Slide 1: Results H1 2018 Schaeffler AG Conference Call
Results H1 2018 Schaeffler AG Conference Call August 7, 2018 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 H1 2018 3 Financial Highlights Q2 2018 4 Outlook 3 August 7, 2018 Schaeffler AG H1 2018 Results
Slide 4: Solid H1 results – On track to achieve targets for 2018
1 Overview Solid H1 results – On track to achieve targets for 2018 H1'17 H1'18 Key aspects Group 1 +5.8% 1) Solid H1 Group results – Sales H1 +5.8%1), EBIT margin2) H1 11.1% (PY 11.1%) after 11.0% Sales 7,046 mn 7,193 mn in Q1, FCF slightly better than PY 2 EBIT margin2) 11.1% 11.1% Automotive OEM –
Slide 5: Automotive OEM – Growth momentum accelerating, EBIT margin at 9.2%
2 Business Highlights H1 2018 Automotive OEM – Growth momentum accelerating, EBIT margin2) at 9.2% Automotive OEM sales in EUR mn +4.8%1) Growth momentum accelerating, FX-adjusted sales in Q2'18 +6.5%1) – All 4,528 4,587 business divisions and regions contributing, Greater China +13.4% despite tempo
Slide 6: Automotive OEM – H1 with strong order intake; Book to Bill Ratio at 1.8x
2 Business Highlights H1 2018 Automotive OEM – H1 with strong order intake; Book to Bill Ratio at 1.8x Automotive OEM Order Intake1) Automotive OEM Business Highlights in EUR bn 12.6 E-Mobility: Wet Double Clutch 11.3 Includes wet double clutch, clutch H2 release system, gear actuator and 5.4 clut
Slide 7: Automotive Aftermarket – Sales growth H1 3.6%, EBIT margin H1 at 19.0%
2 Business Highlights H1 2018 Automotive Aftermarket – Sales growth H1 3.6%1) , EBIT margin H1 at 19.0%2) Automotive Aftermarket sales in EUR mn +3.6%1) Strong growth in Q2 (+12.3%1)) bringing FX adjusted sales growth back to 928 925 +3.6%1) in H1 – Full year growth guidance of 3-4%1) confirmed Sale
Slide 8: Automotive Aftermarket – Breaking Ground of AKO and successful program launch in North America
2 Business Highlights H1 2018 Automotive Aftermarket – Breaking Ground of AKO and successful program launch in North America Breaking Ground for AKO Europe investment Launch of a Bearing and Seals Program in North America Successful entering into the bearing and seals market in North America Col
Slide 9: Industrial – Strong performance in H1: Sales growth 10.0%, EBIT margin at 11.6%
2 Business Highlights H1 2018 Industrial – Strong performance in H1: Sales growth1) 10.0%, EBIT margin2) at 11.6% Industrial sales in EUR mn +10.0%1) Above average sales growth continues, bringing FX-adjusted sales growth in 1,681 1,590 H1'18 to 10.0%1) – Sales guidance FY 18 increased to 6-7%1) (pr
Slide 10: Industrial – Order book 3M indicates further growth
2 Business Highlights H1 2018 Industrial – Order book 3M2) indicates further growth Industrial Order book 3M2) with strong growth Strong business performance in Greater China y-o-y growth Order book 3M2) + Sales1) Wind 40 Strategically important order 30 received for first 5 MW series turbine in o
Slide 11: Free Cash Flow before M&A at EUR -74 mn – Capex Ratio at 8.3%
2 Business Highlights H1 2018 Free Cash Flow before M&A at EUR -74 mn – Capex Ratio at 8.3% Free Cash Flow FY 2017 Target: Key aspects in EUR mn FCF ~ EUR 500mn1) Free Cash Flow before M&A increased slightly to EUR -74 mn in H1'18 +13 mn (PY: EUR -86 mn), FCF conversion ratio 22% vs H1 2017 Incr
Slide 12: "Drive by wire" acquisition – Delivering on our M&A strategy
2 Business Highlights H1 2018 "Drive by wire" acquisition – Delivering on our M&A strategy "Drive by wire"-technology Transaction structure "Drive by wire"-technology is a prerequisite for the autonomous Schaeffler acquires "Drive by wire"-technology from Paravan and its driving market ("Steer b
Slide 13: "Drive by wire" acquisition – Positioning Chassis business for autonomous driving growth potential
2 Business Highlights H1 2018 "Drive by wire" acquisition – Positioning Chassis business for autonomous driving growth potential Schaeffler Chassis business Strategic rationale Autonomous driving as one of the key future trends in the global automotive industry Acquired technology allows Schaeff
Slide 14: Key figures Q2 2018
3 Financial Results Q2 2018 Key figures Q2 2018 H1 2018 Q2 2018 in EUR mn H1 2017 H1 2018 vs. H1 2017 Q2 2017 Q2 2018 vs. Q2 2017 +2.1% +4.9% Sales 1 7,046 7,193 3,472 3,642 +7.9%1) +5.8%1) +15 mn +59 mn EBIT2) 780 795 345 404 +1.9% +17.1% 2 EBIT margin2) 11.1% 11.1% +0.0%-pts. 9.9% 11.1% +1.2%-pts.
