Schaeffler Ag · XETR:SHA0

Schaeffler — 9M 2018 Earnings Presentation

31 slides from Schaeffler's earnings presentation, Nov 7, 2018

  1. Slide 1: Results 9M 2018 Schaeffler AG Conference Call

    Results 9M 2018 Schaeffler AG Conference Call November 7, 2018 Herzogenaurach

  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 Business Highlights 9M 2018 3 Financial Highlights Q3 2018 4 Outlook 3 November 7, 2018 Schaeffler AG 9M 2018 Results

  4. Slide 4: Mixed 9M results – Full-year guidance adjusted on October 30th

    1 Overview Mixed 9M results – Full-year guidance adjusted on October 30th 9M'17 9M'18 Key aspects Group 1 +5.1% 1) 9M Group results impacted by mixed Q3 – Sales 9M +5.1%1), EBIT margin2) 9M 10.7% (PY Sales 10,480 mn 10,714 mn 11.4%) after 11.1% in H1, FCF3) 9M at EUR 127 mn (PY: EUR 247 mn) 2 EBIT m

  5. Slide 5: Automotive OEM – Good Outperformance in a weak market environment

    2 Business Highlights 9M 2018 Automotive OEM – Good Outperformance in a weak market environment, EBIT margin2) at 8.8% Automotive OEM sales in EUR mn +4.3%1) Subdued growth development due to weak market environment in China and Europe (WLTP), FX-adjusted sales in Q3'18 +3.2%1) – All business divisi

  6. Slide 6: Automotive OEM – Schaeffler e-Axle transmission driving the Audi eTron Quattro

    2 Business Highlights 9M 2018 Automotive OEM – Schaeffler e-Axle transmission is driving the brand new Audi eTron Quattro E-Axle subsystems 2018 Schaeffler‘s new Lightweight E-Axle Transmissions for the Audi eTron Quattro SOP Q3/2018  Schaeffler supplies both E-Axle Power Electronics Transmissions

  7. Slide 7: Automotive Aftermarket – Soft Q3 leading to sales growth 9M +1.3%

    2 Business Highlights 9M 2018 Automotive Aftermarket – Soft Q3 leading to sales growth1) 9M +1.3%, EBIT margin 9M at 18.3%2) Automotive Aftermarket sales in EUR mn +1.3%1) Q3 sales down 3%1) bringing FX adjusted sales growth to +1.3%1) in 9M – Sales development in Q3 driven by temporary lower demand

  8. Slide 8: Automotive Aftermarket – Further footprint optimization and presence at Automechanika

    2 Business Highlights 9M 2018 Automotive Aftermarket – Further footprint optimization and presence at Automechanika Closer to our customers around the globe: Showcasing the future: 3 new kitting operations Schaeffler at the Automechanika 2018 ▪ Connecting with customers: 260 meetings in 13 on-site m

  9. Slide 9: Industrial – Very strong performance continued

    2 Business Highlights 9M 2018 Industrial – Very strong performance continued: Sales growth1) 9M +9.8%, EBIT margin2) 9M at 11.8% Industrial sales in EUR mn +9.8%1) Very strong Q3 sales growth of 9.4% bringing FX-adjusted sales growth in 9M'18 2,535 to 9.8%1) – Growth driven by all sectors and region

  10. Slide 10: Industrial – Strong growth across main sector clusters

    2 Business Highlights 9M 2018 Industrial – Strong growth across main sector clusters Key aspects YOY Growth rates Q3´181) Ongoing high growth in all regions, with Europe and Americas Regional growth performance accelerating against Q2. Positive price momentum continues in % <-10 -5 to -10 0 to -5 0

  11. Slide 11: Agenda 4 plus One on track – Global Footprint Initiative in the UK

    2 Business Highlights 9M 2018 Agenda 4 plus One on track – Global Footprint Initiative in the UK Key aspects Rationale in the UK  Company remains committed to UK, but with smaller  Decision based on economic and commercial imperatives production footprint  Optimize footprint with only 1 plant (Sh

  12. Slide 12: Free Cash Flow before M&A Q3 at EUR 201 mn – Capex Ratio Q3 at 7.4%

    2 Business Highlights 9M 2018 Free Cash Flow before M&A Q3 at EUR 201 mn – Capex Ratio Q3 at 7.4% Free Cash Flow FY 2017 Target: Key aspects in EUR mn FCF ~ EUR 500mn1)  FCF before M&A at EUR 201 mn in Q3’18 (PY: EUR 333 mn), FCF -119 mn vs 9M 2017 conversion ratio 17% 333  Lower EBIT and higher i

