Schaeffler Ag · XETR:SHA0

Schaeffler — FY2017 Earnings Presentation

37 slides from Schaeffler's earnings presentation, Mar 7, 2018

  1. Slide 1: Results FY 2017 Schaeffler AG

    Results FY 2017 Schaeffler AG Conference Call March 7, 2018 Munich

  2. Slide 2: Disclaimer

    Disclaimer This presentation contains forward-looking statements. The words "anticipate", "assume", "believe", "estimate", "expect", "intend", "may", "plan", "project“, "should" and similar expressions are used to identify forward-looking statements. Forward-looking statements are statements that ar

  3. Slide 3: Agenda

    Agenda 1 Overview 2 Key Investment Highlights 3 Financial Results 2017 4 Outlook 3 March 7, 2018 Schaeffler AG FY 2017 Results

  4. Slide 4: Solid results 2017 – Transformation to be accelerated

    1 Overview Solid results 2017 – Transformation to be accelerated Key aspects 1 FY 2017 Schaeffler Group Sales +5.9%1) – All divisions and regions contributed FY 2017 EBIT margin2) at 11.3% (FY 2016: 12.7%) – 2 Net Income3) increased to EUR 980 mn (+14% vs. Prior Year) FY 2017 Free Cash Flow of EUR 4

  5. Slide 5: New board member – Andreas Schick becomes new COO as of April 1st

    1 Overview New board member – Andreas Schick becomes new COO as of April 1st Decisions Supervisory Board, 2nd March  Andreas Schick becomes Member of the Board of Managing Directors of Schaeffler AG, responsible for Production, Logistics and Purchasing as of April 1st, 2018  Oliver Jung leaves Sch

  6. Slide 6: Performance 2017 – Highlights and Lowlights

    1 Overview Performance 2017 – Highlights and Lowlights 10 Performance Indicators 2017 Growth Earnings Quality Cash flow Gearing EPS + - - + + Financial Performance +5.9% -1.4%pts -247mn <100% +14% EBIT-Margin before special Sales growth vs. prior year items, vs. prior year 2016 in Free Cash Flow vs.

  7. Slide 7: Sales Schaeffler Group FX-adjusted plus 5.9% – All regions and divisions contributed

    1 Overview 1 Sales Schaeffler Group FX-adjusted plus 5.9% – All regions and divisions contributed Sales Sales by region FY 2017 Asia/Pacific in EUR mn y-o-y growth1) +5.6% +5.9%1) vs FY 2016 10% Greater China 14,021 18% +24.1% 51% Europe 13,338 +1.4% 13,179 Americas 21% +4.6% Sales by division2) y-o

  8. Slide 8: EBIT Margin at 11.3% – Net Income further increased by 14% to EUR 980 mn

    1 Overview 2 EBIT Margin1) at 11.3% – Net Income2) further increased by 14% to EUR 980 mn EBIT before special items Net Income2) and EPS3) in EUR mn in EUR mn -7% +14% vs FY 2016 vs FY 2016 1,700 1,676 980 1,584 859 591 R&D to EPS3) 5.1% 5.6% 6.0% 1.28 1.30 1.48 sales in EUR 2015 2016 2017 2015 2016

  9. Slide 9: Free Cash Flow EUR mn – Capex ratio increased to 9.1%

    1 Overview 3 Free Cash Flow EUR 488 mn – Capex ratio increased to 9.1% Free Cash Flow FCF excluding M&A Key aspects in EUR mn EUR 515mn 735 Free Cash Flow decreased from EUR 735 mn to EUR 488 mn due to lower profitability and higher capital expenditures Capex to sales at 9.1% in FY 2017 (8.6% in F

  10. Slide 10: FY 2017 Guidance achieved – Financial Ambitions 2020 confirmed

    1 Overview 4 FY 2017 Guidance1) achieved – Financial Ambitions 2020 confirmed FY 2017 Guidance FY 2018 Financial Ambitions 2020 Sales Growth +5.9%  FX-adjusted 5-6% FX-adjusted Ø 4-6% p.a. FX-adjusted EBIT Margin 11.3%  before special items 10.5-11.5% before special items 12-13% before special ite

