Schaeffler Group meets targets in 2018

Global automotive and industrial supplier Schaeffler presented its results for 2018 today. The Schaeffler Group’s revenue for the reporting period amounted to approximately 14.2 billion euros (prior year: approximately 14.0 billion euros). At constant currency, revenue increased by 3.9 percent during this period. All three divisions and all four regions contributed to the group’s constant currency revenue growth. The Greater China region once more reported the highest revenue growth rate, albeit with considerably less momentum than in previous years. The Schaeffler Group generated earnings before financial result and income taxes (EBIT) before special items of 1,381 million euros in 2018, (prior year: 1,584 million euros), less than in the prior year. This represents an EBIT margin before special items of 9.7 percent (prior year: 11.3 percent).

Net income attributable to shareholders of the parent company for the reporting period amounted to 881 million euros, falling short of the prior year level (980 million euros). Earnings per common non-voting share were 1.33 euros (prior year: 1.48 euros). On that basis, Schaeffler AG’s Board of Managing Directors will propose a dividend of 55 cents to the annual general meeting. This represents a dividend payout ratio of approximately 40 percent (prior year: approximately 35 percent) of net income attributable to shareholders before special items.

Klaus Rosenfeld, CEO of Schaeffler AG, commented on the performance of the business in 2018: “Following a good first six months for the Schaeffler Group, market conditions in the global automotive business deteriorated considerably during the second half of 2018. This put pressure on our earnings. The Industrial division’s very strong development over the course of 2018, which has partially offset the weaker performance of the two Automotive divisions, was encouraging. It proves that our positioning as a global automotive and industrial supplier is invaluable.”

Klaus Rosenfeld was not satisfied, however, with the Automotive OEM division’s earnings. “The decrease in Automotive OEM division earnings resulted mainly from the difficult competitive and market environment and the growing pressure to change. However, there are also a number of homegrown factors we need to address. That is why we have launched the program RACE, which is aimed at increasing efficiency and optimizing the portfolio. If we are going to improve our productivity and competitiveness, we need more focus and more speed.”

Cautious guidance 2019

The Schaeffler Group expects its revenue to grow by 1 to 3 percent at constant currency in 2019. In addition, the company expects to generate an EBIT margin before special items of 8 to 9 percent in 2019. The Schaeffler Group also anticipates approximately 400 million euros in free cash flow before cash in- and outflows for M&A activities for 2019.

The group anticipates that its Automotive OEM division will continue to outperform the global automobile production of passenger cars and light commercial vehicles, expected to decline by about 1 percent, in 2019. Based on this anticipated outperformance, the Schaeffler Group expects its Automotive OEM division to generate revenue growth of 1 to 3 percent at constant currency in 2019 (adjusted comparative figure for 2018: 2.1 percent). The company also expects an EBIT margin before special items of between 6 and 7 percent for 2019 (adjusted comparative figure for 2018: 7.5 percent) for the Automotive OEM division.

Given lower growth in the global vehicle population than in 2018 and a nearly unchanged average vehicle age, the Aftermarket business is expected to grow slightly as well. Based on its own observation of the market, the group expects the Automotive Aftermarket division to generate revenue growth at constant currency of 1 to 3 percent (adjusted comparative figure for 2018: 2.2 percent) and an EBIT margin before special items of 15 to 16 percent in 2019 (adjusted comparative figure for 2018: 18.2 percent).

In the Industrial division, the macroeconomic environment points to slowing growth in global industrial production. Based on this indication, the Schaeffler Group expects its Industrial division to generate 1 to 3 percent (adjusted comparative figure for 2018: 10.1 percent) in revenue growth at constant currency in 2019. In addition, the Industrial division anticipates generating an EBIT margin before special items of between 10 and 11 percent for the same period (adjusted comparative figure for 2018: 10.9 percent).

The Financial Ambitions 2020 formulated in 2016 can no longer be maintained given the persistently challenging market environment.

“We are anticipating that the environment, especially in the global automotive business, will remain extremely demanding and challenging. At the same time, we expect the global economy to slow down further. The cautious guidance for the Schaeffler Group reflects these assessments,” stated Klaus Rosenfeld. “However, we are confident that we will continue to grow profitably. Our strategy is the right one. We are consistently pushing ahead with the transformation. With additional measures and at an increased pace where necessary, as the program RACE shows.

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