08.05.2018
Schaeffler AG DE000SHA0159
DGAP-News: Schaeffler AG: Schaeffler reports three divisions for the first time and confirms guidance for the year
DGAP-News: Schaeffler AG / Key word(s): Quarterly / Interim Statement
Schaeffler AG: Schaeffler reports three divisions for the first time and
confirms guidance for the year
08.05.2018 / 07:53
The issuer is solely responsible for the content of this announcement.
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- 2018 started according to plan, sales growth at constant currency 3.9
percent
- Automotive OEM grows four percent above market, Automotive Aftermarket
revenue drops temporarily, rapid growth for Industrial division
- EBIT margin before special items of 11 percent at mid-target, over 300
million euros invested
- Transformation accelerated, network of plants to be realigned and
structured more efficiently
- Outlook confirmed, growth to accelerate in second half of 2018
HERZOGENAURACH, May 8, 2018. Global automotive and industrial supplier
Schaeffler announced its quarterly results for the first three months of
2018 today. As a result of the organizational realignment initiated last
year, this is the first time the company is also reporting on the
performance of its three divisions - Automotive OEM (64.2 percent of
revenue), Automotive Aftermarket (12.5 percent of revenue), and Industrial
(23.3 percent of revenue.
2018 started according to plan
The Schaeffler Group generated approximately 3.6 billion euros in revenue in
the first quarter of 2018. At constant currency, revenue increased by 3.9
percent from the relevant prior year period. Except for the new Automotive
Aftermarket division, whose revenue declined slightly in the first quarter
of 2018 due to the impact of one-off business, all divisions and regions
contributed to this revenue growth. Especially noteworthy was the rapid
growth of the Industrial division, which expanded its revenue by 10.4
percent at constant currency. Looking at the regions, the Greater China
region once again contributed the highest growth rate of 18.1 percent (at
constant currency). On the basis of this performance, the Schaeffler Group
generated earnings before financial result and income taxes (EBIT) of 391
million euros (prior year: 435 million euros) during the first three months.
This represents an EBIT margin before special items of 11 percent (prior
year: 12.2 percent). The decrease in EBIT margin before special items is due
to higher research and development expenses and additional costs related to
the transformation of the Schaeffler Group. There were no special items
during the first quarter of 2018. While capital expenditures increased
slightly, free cash flow improved from the prior year quarter, seasonally
amounting to minus 71 million euros (prior year: minus 130 million euros).
Based on this performance, net income amounted to 240 million euros (prior
year: 279 million euros), representing earnings per share of 0.36 euros
(prior year: 0.42 euros) for the first quarter of 2018.
Automotive OEM grows more rapidly than market
Automotive OEM division revenue increased by 3.2 percent at constant
currency to approximately 2.3 billion euros during the reporting period.
Compared to global automobile production, which declined by 0.7 percent over
the same period, the Automotive OEM division grew significantly above
market, outperforming it by approximately 4 percent. All four of the
Automotive OEM division's business divisions contributed to this growth,
including the newly reported "E-Mobility" business division, which expanded
its revenue by 6.6 percent at constant currency in the first quarter. At
12.4 percent, the constant currency growth rate was particularly high in the
Greater China region, followed by 3.7 percent in the Americas region, while
both Asia/Pacific and Europe generated only slight growth of approximately
0.5 percent. Based on this performance, the Automotive OEM division
generated EBIT before special items of 217 million euros (prior year: 275
million euros). The division's EBIT margin before special items for the
first three months amounted to 9.5 percent (prior year: 11.9 percent).
Reasons for the decrease include launching costs incurred for the ramp-ups
in the second half of the year as well as rising development expenses and
other expenses to accelerate implementation of the "E-Mobility" initiative
that is part of the company's program for the future, the "Agenda 4 plus
One". Based on an increasing number of product launches in the second half
of the year, the Automotive OEM division continues to expect to generate
revenue growth of 6 to 7 percent at constant currency and an EBIT margin of
between 9.5 and 10.5 percent before special items for the full year 2018.
