management and the training division for the business units Trailer Systems and Powered Vehicle Systems.

“I’m really looking forward to the task of further extending the global orientation of Verkehrstechnik GmbH and to utilizing the opportunities arising from cooperation with our parent company. Our strong market position in Europe, the agreed service and replacement part sales alliances with truck manufacturers and our Group’s international sales networks are the primary factors that provide a solid basis for further growth potential. This on top of the fact that SAF-HOLLAND is already the market leader in North America for fifth wheels", says Svend Koch on his new position.

Svend Koch is married and the father of two children.

Bessenbach, August 25, 2009 – SAF-HOLLAND S.A. achieved an adjusted operating result nearly at break-even point in the first half of 2009 with June the first month of the year to show a profit. The Group is beginning to benefit from the cost reduction and restructuring activities which the Company has initiated due to weak business conditions. Management and employees remain focused on the day to day business of the Company, a situation unaffected by the on-going negotiations with the banks on the Company’s financing arrangements. The trustee model proposed by the banks primarily affects the interests of owners and financing banks.

Dr. Reiner Beutel, CEO of SAF-HOLLAND Group GmbH: “SAF-HOLLAND is benefitting from our decisive cost reduction initiatives. Both in June and July, a positive monthly operating result was achieved. In addition, liquidity has continuously improved. It is not only on the cost side where positive signs are visible: the truck market in the USA also seems to be stabilizing  and our global Aftermarket business has been showing an upswing since March. We are confident that this positive development in North America and in the Aftermarket will continue. Our efforts will pay off even more, if demand sustainably increases. Finalizing the negotiations with the banks, whether on the basis of the currently proposed “trustee model”, would also sustainably support and financially secure the operating business.” 

Cost savings stop decline in earnings
Demand for trucks, trailers, components and replacement parts continues to suffer from high inventories of unsold vehicles and under-utilized fleets and equipment.  As a result, Group sales fell in the first half of the year by more than 50 % to EUR 213.3 million (previous year: EUR 458.0 million). The decline primarily affected business in Europe with a drop of 67.9 % to EUR 104.9 million (previous year: EUR 326.8 million) in the first half-year. In North America, sales went down by only 16.3% to EUR 98.3 million (previous year: EUR 117.5 million). While extraordinary expenses, which were primarily due to refinancing negotiations, burdened earnings, cost savings and efficiency increases had a positive effect. Adjusted EBIT amounted to a total of EUR  -1.3 million (previous year: EUR 37.5 million). The gross margin in the first half of the year was almost at the same level as in the previous year at 16.2 % (previous year: 17.7 %). Adjusted profit for the period amounted to EUR  -9.9 million (previous year: EUR 21.1 million) in the first half of the year, and was influenced by financing costs, particularly higher interest rates and a higher utilization of bank credits. Adjusted earnings per share amounted to EUR -0.48 (previous year: 1.12)

The second quarter of 2009 was characterized by conflicting developments: a weak May was followed in June by the second highest monthly sales of 2009 to date. In the three months from April to June, the Group achieved sales of EUR 101.2 million (previous year: EUR 238.7 million). Adjusted EBIT was EUR -0.8 million (previous year: EUR 19.4 million).

Trailer Systems with higher demand since June
A decline in sales of up to 90%, related mainly to plant closures by our customers, was experienced by the Trailer Systems Business Unit. Since June, however, sales have increased but at a low rate. We have started our own axle production in the USA, replacing purchased axles from external manufacturers. The Group also received its first orders for axle systems with disc brakes which offer reduced braking distances over drum brakes. We expect our business to benefit from new braking regulations which take effect in 2011 and require that braking distances for new trucks be reduced by 30%. Cumulative sales declined in the first half-year to EUR 89.5 million (previous year: EUR 327.8 million), the gross margin decreased to -3.8% (previous year: 13.0%) due to the high underutilization. The Business Unit’s share of total sales fell to 42.0% (previous year: 71.6%).

Powered Vehicle Systems with stable demand in the USA
The Powered Vehicle Systems Business Unit significantly increased sales and earnings compared to the previous year. Additional business from the former Georg Fischer Verkehrstechnik GmbH acquired in 2008 as well as a major order in the USA allowed for an increase in sales of 32.2% to EUR 48.9 million (previous year: EUR 37.0 million) in the first half of the year. The gross margin improved to 21.1% (previous year: 14.9%). The share in Group sales rose to 22.9% (previous year: 8.1%). According to estimates from leading market research institutes, the truck market in the USA has stabilized. In view of new emission regulations beginning in 2010, an upturn of demand can be expected at the end of the year.

Aftermarket with upswing since March
In the first half of 2009, the Aftermarket Business Unit again assisted in stabilizing sales of the Group. Since March, demand has revived in Europe and North America. The acquisition of the former Georg Fischer Verkehrstechnik showed positive effects due to the broader product portfolio. In addition, new orders were generated in the Middle Eastern states and the worldwide services network is continuously being extended. With -19.6%, the decline in sales to EUR 74.9 million (previous year: EUR 93.2 million) was lower than in the Trailer Systems business. New international sourcing activities contributed to an improved gross margin, which increased to 37.8% (previous year 35.4%). This business segment currently contributes 35.1% (previous year: 20.3%) to total Company sales.

