Heavy commercial vehicle brake adjusters and disc brakes specialist Haldex said it increased net sales in all regions in the third quarter.

“The development in a number of product areas continued to be strong, including brake adjusters and disc brakes. Large investments in R&D and increased costs to meet high demand, and thus a constrained supply chain in North America, had a negative effect on earnings, but, despite this, the operating margin and the earnings per share were higher than the same period the previous year,” the supplier said in a statement.

Q3 sales rose 17% year on year to SEK1,270m (SEK1,081m in Q3 2017) or, after currency adjustments by 9%.

Net sales for the first nine months rose a currency-adjusted 13% to SEK 3,894m (SEK3,413m).

Q3 operating income was SEK79m (SEK48m) for Q3 and SEK272m (SEK116m) for the first nine months of the year, equivalent to an operating margin of 6.3% (4.5%) for Q3 and 7% (3.4%) year to date.

Q3 net income after tax was SEK58m (SEK26m) and earnings per share was SEK1.30 (0.59). YTD was SEK177m (SEK65m) net income after tax and SEK3.95 (1.45) EPS.

Ake Bengtsson, Haldex president and CEO, said:  “Net sales and earnings performed well in Q3. Market conditions continued to improve, and we have had higher net sales and operating income in all quarters of the year than in equivalent quarters the previous year. However, the high demand creates challenges in the supply chain, which we have managed better and better during the year.

He said Haldex’s market was going through a transformation.

“In the short term, we are facing a technology shift from drum brakes to disc brakes in North America and a sharp increase in demand for automatic brake adjusters due to a change in the legal requirements in China. In the long term, changes are under way that will affect society as a whole as the market moves toward connected, electric and self-driving vehicles.

Haldex has left its outlook for 2018 unchanged, saying: “We believe that net sales for 2018 will increase compared to 2017. Costs for a higher rate of investment in development projects and costs for expansion in North America and China will burden income. In Q4, the increase in material cost and tariffs will have a greater impact than in Q3. Our assessment is that the operating margin in 2018 will be in line with or possibly slightly higher than the operating margin in 2017 excluding one off items.”