Automotive Aftermarket revenue drops temporarily
The Automotive Aftermarket division reported a slight temporary drop in
first quarter revenue of 4.4 percent at constant currency to 446 million
euros (prior year: 484 million euros). The slight decrease is primarily due
to lower revenue in the Europe region as well as in the Americas region. The
drop in first quarter revenue largely results from the favorable impact of
one-off additional business with U.S. customers in the first quarter of 2017
that was not repeated in the first quarter of 2018. Good headway was made in
developing the Greater China region where revenue grew by 40.9 percent at
constant currency in the first quarter as a result of higher Original
Equipment customers' requirements. At 16.1 percent, the Asia/Pacific region
reported a considerable increase in revenue at constant currency as well,
largely due to growth in the Independent Aftermarket (IAM) in the Southeast
Asia subregion. These developments resulted in EBIT before special items of
80 million euros (prior year: 93 million euros). The resulting EBIT margin
before special items of 17.9 percent (prior year: 19.2 percent) slightly
exceeded the guidance for the full year. The decrease compared to the prior
year is mainly due to the one-off business in the first quarter of 2017
described above. The group expects the Automotive Aftermarket division to
generate revenue growth of 3 to 4 percent at constant currency and an EBIT
margin before special items of 16.5 to 17.5 percent for the full year.
Rapid growth for Industrial division
The Industrial division expanded its revenue to 826 million euros in the
first quarter (prior year: 782 million euros), representing a growth rate of
10.8 percent at constant currency. This means the Industrial division has
grown considerably more rapidly - for reasons related to the market - than
expected. The increase was primarily driven by the Industrial Distribution
unit which raised its revenue by 12.4 percent at constant currency. The
railway, raw materials, offroad, power transmission, and industrial
automation sector clusters also contributed to the increase. Looking at the
regions, the Greater China region reported the highest constant currency
growth rate, with approximately 40 percent, followed by 8.2 percent in the
Europe region, 5.4 percent in the Americas region, and 3.2 percent in the
Asia/Pacific region. Thus, EBIT before special items of 94 million euros
(prior year: 67 million euros) led to an EBIT margin before special items of
11.4 percent (prior year: 8.6 percent). This improvement was buoyed
especially by considerably higher demand and improvements to the functional
cost structure from the "CORE" initiative under the company's program for
the future, the "Agenda 4 plus One". For the Industrial division as well,
the group confirms its target for 2018 of increasing revenue by between 3
and 4 percent at constant currency and generating an EBIT margin before
special items of 9 to 10 percent in 2018.
Over 300 million euros invested
The Schaeffler Group generated free cash flow of minus 71 million euros in
the first quarter of 2018 (prior year: minus 130 million euros). This amount
includes 2 million euros (prior year: 19 million euros) in cash outflows for
M&A activities. Working capital increased slightly while capital
expenditures amounted to 306 million euros (prior year: 299 million euros),
representing a capex ratio of 8.6 percent (prior year: 9.1 percent). At the
same time, the Schaeffler Group's financing situation has improved further.
Despite slightly higher net financial debt, the gearing ratio, i.e. the
ratio of net financial debt to shareholders' equity, improved to
approximately 89 percent (prior year: 93 percent).
The headcount increased by 1,263 or 1.4 percent from the end of December
2017 to 91,414 as at the end of March 2018.
Transformation accelerated
As most recently described at Schaeffler AG's annual general meeting on
April 20, 2018, the 20 initiatives comprising the company's program for the
future, the "Agenda 4 plus One", are being executed consistently and
energetically. Nearly all initiatives made progress. Implementation of the
program was 40 percent complete as at the end of March 2018. In support of
this implementation, on April 16, 2018, the company signed a Future Accord
with the IG Metall trade union that complements the program, setting out
priorities for and a joint approach to implementation of the program.