Milestones reached in cost reduction programme 
SAF-HOLLAND made good progress in terms of cost reductions and efficiency improvements in the first half of 2009. Net working capital declined significantly by EUR 13.6 million; inventories were reduced by EUR 22.8 million to EUR 66.3 million. Cash and cash equivalents rose to EUR 14.2 million (December 31, 2008: EUR 8.6 million) as of the reporting date June 30, 2009. Cash flow from operating activities before income tax improved despite weak sales development to EUR 21.0 million (previous year: EUR 20.3 million). Repayments for current financing were made on schedule. The equity ratio was 10.5% (December 31, 2008: 13.4%). In addition, the Group reached a supplementary labor agreement with the workforce in Germany. It provides for savings in the single-digit millions and grants employment and location guarantees in return.

In parallel with operating the business, there have been intensive discussions with the lending banks on the Group’s refinancing. Until the end of July, a standstill agreement was in force with the banks, who have also endorsed a preliminary expert opinion on the financial restructuring from the auditing firm KPMG and the prognosis as a going concern. In August, the banks proposed a refinancing arrangement that included the transfer of the Company’s operational activities to a trustee. This would mean that SAF-HOLLAND S.A. would, to a large extent, be legally separated from the operating business and the assets of the Group. At the same time, the operating business would be sustainably supported and financially secured. After negotiating the economic considerations, an extraordinary General Meeting of the shareholders must make a decision on the proposal.

Outlook:
Even if the first signs of a market revival in the worldwide replacement part business and stabilization in the truck market in the USA are visible, SAF-HOLLAND expects a clear sales decline over the year compared to 2008 with a corresponding reduction in earnings. The planned cost reductions of EUR 60 million will, however, cushion the decline in earnings. Moreover, liquidity is to be improved by inventory cuts and lower net working capital. Over the long term, SAF-HOLLAND expects an increase in demand which will also be boosted by new emissions regulations in the USA (beginning in 2010) and braking regulations (beginning in 2011).

Key Figures

* Adjusted profit/loss / number of ordinary shares as of June 30
** The operating cash flow is the cash flow from operating activities before income tax payments

Note:
SAF-HOLLAND reports adjusted earnings figures since costs have accrued as a result of the business combination, the IPO and restructuring that are not directly attributable to the operating business. EBIT has been adjusted for the following effects: depreciation and amortization from the purchase price allocation as well as restructuring and integration costs.

Company Profile:
With more than EUR 800 million in sales and over 2,000 employees, SAF-HOLLAND S.A. is one of the worldwide leading manufacturers and suppliers of premium product systems and components primarily for trailers as well as trucks, buses and recreational vehicles. The product range encompasses axle and suspension systems, fifth wheels, coupling devices, kingpins, and landing legs. SAF-HOLLAND customers include the majority of large truck and trailer producers all over the world. The products are sold to Original Equipment Manufacturers (OEMs) and Original Equipment Suppliers (OESs) by means of a global service and distribution network and via aftermarket channels directly to the end users and service garages. SAF-HOLLAND has therefore established itself as one of the few manufacturers in its sector that is internationally positioned with an extensive product range and a broad service network. SAF-HOLLAND S.A. has been listed in the Prime Standard of the Frankfurt Stock Exchange since July 2007.

Bessenbach, July 22, 2009 – SAF-HOLLAND GmbH has agreed, with the support of the works council, a supplementary labor contract with IG Metall for its locations at Wörth and Bessenbach. This is the Company’s response to continued weak growth in the commercial vehicle market. The contract brings a total cost saving in the amount of single-digit millions for 2009 and 2010.

“In addition to the cuts already implemented, such as short-time work and a reduction of working hours, the employees are making an important contribution to helping the Company through the crisis. This is an encouraging sign and shows that we all believe in the future of our Company and are committed to working toward the success of SAF-HOLLAND", said CEO Dr. Reiner Beutel.

It is planned to reduce the additional holiday pay for 2009 and 2010 by 50%. The Christmas bonus for 2009 will be waived in full. In 2010, 50% of the Christmas bonus will be paid in November of the same year, while the other half will be paid in April of the following year, provided certain Company key figures are reached. The agreed pay increase of 2.1% due to come into effect in May 2009 will be postponed until January 2010. If certain Company key figures are reached from 2011 onward, the 2009 and 2010 holiday pay will be refunded in 2012 and in 2013. The measures taken to stabilize the company extend across all departments of SAF-HOLLAND. Senior staff and management are already foregoing bonus payments, part of their holiday pay and certain components of their salaries.

In return, SAF-HOLLAND guarantees the continued existence of the production facilities at Wörth and Bessenbach until June 30, 2013. For 710 core employees, the employment guarantee was extended until June 30, 2014. At both production locations, SAF-HOLLAND will also guarantee a training rate of at least 5.5% until June 2014.

“The decision to cancel or defer payments has not been easy for us. However SAF-HOLLAND is providing comprehensive guarantees on the continuation of operations and employment. In the current extremely difficult economic environment, this is greatly appreciated”, commented Matthias Gebhardt, chief negotiator at IG Metall, Aschaffenburg on the compromise reached.

Günther Baumann, chairman of the works council at the Wörth plant was relieved: “Considering that just a few months ago the plant in Wörth was in danger of closing, the location and employment guarantee is of huge importance to us”. His colleague Volker Caspers, chairman of SAF central works council from Bessenbach said: “The work force stands fully behind the Company in difficult times – on the basis of our own jobs, of course. It was also important for us to secure a commitment to the training of young employees as a promising sign for the future".