  13. Slide 13: Key figures Q3 2018 and 9M 2018

    3 Financial Results Q3 2018 Key figures Q3 2018 and 9M 2018 9M 2018 Q3 2018 in EUR mn 9M 2017 9M 2018 vs. 9M 2017 Q3 2017 Q3 2018 vs. Q3 2017 +2.2% +2.5% Sales 1 10,480 10,714 3,434 3,521 +3.7%1) +5.1%1) -46 mn -61 mn EBIT2) 1,196 1,150 416 355 -3.8% -14.7% 2 EBIT margin2) 11.4% 10.7% -0.7%-pts. 12.

  14. Slide 14: Sales growth Q3'18 +3.7% – Americas and Greater China with highest growth

    3 Financial Results Q3 2018 1 Sales growth Q3'18 +3.7%1) – Region Americas and Greater China with highest growth rates Sales Key aspects Q3'18 in EUR mn +5.1%1)  Group sales up by +3.7%1) (Q3'17: +7.4%1)), all regions vs 9M 2017 contributed 3,574 3,472 3,434 3,541 3,551  Sales growth mainly driven

  15. Slide 15: EBIT Margin Q3'18 10.1% – 2.0%-pts. below prior year quarter

    3 Financial Results Q3 2018 2 EBIT Margin Q3’18 10.1% – 2.0%-pts. below prior year quarter EBIT1) Key aspects Q3'18 in EUR mn  Gross profit margin decreased from 28.1% to 26.5% mainly -46 mn driven by ramp up costs, project delays in China and higher vs 9M 2017 production costs (including higher ra

  16. Slide 16: Automotive OEM – 5.2%-pts. outperformance versus market in Q3'18

    3 Financial Results Q3 2018 A Automotive OEM – 5.2%-pts. outperformance versus market in Q3'18 Automotive OEM sales and market development Q3 Sales by business division in EUR mn Europe Americas Greater China Asia/Pacific Q3 2017 Q3 2018  1) +9.9% Engine Systems 669 691 +4.1% +1.6% +2.2% +2.5% Tran

  17. Slide 17: Automotive OEM – Q3 EBIT margin of 7.9% (Q3'17: 10.7%)

    3 Financial Results Q3 2018 A Automotive OEM – Q3 EBIT margin2) of 7.9% (Q3'17: 10.7%) EBIT1) Q3 2017 vs. Q3 2018 Key aspects in EUR mn  Gross margin declined from 25.6% to 23.1% mainly driven by ramp up costs, project delays in China and 229 higher production costs (including +1 higher raw materia

  18. Slide 18: Automotive Aftermarket – High comps in Americas and temporary lower sales in Europe

    3 Financial Results Q3 2018 B Automotive Aftermarket – High comps in Region Americas and temporary lower sales in Europe Automotive Aftermarket sales by quarter Sales by region in EUR mn y-o-y growth Q3 2017 Q3 2018 1) +1.3%1) vs 9M 2017 Europe 375 355 -4.3% 484 506 446 479 476 444 446 Americas 106

  19. Slide 19: Automotive Aftermarket – Q3 EBIT margin of 16.8% (Q3'17: 23.1%)

    3 Financial Results Q3 2018 B Automotive Aftermarket – Q3 EBIT margin2) of 16.8% (Q3'17: 23.1%) EBIT1) Q3 2017 vs. Q3 2018 Key aspects in EUR mn  Gross margin decreased from 38.1% to 34.7% of sales, mainly driven by higher production costs and price pressure in 117 some markets  Selling expenses h

  20. Slide 20: Industrial Division – All sectors and regions growing in Q3

    3 Financial Results Q3 2018 C Industrial Division – All sectors and regions growing in Q3 Industrial sales by quarter Sales by region in EUR mn +9.8%1) y-o-y growth Q3 2017 Q3 2018 1) vs 9M 2017 826 855 854 Europe 446 469 +6.3% 782 808 790 770 Americas 139 150 +10.1% 2,380 2,535 Greater China 130 1

  21. Slide 21: Industrial Division – Q3 EBIT margin of 12.1% (Q3'17: 8.9%)

    3 Financial Results Q3 2018 C Industrial Division – Q3 EBIT margin2) of 12.1% (Q3'17: 8.9%) EBIT1) Q3 2017 vs. Q3 2018 Key aspects in EUR mn  Gross margin increased to 30.8% (Q3'17: 28.4%) driven by positive volume effects and favourable pricing +392) 103  Successful execution on CORE3) – -1 CORE