In light of this - as previously announced in a press release issued May 7th
- the Board of Managing Directors has decided to take further steps,
complementing the program "Agenda 4 plus One", to optimize the Schaeffler
Group's organizational and leadership structure and to realign its network
of plants. To this end, the Board of Managing Directors agreed to dissolve
the Bearing Components & Technologies unit (BCT), which currently functions
as an internal supplier, and to integrate the plants more closely into
Schaeffler's business in keeping with the "One Schaeffler" approach. This
means that the 26 plants currently not directly assigned to the business
will be integrated into the divisions as well. The realignment is designed
to improve customer focus, strengthen the divisions' responsibility for
their own profitability, and deliver further efficiencies. Implementing
these measures will reduce headcount by approximately 950 jobs, including
about 450 jobs in Germany. The company will use socially responsible methods
to achieve these workforce reductions. No forced redundancies or site
closures are planned. These plans have already been discussed at a meeting
of the newly created Joint Steering Committee, as agreed in the Future
Accord signed with the IG Metall trade union earlier in the year. The
company will initiate consultations with the relevant employee
representative and Works Council committees in a timely manner. Once fully
implemented, the planned measures will boost the Schaeffler Group's earnings
potential by approximately 60 million euros - a potential which, the company
anticipates, will be fully realized by 2021. The group expects to recognize
one-time restructuring charges of approximately 50 million euros in 2018.
These figures do not affect the group's guidance for 2018. The measures
announced will help the Schaeffler Group sustainably achieve its Financial
Ambitions for 2020.
Outlook confirmed
For 2018, the Schaeffler Group maintains its guidance, anticipating revenue
growth of 5 to 6 percent at constant currency, an EBIT margin of 10.5 to
11.5 percent before special items, and free cash flow before cash in- and
outflows for M&A activities of approximately 450 million euros. In light of
the large number of product launches in the Automotive OEM division, the
group expects this division's growth to gather further momentum in the
second half of the year.
Klaus Rosenfeld, CEO of Schaeffler AG, was pleased with the performance of
the business in the first quarter and stated: "Despite the very demanding
market conditions and competitive environment, we have started 2018
according to plan. The measures comprising our program for the future, the
'Agenda 4 plus One', are beginning to take effect. We have initiated a
realignment of our network of plants, which will help us push ahead with our
transformation. The Automotive OEM division will also see its growth gather
speed in the second half of 2018. Based on these developments, we are fully
committed to achieving our guidance for 2018."
Disclaimer
This publication does not constitute an offer of securities for sale or a
solicitation of an offer to purchase the above mentioned securities in the
United States, Germany or any other jurisdiction.
Neither this announcement nor anything contained herein shall form the basis
of, or be relied upon in connection with, any offer or commitment whatsoever
in any jurisdiction. The securities of Schaeffler AG have not been, and will
not be, registered under the U.S. Securities Act of 1933, as amended (the
'Securities Act'). The securities of Schaeffler AG may not be offered or
sold in the United States absent registration or an applicable exemption
from registration under the Securities Act.
About Schaeffler
The Schaeffler Group is a global automotive and industrial supplier. Top
quality, outstanding technology, and exceptionally innovative spirit form
the basis for the continued success of the company. By delivering
high-precision components and systems in engine, transmission, and chassis
applications, as well as rolling and plain bearing solutions for a large
number of industrial applications, the Schaeffler Group is already shaping
"Mobility for tomorrow" to a significant degree. The technology company
generated sales of approximately 14 billion euros in 2017. With more than
90,000 employees, Schaeffler is one of the world's largest family companies
and, with approximately 170 locations in over 50 countries, has a worldwide
network of manufacturing locations, research and development facilities, and
sales companies.
[1]Schaeffler [1]Twitter 1. [1]Facebook 1. [1]Youtube 1.
1. http://www.twitte https://www.faceboo http://www.youtu
http://www.sch r.com/schaefflerg- k.com/SchaefflerDeu- be.com/schaeffle-
aeffler.com/de roup tschland rDE
Contact:
Renata Casaro, Head of Investor Relations, Schaeffler AG, Herzogenaurach,
Germany
Tel. +49 (0)9132 82 -4408, e-mail: [email protected]
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08.05.2018 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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Language: English
Company: Schaeffler AG
Industriestr. 1-3
91074 Herzogenaurach
Germany
Phone: 09132 - 82 0
E-mail: [email protected]
Internet: www.schaeffler.com
ISIN: DE000SHA0159
WKN: SHA015
Indices: MDAX
Listed: Regulated Market in Frankfurt (Prime Standard); Regulated
Unofficial Market in Berlin, Dusseldorf, Munich,
Stuttgart, Tradegate Exchange; Luxemburg
End of News DGAP News Service
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