Schaeffler Ag · XETR:SHA0
Schaeffler — Q2 2019 Earnings Presentation
30 slides from Schaeffler's earnings presentation, Aug 6, 2019
Slide 1: Results Q2 and H1 2019 Schaeffler AG Conference Call
Results Q2 and H1 2019 Schaeffler AG Conference Call August 6th, 2019 Herzogenaurach
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
Slide 3: Agenda
Agenda 1 Overview 2 Business Highlights Q2 and H1 2019 3 Financial Results Q2 and H1 2019 4 Outlook 06 August 2019 Results Q2 and H1 2019 Schaeffler AG 3
Slide 4: Overview: Q2 2019 key messages
1 Overview Q2 2019 supported by stronger Industrial performance – Tough market environment in automotive businesses Key messages Q2 2019 Sales growth1 Q2 Gross margin Q2 1 Group sales growth1 Q2’19 of -2.0% (H1’19: -0.8%) impacted by weak Automotive end markets in Europe and Greater China -2.0% 25.0
Slide 5: Schaeffler Group Q2 2019 – Highlights and lowlights
1 Overview Schaeffler Group Q2 2019 – Highlights and lowlights Automotive OEM: 330 bps LVP1 Q2 outperformance Continued weakness of Automotive OEM business both driven by Americas and Greater China; in Greater China (-10.7%2) and Europe (-6.8%2) E-Mobility Business Division grew more than 35% in Q2
Slide 6: Automotive OEM – Earnings quality still low in a tough environment
2 Business Highlights Q2 and H1 2019 Automotive OEM – Earnings quality still low in a tough environment, more actions needed Sales in EUR mn -2.9%1 Q2 Outperformance of LVP3 by 330 bps, driven by strong growth in Americas and -4.2%1 Outperformance in Greater China 4,587 4,514 2,307 2,229 Strong orde
Slide 7: Automotive OEM – Book to Bill Ratio at 1.8x in H1
2 Business Highlights Q2 and H1 2019 Automotive OEM – Book to Bill Ratio2 at 1.8x in H1 Automotive OEM Order Intake1 Business Highlights 1 Received orders in given time period | 2 Lifetime Sales / Current period revenue in bn EUR 1 All Business divisions contributing with a Book to Bill Ratio2 in H1
Slide 8: Automotive Aftermarket – Weak sales in Europe
2 Business Highlights Q2 and H1 2019 Automotive Aftermarket – Weak sales in Europe, lower quality of earnings on top of high comps Sales in EUR mn -2.4%1 Independent Aftermarket growing with +1.1%1 in Q2, driven by double-digit -3.6%1 growth1 in Americas 926 905 480 465 Realized price increases show
Slide 9: Automotive Aftermarket – Market launch and AKO Europe milestone
2 Business Highlights Q2 and H1 2019 Automotive Aftermarket – Successful market launch and milestone achievement in AKO Europe FAG steering parts launched in Europe in June, 2019 AKO Europe construction activities progressing u Market-leading range of chassis components and repair solutions from u S
Slide 10: Industrial – Strong growth and further improved earnings quality
2 Business Highlights Q2 and H1 2019 Industrial – Strong growth and further improved earnings quality Sales in EUR mn +5.9%1 Strong growth in Greater China in Q2 (+23.0%1) mainly driven by sector cluster +5.0%1 Wind with 39.1% growth; all regions growing except Asia/Pacific 1,679 1,806 911 855 Conti
Slide 11: Industrial – Order book 3M indicates further growth
2 Business Highlights Q2 and H1 2019 Industrial – Order book 3M2 indicates further growth, but at slower pace Business highlights Orderbook 3M yoy growth Railway u Successful growth with axlebox bearings in Europe u Industry 4.0: joint development project with Siemens for + Order book 3M2 Sales1 “in