  11. Slide 11: New business structure with divisions – More transparency, more accountability

    1 Overview 5 New business structure with 3 divisions – More transparency, more accountability New business structure Key performance indicators FY 20164) FY 20174) 64%3) 13%3) 23%3) Divisions Automotive Automotive Industrial Sales1) 8,525 mn 8,991 mn OEM Aftermarket Automotive OEM Business Divisions

  12. Slide 12: Excellence program Agenda 4 Plus One – Increased to 20 initiatives

    1 Overview 6 Excellence program "Agenda 4 Plus One" – Increased to 20 initiatives Completion ratio as of Dec 31,2017: 35%2) Agenda 4 plus One 20 strategic initiatives Customer Focus Operational Excellence 1 Customer Excellence 4 Quality for Tomorrow 5 Global Footprint 2 E-Mobility 6 Factory for Tomo

  13. Slide 13: Acceleration of transformation – 5 key questions

    2 Key Investment Highlights Acceleration of transformation – 5 key questions 5 key questions A What is the financial impact of Agenda 4 plus One? B What is the expected profitability of your 3 divisions in 2018? C Accelerating our How will you close the gap to your Financial Ambitions 2020? transfor

  14. Slide 14: What is the financial impact of Agenda 4 plus One?

    2 Key Investment Highlights A "What is the financial impact of Agenda 4 plus One?" Financial impact Agenda 4 plus One Key aspects in EUR mn Agenda 4 plus One with its 20 initiatives led to EUR 159 mn expenditures in 2017 reducing the EBIT before special items EBIT impact before special Items in EUR

  15. Slide 15: What is the expected profitability of your 3 divisions?

    2 Key Investment Highlights B "What is the expected profitability of your 3 divisions?" Includes impact of "Agenda 4 Plus One" Proforma Proforma Divisional Guidance FY 2016 FY 2017 FY 2018 64%3) Sales Growth1) +4.8% +6.5% Sales growth1) 6-7% Automotive OEM EBIT margin2) 12.8% 10.8% EBIT margin2) 9.5

  16. Slide 16: How will you close the gap to your Financial Ambitions 2020?

    2 Key Investment Highlights C "How will you close the gap to your Financial Ambitions 2020?" Gap to Financial Ambitions 2020 - EBIT before special items2) Key aspects in EUR mn ̴ 2,000 Financial Ambition for 2020 based upon operating performance and realization of Agenda 4 plus One Agenda 4 plus On

  17. Slide 17: How is your order book developing?

    2 Key Investment Hightlights D "How is your order book developing?" For illustration Automotive OE Order Intake1)3) Industrial Order book 3M purposes only in EUR bn y-o-y growth2) 12.6 Business expectation based upon order book 3M3) 11.9 11.5     + 35 5.4 H2 5.2 30 25 6.8 20 15 10 5 0 H1 6.7 7.2

  18. Slide 18: How do you plan to allocate capital and use your cash flow going forward?

    2 Key Investment Highlights E "How do you plan to allocate capital and use your cash flow going forward?" Free Cash Flow Analysis Key aspects in EUR mn FCF generation Actual Actual Guidance 2016 2017 2018 Schaeffler Group generates significant Free Cash Flow from its EBITDA 2,293 2,295 operating bu

  19. Slide 19: Schaeffler Mobility for tomorrow – Transformation to be accelerated

    2 Key Investment Highlights Schaeffler "Mobility for tomorrow" – Transformation to be accelerated Schaeffler Group Key aspects Today  Strategy "Mobility for tomorrow" successfully implemented  Excellence program "Agenda 4 plus One" increased to 20 initiatives  3 divisions from January 1st 2018 Su

  20. Slide 20: Key figures FY 2017

    3 Financial Results 2017 Key figures FY 2017 FY 2017 Q4 2017 in EUR mn FY 2016 FY 2017 vs. FY 2016 Q4 2016 Q4 2017 vs. Q4 2016 +5.1% +5.4% Sales 1 13,338 14,021 +5.9%1) 3,361 3,541 +8.5%1) 1,556 1,528 -28 mn 280 319 +39 mn EBIT 1,7002) 1,5842) -116 mn 4242) 3882) -36 mn 2 11.7% 10.9% -0.8%-pts. 8.3%