“We reached a fair compromise with the employee representatives”, continued CEO Dr. Reiner Beutel. “For our part, the labor agreement gives us much needed financial space in the ongoing difficult market situation. But for their part, the guarantee of continued operations and employment provides our employees with job security for the next five years”. This agreement is the result of very constructive cooperation based on trust and shows that management and employee representatives pull together when it comes to ensuring the future of the Company.

Luxembourg, June 8, 2009 – SAF-HOLLAND S.A. is reinforcing its sales potential in the spare parts business. SAF-HOLLAND, a leading worldwide manufacturer and supplier of premium product systems and components for commercial vehicles (trucks and trailers), is joining forces with the Volvo Truck Corporation in the aftermarket business. As part of this cooperation,   Volvo Truck Corporation has started to include SAF-HOLLAND spare parts in its Truck Shop Europe product range and thus supply service centers across Europe. SAF-HOLLAND spare parts are currently available at service centers in Europe, America, Asia, Africa and Australia.

“We are delighted with this strategically important cooperation because VOLVO truck service centers are an ideal addition to our worldwide service network and a significant part of the expansion of our Aftermarket Business Unit,” commented SAF-HOLLAND Group CEO Dr. Reiner Beutel. The Aftermarket’s share of Group sales is planned to increase from 22% to 25% in the medium term and 30% over the long term, thereby further improving SAF-HOLLAND’s strong market position. In addition, more partners were added in Europe when agreements with DAF Parts and MAN were concluded in 2008.

The Aftermarket Business Unit supplies spare parts for the heavy duty truck business through a comprehensive network of OEM vehicle dealers, independent distributors, service centers and fleet operators. With vigorous sales and marketing activities, the Aftermarket Business Unit has been a stabilizing factor for the Group, as this part of the organization has been less seriously affected by the market downturn than the OEM business for trucks and trailers.  SAF-HOLLAND recorded a slight increase in order entry in this segment back in March. In the past, the spare parts business has been an early indicator of further developments in the truck and trailer market.

Company Profile:
With about EUR 800 million in sales and over 2,000 employees, SAF-HOLLAND S.A. is one of the worldwide leading manufacturers and suppliers of premium product systems and components primarily for trailers as well as trucks, buses and recreational vehicles. The product range encompasses axle and suspension systems, fifth wheels, couplers, kingpins and landing legs. SAF-HOLLAND customers include the majority of large truck and trailer producers all over the world. The products are sold to Original Equipment Manufacturers (OEMs) and Original Equipment Suppliers (OESs) by means of a global service and distribution network and via aftermarket channels directly to the end users and service garages. SAF-HOLLAND has therefore established itself as one of the few manufacturers in its sector that is internationally positioned with an extensive product range and a broad service network. SAF-HOLLAND S.A. has been listed in the Prime Standard of the Frankfurt Stock Exchange since July 2007.

Luxembourg, May 28, 2009 – In spite of the negative market trend, SAF-HOLLAND S.A. is realizing initial positive effects from the cost reduction program. As a result, even in light of the decline in sales, it was possible in the first quarter of 2009 to maintain the gross margin at nearly the previous year’s level and to achieve an adjusted operating result (EBIT) close to the profit threshold. In the process, the Company has solidified its market position.

Dr. Reiner Beutel, CEO of SAF-HOLLAND GROUP GmbH, explained, “The demand for trucks and trailers continued to decline in the first quarter of 2009. Therefore, we are continuing our course of reducing capacity and costs as well as preserving liquidity. These measures will pay a double dividend when the market recovers. The commercial vehicles industry stands to be one of the first to benefit when the economy improves.”

Sales Decline Puts Pressure on Earnings
In the first quarter, sales declined by almost half to EUR 112.1 million (previous year: EUR 219.3 million) as a result of globally weak demand. On an exchange rate-adjusted basis, sales decreased by 52%. The European business’ contribution to total sales fell to 50.9% (previous year: 71.4%), driven by a particularly strong market downturn, due mainly to high inventories and under-utilized equipment at fleets, particularly for trailers. In North America, where SAF-HOLLAND generated 45.1% (previous year: 25.9%) of its sales, demand had already dropped significantly in 2007 and 2008. The remaining regions contributed 4.0% (previous year: 2.7%) of sales.

Cost savings for materials as well as personnel and non-personnel expenses cushioned the impact of the sales decline on earnings. The gross margin of 16.9% almost reached the previous year’s value of 17.5%. Adjusted earnings before interest and taxes (EBIT) were EUR -0.5 million (previous year: 18.1 million), and the adjusted profit for the period totaled EUR -5.3 million (previous year: EUR 9.4 million). Adjusted earnings per share amounted to EUR -0.26 (previous year: EUR 0.50).

Powered Vehicle Systems Significantly Improves Results
The Powered Vehicle Systems Business Unit benefited from the business of SAF-HOLLAND Verkehrstechnik GmbH, which was acquired in the fall of 2008, and a government contract in the USA. Sales increased by 50.8% to EUR 26.7 million (previous year: EUR 17.7 million); exchange rate-adjusted it increased by 35.6%. The adjusted gross margin rose to 20.6% (previous year: 13.1%). With these good results, the Business Unit is increasingly proving itself to be an important sales and earnings contributor for the Group. It now accounts for 23.8% (previous year: 8.1%) of total sales.

Trailer Systems Particularly Affected by the Decline in Sales
The Group’s previous growth engine is suffering from weak demand triggered by high inventories of new trailers and under-utilized equipment at fleets worldwide but especially in Europe. Only the sale of specialty trailers has remained stable. Sales for the Trailer Systems Business Unit totaled EUR 47.2 million (previous year: EUR 158.7 million) declining on an exchange rate-adjusted basis by 71.4%. The gross margin was -2.1% (previous year: 13.1%), reflecting lingering excess capacity despite the cost reductions implemented to date.