Slide 12: Capital allocation – Increased spending discipline in Q2
2 Business Highlights Q2 and H1 2019 Capital allocation – Increased spending discipline in Q2 starting to gain traction Investment1 allocation | in EUR mn Key aspects u Measures to improve capital efficiency start to gain momentum; Q2 Capex ratio2 at 6.1% FY 17 FY 18 Q2 18 Q2 19 H1 19 u Stricter app
Slide 13: Key figures Q2 and H1 2019
3 Financial Results Q2 and H1 2019 Key figures Q2 and H1 2019 Q2 2019 H1 2019 in EUR mn Q2 2018 Q2 2019 vs. Q2 2018 H1 2018 H1 2019 vs. H1 2018 -1.0% +0.5% Sales 1 3,641 3,604 7,193 7,226 -2.0%1 -0.8%1 Gross Profit 973 899 -74 mn 1,933 1,813 -120 mn 2 Gross Margin 26.7% 25.0% -1.7pp 26.9% 25.1% -1.8
Slide 14: Sales growth – Weak in Europe and China, strong in Americas
3 Financial Results Q2 and H1 2019 1 Sales growth – Weak sales development in Europe and China in Q2, strong in Americas Sales | in EUR mn Key aspects Q2 -0.8%1 u Group sales down by 2.0%1 vs H1 2018 u Negative sales development driven by Europe (-5.0%1) and Greater China (-2.2%1) u Mixed sales deve
Slide 15: Gross Profit – Gross margin impacted by weak volumes and mix
3 Financial Results Q2 and H1 2019 2 Gross Profit – Gross margin impacted by weak volumes and negative mix effects Gross Profit1 Q2 2018 vs. Q2 2019 | in EUR mn Key aspects Q2 1 1 Negative volume effect mainly in transmission systems business 2 division and related to Greater China -16 3 -29 2 Negat
Slide 16: EBIT margin – Sequential improvement, lower earnings quality
3 Financial Results Q2 and H1 2019 3 EBIT margin – Sequential improvement, however lower earnings quality due to Automotive OEM EBIT1 | in EUR mn Key aspects Q2 -238 mn u Automotive OEM division’s EBIT margin was the main reason of the vs H1 2018 Group’s EBIT margin yoy erosion u Automotive Aftermar
Slide 17: Automotive OEM – Good outperformance, lower quality of earnings
3 Financial Results Q2 and H1 2019 Automotive OEM – Good outperformance, but lower quality of earnings Sales by business division | yoy growth EBIT2 Q2 2018 vs. Q2 2019 | in EUR mn Q2 2018 Q2 2019 ∆1 Engine Systems 713 688 -4.4% Transmission Systems 1,075 976 -10.4% E-Mobility 119 160 +37.6% Chassis
Slide 18: Automotive Aftermarket – Weak European market
3 Financial Results Q2 and H1 2019 Automotive Aftermarket – Weak European market, lower quality of earnings on top of high comps Sales by region | yoy growth EBIT4 Q2 2018 vs. Q2 2019 | in EUR mn Q2 2018 Q2 2019 ∆1 Europe 363 335 -7.7% Americas 84 95 +12.1% +1 +1 Greater China 20 22 +9.6% -166 -3 As
Slide 19: Industrial – Strong growth, further improved earnings quality
3 Financial Results Q2 and H1 2019 Industrial – Strong growth, further improved earnings quality Sales by region | yoy growth EBIT2 Q2 2018 vs. Q2 2019 | in EUR mn Q2 2018 Q2 2019 ∆1 +313 Europe 473 480 +0.9% Americas 149 160 +2.8% -1 -0 -5 Greater China 154 191 +23.0% -15 Asia/Pacific 79 80 -0.2% T
Slide 20: Net income Q2 2019 EUR 136 mn – EPS EUR 0.21
3 Financial Results Q2 and H1 2019 4 Net income1 Q2 2019 EUR 136 mn – EPS Q2 2019 at EUR 0.21 (PY: EUR 0.41) Net income1 | in EUR mn Key aspects Q2 -233 mn u Net income decreased to EUR 136 mn (Q2’18: EUR 268 mn) vs H1 2018 u Decrease driven by lower EBIT u EPS decreased to EUR 0.21 (Q2’18: EUR 0.41