  21. Slide 21: Sales Schaeffler Group – Sales growth FY 2017 5.9%

    3 Financial Results 2017 1 Sales Schaeffler Group – Sales growth FY 2017 5.9%1) Sales Key aspects in EUR mn +8.5%1) vs Q4 2016  FY 2017 growth of +5.9%1) with acceleration in Q4 3,574  Automotive growth with outperformance of 3.8% for the Full 3,541 3,343 3,369 3,265 3,361 3,472 3,434 Year 2017 

  22. Slide 22: Sales Automotive Division – Sales growth FY 2017 5.9%

    3 Financial Results 2017 1 Sales Automotive Division – Sales growth FY 2017 5.9%1) Sales Sales by region FY 2017 in EUR mn y-o-y growth1) Asia/Pacific +8.3%1) +5.8% vs Q4 2016 Greater China 11% +22.9% 2,791 2,771 18% 2,631 2,664 2,643 2,578 2,604 50% 2,525 21% Americas Europe +4.9% +1.3% Sales by bu

  23. Slide 23: Sales Industrial Division – Sales growth FY 2017 5.7%

    3 Financial Results 2017 1 Sales Industrial Division – Sales growth FY 2017 5.7%1) Sales Industrial sales growth by sector cluster FY 20171) in EUR mn Industrial Distribution Wind +9.0% 1) Two-Wheelers vs Q4 2016 Aerospace Rail 808 Industrial Automation 783 791 770 765 765 740 Raw Materials 730 Offr

  24. Slide 24: Group EBIT margin – Q4 2017 weaker than expected

    3 Financial Results 2017 2 Group EBIT margin – Q4 2017 weaker than expected EBIT1) Moving parts Q4 2017 in EUR mn  Very high level of demand in Q4 compared to previous -1.6%-pts. vs Q4 2016 quarters led to: 438 435 421 417 424 416 388  Inefficiencies in plants caused by strained supply 3452) chain

  25. Slide 25: Automotive EBIT – EBIT margin FY 2017 at 12.2%

    3 Financial Results 2017 2 Automotive EBIT – EBIT margin1) FY 2017 at 12.2% EBIT1) EBIT1) FY 2016 vs. FY 2017 in EUR mn in EUR mn -2.3%-pts. +5 vs Q4 2016 1,481 -95 367 368 362 384 367 345 341 277 -54 1,481 1,330 -22 +15 1,330 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 EBIT Gross R&D Selling Administrative O

  26. Slide 26: Industrial EBIT – EBIT margin FY 2017 at 8.1%

    3 Financial Results 2017 2 Industrial EBIT – EBIT margin1) FY 2017 at 8.1% EBIT1) EBIT1) FY 2016 vs. FY 2017 in EUR mn in EUR mn +0.6%-pts. -26 vs Q4 2016 +7 +55 0 -1 70 71 68 68 254 54 55 47 40 219 254 219 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 EBIT Gross R&D Selling Administrative Others EBIT EBIT FY 2

  27. Slide 27: Net income – FY 2017 plus 14%

    3 Financial Results 2017 3 Net income1) – FY 2017 plus 14% Net income1) Key aspects in EUR mn 306 FY 2017 EPS improved by 14% to EUR 1.48 279 Significant improvement of financial result due to lower 253 241 interest expenses on financial debt 206 Benefit from lower tax rate of 25.4% in FY 2017 vs

  28. Slide 28: Working Capital ratio at 16.7% per year end – Capex ratio 11.3% in Q4 2017

    3 Financial Results 2017 4 Working Capital ratio at 16.7% per year end – Capex ratio 11.3% in Q4 2017 Working capital1) Capex2) in EUR mn Q4 2017 includes in EUR mn 150 mn EUR Receivable 400 Sale Program 318 317 299 295 279 268 243 2,796 2,802 2,820 2,756 2,740 2,733 2,498 2,342 1,146 1,273 Q1 Q2 Q3

  29. Slide 29: Solid Free Cash Flow generation – Capex Ratio increased to 9.1%

    3 Financial Results 2017 4 Solid Free Cash Flow generation – Capex Ratio increased to 9.1% Free Cash Flow development Key aspects in EUR mn Free Cash Flow decreased from EUR 735 mn to EUR 488 mn due to lower profitability1) and higher capex 328 333 263 256 244 Capex to sales at 9.1% in FY 2017 (8.