Aftermarket a Stabilizing Factor with Improved Margin
The Aftermarket Business Unit is likewise affected by the market weakness, but to a lesser extent than the OEM business in the truck and trailer sector. In March, SAF-HOLLAND recorded slightly higher order entry. Business Unit sales declined to EUR 38.2 million (previous year: EUR 42.9 million), exchange rate-adjusted by 16.6%. The Business Unit improved its gross margin to 38.0% (previous year: 35.7%) due to cost reductions and a changed product mix.

Restructuring Plan
During the period under review, SAF-HOLLAND benefited from the measures initiated in fall 2008 aimed at reducing costs and improving efficiency. The capacity adjustment encompasses not only staff reductions, but also reduced working hours. In addition, executives and the members of the Management Board are foregoing a portion of their salaries, the bonus for 2008 as well as vacation days. Furthermore, inventories were reduced further in the first quarter, which has had a positive effect on liquidity. Measures to stabilize the Group are continuing; a further EUR 43 million is to be saved during the current year, following the EUR 16 million in cost reductions already achieved in 2008. The goal is to continue to lower the profit threshold substantially. A preliminary expert opinion from the auditing firm KPMG from April 20, 2009, and Mai 25, 2009, confirmed the Group’s ability to restructure. Based on the expert opinion, external financing should be secured during the current quarter.

Outlook for 2009: Initial Positive Signs Perceptible
In view of the weak demand, which is also characterized by volatility and orders placed at short notice, business development still cannot be forecast with any certainty. Total sales are expected to be well below the previous year’s level, accompanied by corresponding pressure on earnings. However, SAF-HOLLAND anticipates a slight recovery of orders in the US truck sector late in the year, the result of pull-forward effects arising from the introduction of new emissions regulations at the beginning of 2010. Initial positive signs of stabilization are perceptible in the US truck business as well as across the Group in the Aftermarket Business Unit. In the past, the replacement parts business has been an early indicator of the subsequent development of the truck and trailer market. 
 

 
Note:
SAF-HOLLAND reports adjusted earnings figures since costs have accrued as a result of the business combination, the IPO and restructuring that are not directly attributable to the operating business. EBIT has been adjusted for the following effects: depreciation and amortization from the purchase price allocation as well as restructuring and integration costs.

Company Profile:
With more than EUR 800 million in sales and over 2,000 employees, SAF-HOLLAND S.A. is one of the worldwide leading manufacturers and suppliers of premium product systems and components primarily for trailers as well as trucks, buses and recreational vehicles. The product range encompasses axle and suspension systems, fifth wheels, couplers, kingpins and landing legs. SAF-HOLLAND customers include the majority of large truck and trailer producers all over the world. The products are sold to Original Equipment Manufacturers (OEMs) and Original Equipment Suppliers (OESs) by means of a global service and distribution network and via aftermarket channels directly to the end users and service garages. SAF-HOLLAND has therefore established itself as one of the few manufacturers in its sector that is internationally positioned with an extensive product range and a broad service network. SAF-HOLLAND S.A. has been listed in the Prime Standard of the Frankfurt Stock Exchange since July 2007.

Luxembourg, April 27, 2009 – In a challenging market, SAF-HOLLAND S.A. maintained Group sales in 2008 at nearly the same level as in the previous year at EUR 798.8 million (previous year: EUR 812.5 million), exchange-rate adjusted EUR 817.2 million. Business performance was characterized by conflicting developments. Following a successful first half of the year with double-digit growth rates, the economic crisis restrained sales in the final months of 2008. SAF-HOLLAND responded promptly by taking steps to adjust to the new environment as early as October 2008.

Dr. Reiner Beutel, CEO of SAF-HOLLAND GROUP GmbH, commented: “The past fiscal year was marked by above-average growth at the beginning and a drastic drop in sales in the final four months of the year. Our comprehensive projects to reduce costs and working capital and to stabilize liquidity are helping us overcome the current market weakness and are simultaneously fortifying us for the time following the crisis. As soon as demand revives, we will benefit from our high quality and innovative products and international positioning as one of the leading global suppliers to the truck and trailer industry.”

Sales at Previous Year’s Level – Earnings Under Pressure
For the entire year, SAF-HOLLAND achieved only slightly lower sales of EUR 798.8 million (previous year: EUR 812.5 million). Exchange rate-adjusted sales of EUR 817.2 million reached the level of 2007. SAF-HOLLAND generated EUR 530.2 million (previous year: EUR 519.7 million) of its sales in Europe, while North America accounted for EUR 239.7 million (previous year: EUR 271.4 million). In the remaining regions, sales climbed to EUR 28.9 million (previous year: EUR 21.4 million).

Adjusted operating earnings before interest and taxes (EBIT) amounted to EUR 41.2 million (previous year: EUR 60.5 million) and the adjusted EBIT margin was 5.2% (previous year: 7.4%). The decline from the previous year resulted primarily from the sharp decrease in demand at the end of the fiscal year. Drops in production of up to 70% in the fourth quarter led to overcapacity, which exerted pressure on earnings. In addition, extraordinary write-downs on goodwill and intangible assets as well as restructuring expenses impaired profitability. As a result, the adjusted profit for the period after taxes fell to EUR 13.4 million (previous year: EUR 22.3 million). Adjusted earnings per share totaled EUR 0.69 (previous year: EUR 1.15). As of the balance sheet date, the Group had cash and cash equivalents of EUR 8.6 million as well as unused credit lines of EUR 15.0 million. The equity ratio was 13.4% (previous year: 19.5%).