Slide 15: Sales growth Q2'18 +7.9% – 19.2% sales growth in China
3 Financial Results Q2 2018 1 Sales growth Q2'18 +7.9%1) – 19.2% sales growth1) in China Sales Key aspects Q2'18 in EUR mn +5.8%1) Group sales accelerated with +7.9%1) (Q2'17: +2.2%1)), all vs H1 2017 regions and divisions contributed 3,574 3,472 3,434 3,541 3,551 3,642 Sales growth mainly drive
Slide 16: EBIT Margin Q2'18 11.1% – 1.2%-pts. above prior year quarter
3 Financial Results Q2 2018 2 EBIT Margin Q2'18 11.1% – 1.2%-pts. above prior year quarter EBIT1) Key aspects Q2'18 in EUR mn EBIT margin1) at 11.1% (Q2'17: 9.9%) +15 mn vs H1 2017 Gross profit margin increased from 26.5% to 26.7% mainly 435 driven by positive volume and mix effects in Industria
Slide 17: Automotive OEM – 2.6%-pts. outperformance versus market
3 Financial Results Q2 2018 A Automotive OEM – 2.6%-pts. outperformance versus market Automotive OEM sales and market development Q2 Sales by business division in EUR mn Europe Americas Greater China Asia/Pacific Q2 2017 Q2 2018 1) +14.5% +8.8% Engine Systems 682 713 +7.3% +7.6% +5.4% +4.6% +3.7%
Slide 18: Automotive OEM – Q2 EBIT margin of 9.0% (Q2'17: 9.4%)
3 Financial Results Q2 2018 A Automotive OEM – Q2 EBIT margin2) of 9.0% (Q2'17: 9.4%) EBIT1) Q2 2017 vs. Q2 2018 Key aspects in EUR mn Gross margin declined from 24.5% to 23.5% mainly driven by ramp-up costs, temporary project delays in China and higher raw material costs 208 02) +11 207 -1 Incr
Slide 19: Automotive Aftermarket – Strong growth in Q2'18
3 Financial Results Q2 2018 B Automotive Aftermarket – Strong growth in Q2'18 Automotive Aftermarket sales by quarter Sales by region in EUR mn y-o-y growth Q2 2017 Q2 2018 1) +3.6%1) vs H1 2017 Europe 320 362 +15.2% 484 506 479 444 446 446 Americas 97 84 -0.7% 928 952 925 Greater China 15 20 +38.8
Slide 20: Automotive Aftermarket – Q2 EBIT margin of 20.0% (Q2'17: 15.3%)
3 Financial Results Q2 2018 B Automotive Aftermarket – Q2 EBIT margin2) of 20.0% (Q2'17: 15.3%) EBIT1) Q2 2017 vs. Q2 2018 Key aspects in EUR mn Gross margin increased from 33.8% to 35.3% of sales, mainly driven by positive volume and mix effects as well as low base effect +14 96 +192) Others in
Slide 21: Industrial Division – all sectors growing, four out of eight sectors with double digit growth
3 Financial Results Q2 2018 C Industrial Division – all sectors growing, four out of eight sectors with double digit growth Industrial sales by quarter Sales by region +10.0%1) y-o-y growth Q2 2017 Q2 2018 1) in EUR mn vs H1 2017 782 808 826 855 790 770 Europe 467 472 +3.7% Americas 148 149 +8.4% 1
Slide 22: Industrial Division – Q2 EBIT margin of 11.8% (Q2'17: 8.5%)
