Financial overview

(in million SEK)	FY2008	FY2007	Rate of change	Remarks
Sales	8,403	7,940	5.8%
Operating income	250	302	(17.2%)
Sales by divisions
Commercial Vehicle Systems	4,234	4,529	(6.5%)	See below (1)
Hydraulic systems	2,095	1,467	42.8%	(2)
Traction systems	1,021	848	(6.7%)	(3)
Garphyttan Wire	1,053	1,095	(24.2%)	-

(1) Commercial Vehicle Systems
-Sales declined by SEK 295million, compared with 2007, to SEK 4,234 million. Sales in the European market were strong during the first half year 2008, which limited the effect of the sales decrease in North America. During the second half, especially in the fourth quarter, demand dropped significantly in Europe, both in the truck and trailer segment. In Europe, sales declined to SEK 1,938 million, while sales in North America decreased to SEK 1,852 million. Currency adjusted sales decreased by 8% and 6% in Europe and North America respectively.
-Operating income for 2008, excluding restructuring cost and write-down of assets, amounted to SEK 4 million. The weak market in North America and the significant drop in demand in Europe in the fourth quarter, especially during November and December, when the Company's customers shut down production for 3 to 5 weeks, in combination with high raw material cost during the year, had a highly adverse impact on earnings.

(2) Hydraulic systems
-Sales amounted to SEK 2,095 million. Adjusted for acquisitions and currency-exchange movements, sales were flat compared with 2007. Concentric's sales amounted to SEK 606 million.
-Excluding restructuring costs and amortization of acquisition-related surplus values, operating income and the operating margin amounted to SEK 146million and 7.0%, respectively. Concentric's contribution to operating income amounted to SEK 82 m excluding amortization of acquisition related surplus values, amounting to SEK 31 m, and expenses related to the Company's integration.

(3) Traction systems
-Sales rose 20% to SEK 1,021 million, which was a lower increase than planned. The increase in sales was mainly related to increased volumes to Landrover, the new VW model, Tiguan, for which deliveries started during the second half of 2007 and Ford Kuga for which deliveries started in 2008.
-Operating income amounted to SEK 41 million. The sharp decrease in volume in December due to production shutdowns, led to a loss in December, which affected operating income in the fourth quarter.

Acquisition
-The Company completed the acquisition of Concentric on April 1, 2008, following approval of the acquisition by the German competition authority. Concentric, a supplier of oil, water and fuel pumps for diesel engines, will sharpen its focus on leading-edge technology and growth within structurally attractive market niches. Concentric's strong position in markets for oil, water and fuel pumps complements its existing product area for diesel engines and enhances the offering to the diesel engine market. Concentric will be part of its Hydraulic Systems Division, whose size will thus increase significantly. The Company is acquiring Concentric for a cash consideration of GBP 75 million. (From a press release on Apr. 2, 2008)

Contracts
-The Company received new order from Volkswagen for four-wheel drive system. Deliveries are expected to commence in the autumn of 2008. The four-wheel drive system will be manufactured and delivered from the plant in Landskrona. (From a press release on Jan. 3, 2008)

-The Commercial Vehicle Systems Division secured a five-year order worth approximately SEK 800 M from BPW in Germany. The order pertains to automatic brake adjusters developed jointly by Haldex and BPW. Series deliveries will commence in April 2008. (From a press release on Mar. 10, 2008)

-The Company received a new order of its fourth-generation all-wheel-drive system from a European manufacturer of sports cars. Delivery start is estimated to be during 2010. The system will be manufactured by its production facility in Landskrona, Sweden. (From a press release on Oct 15, 2008)

Restructuring
The Commercial Vehicle Systems took following restructuring measures in FY2008:
-The operations for drum brake lining within the Friction Products business unit at the plant in Prattville, Alabama, were discontinued and outsourced to subcontractors.
-The production of disc brake lining within Friction Products was divested. The operations had annual sales of SEK 100 m.
-As part of the cost reduction program, a decision was made to consolidate the division's European distribution operations.
Inventories and logistics functions will be concentrated from four units in different countries to a joint warehouse in Weyersheim, France.
-A decision was also taken to relocate all manufacturing and distribution at the plant in Redditch, UK, to another plant in the Group.
-The production of brake actuators was relocated from the plant in Iola, USA, to Mexico.

Divestiture
-On December 25, 2008, the Company reached an agreement with Suzuki Metal Industry Co, a Japanese manufacturer of steel wire products, concerning the divestment of the Garphyttan Wire division.

R&D Expenditures

(in million SEK)	FY2008	FY2007	FY2006
Product development costs	339	335	349

*In 2008, investments in product development totaled 4% of consolidated sales.

Product Developments
Safety
<TRAILER ROLLOVER STABILITY>
-In 2008, the Company announced the addition of the 2nd Generation Trailer Rollover Stability (TRS) System. The system, built on its newest 4S/2M ABS platform provides the next generation of high performance braking along with roll stability safety technology. TRS is designed for one to three or more axle trailers using an air suspension. The system delivers superior braking performance by adjusting for the trailer conditions during normal and ABS braking events as well as to intervene with active braking if conditions indicate a rollover is imminent.

Environment
<ALFDEX>
-The Alfdex system offers the market a highly efficient method for separating oil and particulate matter from ventilation gases in the crankcases of diesel engines, also known as crankcase gases. Alfdex is a joint venture with Alfa Laval, which has an expertise in centrifugal separation. During 2008, a new generation of the Alfdex system was launched, which is up to four times as effective and can handle up to three times the amount of crankcase gases as compared with the current model. The system uses centrifugal technology to remove particles down to 0.1 g/h or lower in normal driving conditions. With a rotational speed of 7,000-8,000 RPM, particles and oil mist are separated from the gas and returned to the oil sump.

Vehicle Dynamics
<Generation IV & XWD- 2007/2008>
-The faster and lighter Generation IV can also be combined with an additional coupling that controls the torque between the left and right rear wheels - Haldex XWD.

Capital expenditures

(in million SEK)	FY2008	FY2007	FY2006
Commercial Vehicle Systems	232	259	228
Hydraulic Systems	88	89	61
Traction Systems	60	95	55
Garphyttan Wire	21	20	75
Group total	402	463	420

Breakdown by geographic area

(in million SEK)	FY2008	FY2007
North America	94	94
Europe	243	302
Asia and The Middle East	11	58
South America	54	9
Group total	402	463

Overseas investment
-In February 2008, the Company increased its manufacturing footprint in Mexico through completion of a new state-of-the-art facility dedicated to production of Limited Slip Couplings and Differentials. Located in the Castro del Rio Industrial Park in Irapuato, State of Guanajuato, near several facilities operated by automakers and suppliers, the 2,500 square meter plant comprises manufacturing, warehousing, logistical functions and administrative space for 70 employees with room for future expansion. The entity offers an annual capacity of 250 000 for production of the 4th generation, electronically controlled Limited Slip Couplings and Differentials (eLSD), and will serve a number of All-Wheel Drive platforms at General Motors. First vehicle model to feature the systems produced in Irapuato is the recently introduced SAAB 9-3 XWD, the first ever All Wheel Drive offering from the automaker. (From a press release on Feb. 15, 2008)

-In October 2008, Haldex Concentric has opened a new 40,000 sq. ft. extension to its factory in Pune, India where it manufactures oil and water pumps for medium and heavy diesel engines. With this extension Haldex Concentric will meet the growing demand for pumps both in India and in export markets. (From a press release on Oct 15, 2008)