Powered Vehicle Systems Improved Sales and Earnings
The Powered Vehicle Systems Business Unit, which generates sales primarily from fifth wheels and axle suspensions, benefited in 2008 from the acquisition of the former Georg Fischer Verkehrstechnik GmbH. As a result, the Business Unit was able to boost its sales during the period under review to EUR 102.3 million (previous year: EUR 81.3 million) or EUR 107.7 million on an exchange rate-adjusted basis, thus contributing 12.8% to Group sales. A major order in North America with a term of five years has further strengthened the Business Unit. Due to an improved product and customer mix, the Business Unit achieved a gross margin of 14.8% (previous year: 14.0%).

Trailer Systems Business Declined
SAF-HOLLAND’s Trailer Systems Business Unit with a predominantly European focus was most strongly affected by the collapse in demand in the fall. During the period under review, the Business Unit generated sales of EUR 527.9 million (previous year: EUR 551.1 million). Adjusted for exchange rate effects, sales amounted to EUR 534.0 million, corresponding to 66.1% of Group sales. The gross margin narrowed from 12.3% to 9.5%.

Weaker Sales in Aftermarket
Similarly, the replacement parts business of the Aftermarket Business Unit suffered from the overall market weakness in the fourth quarter. Unused trucks and trailers as well as large inventories of new vehicles weighed on demand. For the entire year, the Business Unit recorded sales of EUR 168.6 million (previous year: EUR 180.1 million). Adjusted for exchange rate effects, Business Unit sales totaled EUR 175.5 million, accounting for 21.1% of Group sales. The gross margin rose slightly to 35.3% (previous year: 34.6%).

Acquisitions Reinforce Market Position
With two company acquisitions in fiscal year 2008, SAF-HOLLAND has rounded out its product range and positioned itself even more broadly internationally. With Georg Fischer Verkehrstechnik GmbH – today SAF-HOLLAND Verkehrstechnik GmbH – the Company acquired the second leading manufacturer of fifth wheels in Europe. Thus, the Group has significantly improved its basis for growth in the truck sector. In addition, SAF-HOLLAND acquired the landing leg business of the US manufacturer Austin-Westran with production in China. This transaction has not only increased sales potential in the trailer market but also simultaneously improved the cost structure thanks to production in China. By taking these two steps, the Group has significantly strengthened its market position in the worldwide truck and trailer business.

Additional Improvements in Efficiency Expected
The Group will continue to further its cost-reduction program. In the final four months of the past fiscal year, approximately EUR 15 million in savings had already been achieved. The program encompasses measures involving materials, non-personnel and personnel expenses. In the second half year of 2008, the number of employees was reduced by more than 700 excluding acquisitions but including contractors). In addition to the introduction of reduced working hours and a waiver of bonuses by all executives, sites were relocated and/or closed. In order to boost liquidity, the Company trimmed inventories by around EUR 25 million during the last four months. Additional measures in fiscal year 2009 are a supplemental EUR 35 million in cost savings and a further reduction in capital tied up in inventories of an additional EUR 25 million to the level of one month’s worth of sales. Within the framework of the Group’s reorientation, the auditing company KPMG drafted an expert restructuring opinion in recent weeks. The opinion confirms SAF-HOLLAND’s ability to restructure financially under certain conditions and emphasizes its sustainable profitability and competitiveness. On this basis, the Group intends to negotiate a new financing concept with the bank consortium by the end of June.

Volatile Demand Impedes Outlook
Weak economic conditions are dampening the truck and trailer market in the new fiscal year as well. Since orders are for the most part only placed on a short-term basis, reliable planning and publication of a forecast are currently not feasible. SAF-HOLLAND expects Group sales will decline substantially in 2009. This will result in pressure on earnings since the adjustment measures that have already been introduced will only show effect over the course of the year. Therefore, the focus is primarily on securing liquidity, to which numerous additional measures to reduce costs and net working capital will contribute. Over the long term, management anticipates the demand for transportation services to turn upward again. Several market research institutes are forecasting a slight recovery in demand in North America as early as the end of the current fiscal year. With its comprehensive product range and worldwide presence, SAF-HOLLAND is well equipped to participate successfully in future growth.

Note:
SAF-HOLLAND reports adjusted earnings figures since costs have accrued as a result of the business combination, IPO and restructuring that are not directly attributable to the operating business. EBIT has been adjusted for the following effects: depreciation and amortization from the purchase price allocation, impairment of goodwill and intangible assets, as well as restructuring and integration costs.

Company Profile:
With more than EUR 800 million in sales and over 2,000 employees, SAF-HOLLAND S.A. is one of the worldwide leading manufacturers and suppliers of premium product systems and components primarily for trailers as well as trucks, buses and recreational vehicles. The product range encompasses axle and suspension systems, fifth wheels, couplers, kingpins and landing legs. SAF-HOLLAND customers include the majority of large truck and trailer producers all over the world. The products are sold to Original Equipment Manufacturers (OEMs) and Original Equipment Suppliers (OESs) by means of a global service and distribution network and via aftermarket channels directly to the end users and service garages. SAF-HOLLAND has therefore established itself as one of the few manufacturers in its sector that is internationally positioned with an extensive product range and a broad service network. SAF-HOLLAND S.A. has been listed in the Prime Standard of the Frankfurt Stock Exchange since July 2007.