  30. Slide 30: Net debt and Gearing ratio – Gearing ratio with 93% at all time low

    3 Financial Results 2017 5 Net debt and Gearing ratio – Gearing ratio with 93% at all time low Net financial debt and Gearing ratio Key aspects in EUR mn  Lower net debt level in FY 2017 due to full redemption of a bond with a principal of USD 700 mn in Q2 2017 4,909 4,874  Gearing ratio further i

  31. Slide 31: Schaeffler Value Added EUR mn – ROCE 19.9%

    3 Financial Results 2017 Schaeffler Value Added EUR 787 mn – ROCE 19.9% Schaeffler Value Added 1) 2) Key aspects Schaeffler Value Added in EUR mn Schaeffler Value Added 1) measures internal value creation on 952 939 a group-wide basis 902 801 Schaeffler Value Added 2017 of EUR 787 mn below prior y

  32. Slide 32: FY 2018 Guidance

    4 Outlook FY 2018 Guidance Group Guidance Divisional Guidance published on February 1st published on March 7th Group Automotive OEM Automotive AM Industrial Sales growth 5-6% 6-7% 3-4% 3-4% FX-adjusted FX-adjusted FX-adjusted FX-adjusted + EBIT margin 10.5-11.5% 9.5-10.5% 16.5-17.5% 9-10% before spe

  33. Slide 33: Financial calendar 2018

    4 Outlook Financial calendar 2018 Mar 7 FY 2017 Earnings Release Mar 8 Roadshow London Mar 9 Roadshow Frankfurt Mar 22 MainFirst Conference, Copenhagen Apr 20 AGM, Nuremberg May 8 Q1 2018 Earnings Release June 12 Exane BNP CEO conference, Paris June 22 Deutsche Bank E-Mobility Conference, London Aug

  34. Slide 34: IR Contact

    IR Contact Contacts Renata Casaro +49 9132 82 88125 [email protected] Niels Fehre, CFA +49 9132 82 85805 [email protected] Jens-Philipp Briemle +49 9132 82 86377 [email protected] Johann Eisenmann +49 9132 82 88987 [email protected] www.schaeffler.

  35. Slide 35: Key figures by division – new structure

    Backup Key figures1) by division – new structure Automotive OEM Industrial in EUR mn in EUR mn Q1 '17 Q2 '17 Q3 '17 Q4 '17 FY '17 Q1 '17 Q2 '17 Q3 '17 Q4 '17 FY '17 Sales 2,308 2,220 2,138 2,325 8,991 Sales 782 808 790 770 3,150 Sales Growth2) +6.4% +3.5% +7.4% +8.7% +6.5% Sales Growth2) +0.2% +4.5%

  36. Slide 36: Sales by region, business division and sector cluster – old structure

    Backup Sales by region, business division and sector cluster – old structure Automotive sales growth1) by region Industrial sales growth1) by region Q1 '17 Q2 '17 Q3 '17 Q4 '17 FY '17 Q1 '17 Q2 '17 Q3 '17 Q4 '17 FY '17 Europe +3.8% -5.8% +2.3% +5.6% +1.3% Europe -1.3% +0.6% 3.1% 4.5% 1.7% Americas +

  37. Slide 37: Corporate and Financing Structure

    Backup Overview Corporate and Financing Structure Corporate structure (simplified) Financing structure as of December 31, 2017 in EUR2) mn, as of December 31, 2017 IHO Verwaltungs GmbH INA-Holding Schaeffler Debt instrument Nominal Nominal Interest Maturity Rating GmbH & Co. KG (USD mn) (EUR mn) (F/

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