3 Financial Results Q2 2018 C Industrial Division – Q2 EBIT margin2) of 11.8% (Q2'17: 8.5%) EBIT1) Q2 2017 vs. Q2 2018 Key aspects in EUR mn Gross margin increased to 30.5% (Q2'17: 28.2%) driven by positive volume and favourable pricing Successful execution on CORE3) – +332) +5 101 -2 CORE I pro
Slide 23: Net income Q2 2018 EUR 269 mn – EPS increased by 5.0% in H1
3 Financial Results Q2 2018 3 Net income Q2 2018 EUR 269 mn – EPS increased by 5.0% in H1 2018 Net income1) Schaeffler Value Added3) in EUR mn 2.7 in EUR mn +4.9% 902 952 939 vs H1 2017 801 787 792 306 279 269 240 23.7% RoCE4) 23.1% 206 189 22.6% 22.3% 19.9% 19.8% 2013 2014 2015 2016 2017 H1 2018 48
Slide 24: Working Capital ratio 19.3% of sales – Capex ratio 7.9% of sales in Q2
3 Financial Results Q2 2018 4 Working Capital ratio 19.3% of sales – Capex ratio 7.9% of sales in Q2 2018 Working capital1) Capex2) in EUR mn in EUR mn 400 299 306 295 289 279 2,820 2,756 2,733 2,737 2,575 2,342 594 679 595 1.2 1.1 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2017 In % of sales In
Slide 25: Net debt increased due to temporarily higher Gross debt – Gearing ratio at 107%
3 Financial Results Q2 2018 5 Net debt increased due to temporarily higher Gross debt – Gearing ratio at 107% Net financial debt and Gearing ratio Key aspects in EUR mn Net debt increased seasonally to EUR 2,833 mn (FY'17: EUR 2,370 mn) due to the dividend payout Gearing ratio at 107% ´ Net le
Slide 26: Outlook - FY 2018 Guidance confirmed at Group level, Industrial Sales Growth guidance increased
4 Outlook Outlook - FY 2018 Guidance confirmed at Group level, Industrial Sales Growth guidance increased Group Guidance Divisional Guidance Group Automotive OEM Automotive AM Industrial New Sales growth 5-6% 6-7% 3-4% 6-7%2) FX-adjusted FX-adjusted FX-adjusted FX-adjusted + EBIT margin 10.5-11.5% 9
Slide 27: Financial calendar 2018
4 Outlook Financial calendar 2018 Aug 7 H1 2018 Earnings Release Aug 8 Bankhaus Lampe Roadshow, Frankfurt Aug 9 Credit Suisse Roadshow, London Sept 20 Capital Markets Day, Berlin Sep 25 Goldman Sachs German Corporates Conference, Munich Sep 26 Equinet Roadshow, Milano Oct 2 Credit Suisse Paris Autos
Slide 28: IR Contact
IR Contact Investor Relations Phone: + 49 9132 82 4440 Email: ir@schaeffler.com Web: www.schaeffler.com/ir 28 August 7, 2018 Schaeffler AG H1 2018 Results
Slide 29: 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 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Sales 3,574 3,472 3,434 3,541 3,551 3,642 Sales 484 444 506 446 446 479 Sales Growth2) +5.4% +2.2% +7.4% +8.
Slide 30: Corporate and Financing Structure
Backup Overview Corporate and Financing Structure Corporate structure (simplified) Financing structure as of June 30, 2018 in EUR2) mn, as of June 30, 2018 IHO Verwaltungs GmbH INA-Holding Schaeffler Debt instrument Nominal Nominal Interest Maturity Rating GmbH & Co. KG (USD mn) (EUR mn) (F/M/S)4) T