Trailer axle system production is now underway in the United States, and the first customers took delivery of the new axles last month. Production will be increased to meet demand in the weeks ahead. The production facility in Missouri works flexibly to manufacture different kinds of axle systems to suit individual customer requirements. In launching its own axle production, the Group is opening up significant additional sales potentials since buying axles from third-party manufacturers is no longer required. At the same time, SAF-HOLLAND has rounded out its product portfolio in North America.

Dr. Reiner Beutel, CEO of SAF-HOLLAND GROUP GmbH, said, "We are pleased that Daimler Truck North America recognizes that SAF-HOLLAND’s new FWAL fifth wheel offers their fleet customers additional advantages of weight optimization and reduced cost. This confirms our product strategy of offering technically sophisticated solutions in our core and growth markets around the world. The start-up of trailer axle production in North America is one example of leveraging technologies across the entire organization, supporting our ability to meet the requirements of customers around the world."

Dr. Reiner Beutel, CEO of SAF-HOLLAND GROUP GmbH, said: “The agreement with our lenders reaffirms SAF-HOLLAND’s sound positioning in a tough market environment. We have thereby secured corporate financing for the months ahead and will now develop a strategy and a financing concept to ensure that SAF-HOLLAND is well prepared for its further development.”

Against the background of strong market growth in the first half of 2008, the Company had negotiated in February a credit line of EUR 325 million on favorable interest rate terms in return for maintaining certain key financial figures. The terms now agreed are the result of intensive negotiations with the aim of adjusting the terms and conditions of the financing against the backdrop of changing markets and the difficulty of forecasting further industry development. The agreement suspends checks of the abovementioned key financial figures as of December 31, 2008 and March 31, 2009.

The standstill agreement concluded with the banks concerned runs until June 2009. In this connection, the auditors KPMG were assigned the task of carrying out a study on further financial and liquidity planning. Once the study is available on April 20, a financing concept is to be drawn up within 60 days – by June 19, 2009 – for the fiscal years ahead. For this reason, SAF-HOLLAND will be publishing its annual report on Monday, April 27, 2009 instead of April 2, 2009. The Company’s Annual General Meeting will also be postponed by a few weeks.

Business development in 2008 was characterized by contrasting influences for SAF-HOLLAND. After dynamic growth rates in the first half of the year, the Company was confronted by a substantial decline in demand in the fourth quarter of 2008. The management responded to this decline swiftly and consistently in order to adjust costs to the new situation. This extensive program of measures included a significant reduction in personnel and logistics costs, consolidation of production sites and a reduction of capital tied up in inventories. For example, the Company recently relocated a site in North America and closed an additional one in Slovakia. In total, SAFHOLLAND cut its costs by around EUR 15 million in the last four months of 2008, and inventories were reduced by around EUR 20 million over this period.

For the full year 2008, SAF-HOLLAND’s preliminary figures are EUR 798 million in sales, compared with EUR 812.0 million in the previous year. Due mainly to the substantial sales decline in the fourth quarter, adjusted IFRS earnings before interest and taxes totaled around EUR 41 million. The adjusted EBIT margin was therefore approximately 5,1%.

On the basis of expectations about current sales developments in the truck and trailer industry, SAF-HOLLAND assumes that the Company’s sales in all segments will be down compared with the previous year. Such developments will also clearly have a negative impact on 2009 results. To improve results on a lasting basis, the Company will intensify the measures already initiated to reduce costs and improve liquidity. Inventories are to be reduced by a further EUR 30 million during the current fiscal year, and the cost reduction program will lead to an additional EUR 35 million. This will be achieved by measures to reduce personnel expenses, by lowering materials costs, curtailing capital expenditure and consolidating production sites. One site closing concerns the plant in Bessenbach, near Aschaffenburg, Germany. Against the background of these developments, the Company will not recommend payment of a dividend. Its current focus is on downsizing the cost and corporate structures and on refinancing the company.

Most recently Dr. Reiner Beutel has held several Board of Directors seats, amongst others for Haldex AB, KUKA AG and Mirror Controls International. Prior to this, as CEO and CFO of Schefenacker AG in Schwaikheim, Germany, his responsibilities included the operational and financial realignment of this international automotive supplier. Dr. Beutel began his career after studying business administration in Germany and the USA; he earned a doctorate with a focus on strategic planning and controlling in 1986 while working as a business consultant at A.T. Kearney GmbH. Beginning in 1989, he spent fifteen years at the Robert Bosch Group, where he served in a variety of positions with increasing management responsibility, his final position being President, Chairman and CEO of the Bosch Power Tools division in Illinois, USA.

“Dr. Reiner Beutel will strengthen our Company as a proven industrial management expert with international experience, who will continue the growth and globalization strategy initiated by Rudi Ludwig and advance SAF-HOLLAND’s development under new economic conditions,” commented Dr. Rolf Bartke, Chairman of the Board of Directors.

Rudi Ludwig, who has served as Chairman of the Management Board since June 2003, launched the former SAF Group (Otto Sauer Achsenfabrik GmbH) on a successful growth path. As a result of his strategic vision, he more than tripled the sales of the Company from EUR 243 million to approximately EUR 800 million within a few years. Significant milestones were the restructuring of business processes in the early years, the merger of the German Otto Sauer Achsenfabrik GmbH with the American company The Holland Group, Inc. in 2006, the IPO of the combined company in 2007 and further acquisitions in 2008 that contributed to the globalization and rounding out of the product range.