  22. Slide 22: Net income Q3 2018 EUR 257 mn – EPS at 1.16 EUR in 9M 18

    3 Financial Results Q3 2018 3 Net income Q3 2018 EUR 257 mn – EPS at 1.16 EUR in 9M 2018 Net income1) Schaeffler Value Added3) in EUR mn 2.7 in EUR mn 902 952 939 -3.2% 801 787 vs 9M 2017 721 306 279 269 257 240 23.7% RoCE4) 23.1% 206 22.6% 22.3% 19.9% 189 18.8% 2013 2014 2015 2016 2017 9M 2018 791

  23. Slide 23: Working Capital ratio 18.7% of sales – Capex ratio 7.4% of sales in Q3

    3 Financial Results Q3 2018 4 Working Capital ratio 18.7% of sales – Capex ratio 7.4% of sales in Q3 Working capital1) Capex2) in EUR mn in EUR mn 400 306 299 295 289 2,820 2,756 2,733 262 2,737 2,672 279 2,575 2,342 873 857 1.2 1.1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2017 2018 2017 2018 In %

  24. Slide 24: Net debt of EUR 2,644 mn – Gearing ratio at 91%

    3 Financial Results Q3 2018 5 Net debt of EUR 2,644 mn – Gearing ratio at 91% Net financial debt and Gearing ratio Key aspects in EUR mn  Net debt increased to EUR 2,644 mn (FY'17: EUR 2,370 mn) 2,956 mainly driven by a partly draw of the Revolving Credit Facility 2,742 2,833 2,620 2,644 2,370 (EUR

  25. Slide 25: Guidance FY 2018 – Adjustment triggered by Automotive OEM business in China

    4 Outlook Guidance FY 20185) – Adjustment triggered by Automotive OEM business in China Group Guidance Divisional Guidance Old4) New5) Automotive OEM Automotive AM Industrial Sales growth1) +3.5-4.5% +1.5-2.5% +5-6% +4-5% (before 4.5-5.5%) +8-9% (in %) (before 3-4%) EBIT margin2) 8-8.5% 17-17.5% 10.

  26. Slide 26: Guidance FY 2018 – Adapting execution to a more complex market environment

    4 Outlook Guidance FY 2018 – Adapting execution to a more complex market environment Sharp expected market decline of China Light Vehicle Production/Sales is the key catalyst 1 for reducing FY 2018 Group and Automotive OEM Guidance for sales and EBIT margin Softness in Automotive Aftermarket Q3 sale

  27. Slide 27: Financial calendar 2018 / 2019

    4 Outlook Financial calendar 2018 / 2019 Roadshows and conferences Regular capital market communication Nov 7 9M 2018 Earnings Release Nov 7 9M 2018 Earnings Release Nov 8 Citigroup Roadshow, London Mar 6 FY 2018 Earnings Release Nov 9 Warburg Roadshow, Frankfurt Apr 24 Annual General Meeting Nov 20

  28. Slide 28: IR Contact

    IR Contact Investor Relations Phone: + 49 9132 82 4440 Email: [email protected] Web: www.schaeffler.com/ir 28 November 7, 2018 Schaeffler AG 9M 2018 Results

  29. Slide 29: Automotive OEM – Challenging market environment in China and Europe (WLTP) in Q3

    2 Business Highlights 9M 2018 Automotive OEM – Challenging market environment in China and Europe (WLTP) in Q3 Region Greater China Region Greater China FY 18: +0.5% 30% LVP production1) FY 17: +2.8% ▪ China market weakness only partly reflected in the latest IHS figures, other indicators pointing t

  30. Slide 30: Key figures by Group and division – new structure

    Backup Key figures1) by Group and division – new structure Group Automotive Aftermarket in EUR mn in EUR mn Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Sales 3,574 3,472 3,434 3,541 3,551 3,642 3,521 Sales 484 444 506 446 446 479 476 Sales Growth

  31. Slide 31: Overview Corporate and Financing Structure

    Backup Overview Corporate and Financing Structure Corporate structure (simplified) Financing structure as of September 30, 2018 in EUR2) mn, as of September 30, 2018 IHO Verwaltungs GmbH INA-Holding Schaeffler Debt instrument Nominal Nominal Interest Maturity Rating GmbH & Co. KG (USD mn) (EUR mn) (

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