Slide 21: Free Cash Flow before M&A H1 at EUR -229 mn
3 Financial Results Q2 and H1 2019 5 Free Cash Flow before M&A1 FY at EUR -229 mn (PY: EUR -75 mn) Free Cash Flow before M&A1 | in EUR mn Key aspects -154 mn u FCF1 in H1 decreased to EUR -229 mn (PY: EUR -75 mn) vs H1 2018 u FCF1 in H1 negatively impacted by strategic investments, e.g. AKO Europe –
Slide 22: Working Capital ratio 19.2% – Capex ratio 6.1% in Q2
3 Financial Results Q2 and H1 2019 6 Working Capital ratio 19.2% – Capex ratio 6.1% in Q2 Working capital1 | in EUR mn Capex3 | in EUR mn 2,575 2,737 2,672 2,219 2,579 2,733 306 289 262 375 373 221 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 595 594 in % of sales (LTM) in
Slide 23: Net debt of EUR 3,167 mn – Gearing ratio at 116%
3 Financial Results Q2 and H1 2019 7 Net debt of EUR 3,167 mn – Gearing ratio1 at 116% Net financial debt and Gearing ratio | in EUR mn Key aspects u Net Debt increased seasonally to EUR 3,167 mn due to dividend payment; Net leverage ratio2 at 1.6x u Gearing Ratio at 116% u Lower cash position due t
Slide 24: FY 2019 Guidance – As adjusted in the July 29th pre-release
4 Outlook FY 2019 Guidance – As adjusted in the July 29th pre-release Group Guidance Divisional Guidance Previous Guidance New Guidance Automotive Automotive Industrial FY 2019 FY 2019 OEM Aftermarket Previous New Previous New Previous New Sales growth1 1 - 3% -1 - +1% 1 - 3% -2 - 0% 1 - 3% -2 - 0%
Slide 25: Conclusion & Outlook – Focus on self-help measures and cash generation
4 Outlook Conclusion & Outlook – Full focus on structural self-help measures and cash generation Automotive OEM: Promising strong Order Intake (Book-to-Bill ratio 1.8x) including 1 1.1 bn EUR E-Motor order; market conditions remain subdued, full focus on short-term measures and RACE execution going
Slide 26: Financial calendar 2019 / 2020
4 Outlook Financial calendar 2019 / 2020 – CMD on September 11th 2019 in Frankfurt Roadshows Regular capital market communication Aug 7th London Jul 29th H1 Pre-Release – FY 2019 Guidance Adjustment Aug 8th Frankfurt Aug 6th H1 2019 Earnings Release CMD 2019, Deutsche Bank IAA Conference - Oct 8th H
Slide 27: IR Contact
IR Contact Investor Relations Phone: + 49 9132 82 4440 Email: ir@schaeffler.com Web: www.schaeffler.com/ir
Slide 28: Key figures by Group and division
Backup Key figures by Group and division Adjusted comparative figures 2018 Group | in EUR mn Automotive Aftermarket | in EUR mn Q1’18 Q2’18 H1’18 Q3’18 Q4’18 Q1’19 Q2’19 H1’19 Q1’18 Q2’18 H1’18 Q3’18 Q4’18 Q1’19 Q2’19 H1’19 Sales 3,551 3,641 7,193 3,521 3,527 3,622 3,604 7,226 Sales 447 480 926 476
Slide 29: Automotive OEM Outperformance by quarters
Backup Automotive OEM Outperformance by quarters FY 19 (YTD) Q1 19 Q2 19 Outperformance: +3.8pp Outper- Outper- IHS1 Auto OEM2 formance IHS1 Auto OEM2 formance World -5.8% -1.7% +4.1pp -7.5% -4.2% +3.3pp Europe -6.5% -3.3% +3.2pp -9.3% -6.8% +2.5pp Americas -3.2% +12.4% +15.6pp -1.8% +4.7% +6.5pp Gr
Slide 30: Overview Corporate and Financing Structure
Backup Overview Corporate and Financing Structure Corporate structure (simplified) | as of June 30, 2019 Financing structure | as of June 30, 2019 A IHO Verwaltungs GmbH Nominal Nominal Rating INA-Holding Schaeffler Debt instrument (USD mn) (EUR1 mn) Interest Maturity (Fitch/Moody’s/S&P) GmbH & Co.