“Mr. Ludwig has made a substantial contribution to positioning SAF-HOLLAND as a leading supplier in its core international markets. His continued association with our Company as a member of the Board of Directors is extremely valuable and provides continuity as SAF-HOLLAND continues to move forward. On behalf of the entire Board of Directors and all employees, I would like to thank him for his work as Chairman of the Management Board,” remarked Dr. Rolf Bartke, Chairman of the Board of Directors.

The remainder of the SAF-HOLLAND Group GmbH’s Management Board remains the same, with Wilfried Trepels as CFO, Sam Martin as COO, Detlef Borghardt as Head of the Trailer Systems Business Unit, Jack Gisinger as Head of the Powered Vehicle Systems Business Unit and Steffen Schewerda as Head of Group Operations.

In order to prepare employees for the requirements of the job market, the transitional company will advise them, offer further education and possibly arrange new jobs. In order to avoid additional redundancies, reduced hours will come in force from the 1. December 2008 for a period of six months.

“We regret the necessity of this development, but find ourselves with no other choice considering the faltering market. All actions will be carried out as socially acceptable as possible. It is due to this that we are pleased with the quick agreement with the works council. Most importantly incertitude is at an end. In order to prepare SAF-HOLLAND for the demands of 2009 in the best way possible, there will be a series of additional actions, showing that we expect 2009 to continue showing a weaker market,” says Rudi Ludwig.

SAF-HOLLAND will also be reducing capacity in North America. There it will be necessary to make 165 of around 1400 jobs redundant.

For the period from January through September 2008, profit was EUR 18.4 million (previous year: EUR 14.7 million), primarily as a result of the solid performance in the first half of 2008. In the last three months of the period under review, profit declined to EUR 1.1 million. The impact of underutilization of production capacity was the most important factor. In addition, it is possible to pass higher prices for materials along to customers only after a delay. The adjusted EBIT margin during the period from January to September amounted to 7.2 percent (previous year: 7.6 percent).

Rudi Ludwig, CEO of the SAF-HOLLAND Group, commented: “The business environment has deteriorated to such an extent in recent months that the industry could be facing a difficult period. Therefore, we are adjusting our cost structures to new market conditions as quickly as possible. By the end of the year, we will have introduced all of the measures necessary to position the Company well for 2009. We remain committed to our long-term growth strategy even though we cannot achieve our goals in the originally designated time frame.”

Market position improved for the Powered Vehicle Systems Business Unit
Despite a muted business environment, a noticeable revival of the Powered Vehicle Systems Business Unit that began in the second quarter continued during the past three months. Thus, the Business Unit was able to boost sales in the third quarter by 23.2 percent to EUR 23.4 million (previous year: EUR 19.0); adjusted for exchange rate effects, sales even rose by 35.3 percent to EUR 25.7 million. During the months from January to September 2008, the Business Unit’s sales totaled EUR 60.4 million (previous year: EUR 64.1 million); adjusted for exchange rate effects, sales climbed to EUR 68.3 million. The Business Unit will benefit from additional growth stimuli in the future as a result of its entry into the European fifth wheel business via the acquisition of Georg Fischer Verkehrstechnik GmbH at the beginning of October 2008.

Product range expanded in the Trailer Systems Business Unit
The business performance of the Trailer Systems Business Unit was characterized by a strong first half of the year and a weak third quarter. Overall, sales during the nine-month period grew by 10.9 percent to EUR 451.3 million (previous year: EUR 407.0 million); adjusted for exchange rate effects, sales rose by 13.1 percent to EUR 460.4 million. In the third quarter, sales declined as a result of the weaker market environment by 7.2 percent to EUR 123.5 million (previous year: EUR 133.7 million). As early as 2009, SAF-HOLLAND will commence production of its own axle systems in North America, thus rounding out its product range there for the trailer systems segment. Since the business combination of SAF and HOLLAND twenty months ago, progress has been made in facilitating technology transfer between the two predecessor companies.

Aftermarket Business Unit stabilizes business performance
In the first nine months of 2008, the Aftermarket Business Unit of SAF-HOLLAND generated sales of EUR 134.6 million (previous year: EUR 142.3 million); adjusted for exchange rate effects, sales totaled EUR 144.5 million. Of this amount, EUR 41.4 million (previous year: EUR 49.1 million) accrued in the third quarter; adjusted for exchange rate effects, sales totaled EUR 43.4 million. These months were characterized by a somewhat slow summer and market weakness in September. In total, the Business Unit is contributing to the Group’s overall performance with a share of sales of 21.5 percent and an EBIT margin of 16.2%.

Financial structure influenced by capital increase and acquisition
As of September 30, total assets increased to EUR 592.3 million (12/31/2007: EUR 554.6 million). Equity rose to almost EUR 130 million (12/31/2007: EUR 108.2 million), driven in part by proceeds from a capital increase of about EUR 14 million in September. The equity ratio climbed to 21.9 percent (12/31/2007:19.5 percent). Reflecting the acquisition of the landing leg business of Austin-Westran and exchange rate effects, as of September 31, 2008 total short- and long-term loans amounted to EUR 282.6 million (12/31/2007: EUR 262.9 million). As of the same reporting date, cash flow from operating activities amounted to EUR 30.9 million (previous year: EUR 40.0 million). Its decline essentially mirrors the relationship of higher inventories to weaker sales. The combination of high demand for products in the early months of 2008, plant relocations, and the setting up of the Group’s own axle production in North America led to an increase in inventories. In September, SAF-HOLLAND initiated a project to reduce net working capital in the second half of the year by about EUR 20 million.

Number of employees rose slightly
During the nine months ended September 30, the Company had an average of 3,061 employees (12/31/2007: 2,996). The primary cause for the increase was the purchase of the landing leg business of Austin-Westran. Initial measures to adjust capacity to changing market conditions included the termination of approximately 130 subcontractor employment agreements.

Outlook
For the full year 2008, the Company expects slight sales growth to about EUR 820 million (previous year: EUR 812.5 million), representing slower growth than had been anticipated prior to the economic downturn. The adjusted EBIT margin should reach about 6 percent (previous year: 7.4 percent), reflecting the impact of capacity underutilization through the end of the year caused by a distinct decline in orders. SAF-HOLLAND has introduced a series of programs to boost efficiency and reduce costs. In an initial step, employment agreements with contractors and temporary workers were terminated. By the end of the year, the number of employees is to decrease further. In addition, the closure of production sites in Europe and North America is planned. Additional projects, for example to reduce logistics costs, are underway or are close to being completed. These measures will help SAF-HOLLAND in fiscal year 2009 against the backdrop of a weaker market environment. The Group expects to benefit from the acquisitions of Georg Fischer Verkehrstechnik GmbH and Austin-Westran’s landing leg product line. Additional factors are the start of axle production in North America as well as pending new major orders, which would generate additional growth in North America and China. The latter confirm SAF-HOLLAND’s strong position as a systems supplier as the orders encompass the entire product range for trailers. The Group reiterates its long-term goal of achieving sales of at least one billion Euro combined with an EBIT margin of 10%.

Key figures

1 Adjusted EBITDA is defined as EBITDA before additional costs from the higher valuation of inventories in connection with purchase price allocation (PPA) and transaction and integration costs.

2 Adjusted EBIT is defined as EBIT before additional depreciation and amortization, costs from the higher valuation of inventories in connection with purchase price allocation (PPA), and transaction and integration costs.

3 The basis for calculations during both reporting periods is the average weighted number of shares as of September 30, 2008.

Sales by region

Sales by Business Unit

For the full year, SAF-HOLLAND expects to report profitable earnings, even in a significantly weaker business environment than most recently forecast. In the face of the worsening economic situation and difficult sector development, sales are expected to increase to about EUR 820 million (preceding year: 812.5). The adjusted EBIT margin is forecast at around 6% (preceding year: 7.4). SAF-HOLLAND has implemented a series of programs to boost efficiency and reduce costs. As a first step, temporary workers have been laid off and the workforce is to be slashed further by the end of the year. Production sites in Europe and North America are to be shut down. Other projects have either recently begun or are about to conclude, for example with the aim of cutting logistics costs. SAF-HOLLAND will especially benefit from these measures in fiscal year 2009. In the long term, the Group will maintain its goal of achieving an adjusted EBIT margin of 10% at a minimum sales volume of EUR 1 billion.

“This year, the Group has laid some important foundations for its future development,” said Rudi Ludwig, CEO of the SAF-HOLLAND Group. “On the one hand, we have strengthened our basis for growth, for example through the takeover of Georg Fischer Verkehrstechnik and the landing legs business of Austin-Westran. On the other hand, we are continuously increasing productivity. SAF-HOLLAND will also hold its ground in a tough market, and quickly and flexibly adjust to an economic downturn. With its wide range of products, the Group is now well positioned as a system partner for the truck and trailer industry.”

“Thanks to our solid business model, we will continue to grow despite the weak environment. A contributing factor will be the commencement of production of axle systems at our North American plant in Warrenton, Missouri, in the fourth quarter. Additionally, the Company has newly negotiated customer contracts with internationally operating manufacturers from China and North America over multi-year terms. With this year’s company acquisitions, we have solidified our unique position as a global supplier and secured additional sales potential in Europe and Asia. We are confident of our ability to continue on the successful path our Company has already begun,” said Rudi Ludwig, CEO of SAF-HOLLAND Group.

On October 6, SAF-HOLLAND successfully completed the acquisition of Georg Fischer Verkehrstechnik GmbH, a former subsidiary of Georg Fischer AG. By acquiring the number two manufacturer of fifth wheels, trilex wheels, and kingpins in the European market, the Company has rounded out its product range in Europe and positioned itself as an international supplier and partner of the truck industry around the world.

SAF-HOLLAND has already introduced a package of measures aimed at reducing costs, which includes not only a reduction in net working capital but also an adjustment of investments and a cutback in logistics and personnel expenses. The Company can additionally take advantage of its flexible structuring and thus quickly implement the following measures:

• Reducing capital tied up in inventories
• Focusing investments in the growth markets of China and Brazil 
• Reducing transportation and storage costs on the basis of a new logistics concept
• Promoting the consolidation of worldwide production sites
• Consolidating Chinese business activities to one site
• Reducing costs in all overhead areas around the world

For 2009, in addition to positive developments from acquisitions and axle production in North America, SAF-HOLLAND expects further growth from the Brazilian, Chinese, and Russian markets. The Company already has in hand signed declarations of intent for new large orders from North American and Chinese manufacturers across the entire range of products. This confirms SAF-HOLLAND’s strong position as a comprehensive supplier of product systems. SAF-HOLLAND will provide a more detailed forecast when it announces third-quarter results on November 19.