Schaeffler Ag · XETR:SHA0
Schaeffler — Kepler Cheuvreux German Corporate Conference 2024
50 slides from Schaeffler's conference presentation, Jan 17, 2024
Slide 1: Schaeffler AG – CEO update
Schaeffler AG – CEO update Kepler Cheuvreux German Corporate Conference January 17, 2024 PUBLIC
Slide 2: Disclaimer
Disclaimer Disclaimer regarding information on the voluntary public tender offer -This presentation is with regard to the voluntary public tender offer (the “Offer”) of Schaeffler AG (“Schaeffler”) for all shares of Vitesco Technologies Group AG (“Vitesco” or the “Company”) for information purposes
Slide 3: Overview, Transaction Update Vitesco, Q3 2023 results
1 Overview 2 Transaction Update Vitesco 3 Q3 2023 results, Guidance, Current trading Jan 17, 2024 Schaeffler | Kepler Cheuvreux German Corporate Conference 3 PUBLIC
Slide 4: Schaeffler Group at a glance – The Motion Technology Company
1 OVERVIEW Schaeffler Group at a glance – The Motion Technology Company 3 Divisions 4 Regions in % of FY 2022 in % of FY 2022 • 3 Divisions serving attractive, sizeable Automotive and Industrial EUR 1,087 mn1 Europe Asia / Pacific Industrial markets with secular growth +11.6% 2 42% 13% 27% • Diversi
Slide 5: Our Evolution – From Bearings Manufacturer to Motion Technology Company
1 OVERVIEW Our Evolution – From our heritage as a Bearings Manufacturer to “The Motion Technology Company” Where we Motion Technology go to 3 Company Automotive & Sustain Repair & Monitoring 2 Industrial Supplier motion Services Energize Hydrogen Stacks & motion Plates Bearings 1 Drive E-Motors & Ma
Slide 6: Overview, Transaction Update Vitesco, Q3 2023 results
1 Overview 2 Transaction Update Vitesco 3 Q3 2023 results, Guidance, Current trading Jan 17, 2024 Schaeffler | Kepler Cheuvreux German Corporate Conference 6 PUBLIC
Slide 7: Public tender offer to Vitesco shareholders – The story in six highlights
2 TRANSACTION UPDATE VITESCO Public tender offer to Vitesco shareholders – The story in six highlights Public tender offer A 3-step transaction Leading Motion Technology Company • Schaeffler AG Cash Offer1 to acquire • Schaeffler AG non-voting shares become voting • Pro-forma Combined Revenues of EU
Slide 8: Next steps – Towards becoming a leading Motion Technology Company
2 TRANSACTION UPDATE VITESCO Next steps – Towards becoming a leading Motion Technology Company November 27, 2023 Publication of BCA and Offer Price Increase Compelling December 15, 2023 End of Acceptance Period Strategic Logic Invitation EGM and Publication of Tender Offer December 20, 2023 Result J
Slide 9: Simplified shareholding structure – Intention to achieve post-transaction free float of around 30%
2 TRANSACTION UPDATE VITESCO Simplified shareholding structure – Intention to achieve post-transaction free float of around 30% Shareholding structure pre-transaction Shareholding structure post-transaction IHO Holding IHO Holding Free Free Free Float Float Float S AG V AG 24.9% 75.1% 49.9% 50.1% ~3
Slide 10: Shareholding structure after completion of tender offer as an intermediate step
2 TRANSACTION UPDATE VITESCO Shareholding structure after completion of tender offer as an intermediate step Shareholding structure as of December 20, 2023 Key Aspects 1 – On December 12, IHO Beteiligungs GmbH, a subsidiary company of IHO Holding, acquired a package of Schaeffler non-voting shares r
Slide 11: Four focused, 'pure play' divisions – Creating a leading Motion Technology Company
2 TRANSACTION UPDATE VITESCO Four focused, ‘pure play’ divisions – Creating a leading Motion Technology Company New New Bearings & Industrial Divisions1 E-Mobility Powertrain & Chassis Vehicle Lifetime Solutions Solutions E-Mobility Engine & Transmission Automotive Aftermarket Industrial Business El
Slide 12: Executive Board – Targeted new structure in Schaeffler AG
2 TRANSACTION UPDATE VITESCO Executive Board – Targeted new structure in Schaeffler AG (combined company) Board of Managing Directors of Schaeffler AG Key Aspects 1 CEO Klaus Rosenfeld • Executive Board of Schaeffler AG New with 13 members, 4 divisional, 5 2 3 4 5 functional and 4 regional to come i
Slide 13: Debt Capital Markets – Schaeffler successfully issued bonds to finance the acquisition
2 TRANSACTION UPDATE VITESCO Debt Capital Markets – Schaeffler successfully issued bonds to finance the acquisition of Vitesco shares Key terms of new issuance… Transaction Highlights • Well-executed deal roadshow on January 05, 2024 in which we Issuer Schaeffler AG engaged with 80+ investor account
Slide 14: Overview, Transaction Update Vitesco, Q3 2023 results
1 Overview 2 Transaction Update Vitesco 3 Q3 2023 results, Guidance, Current trading Jan 17, 2024 Schaeffler | Kepler Cheuvreux German Corporate Conference 14 PUBLIC
Slide 15: Schaeffler Group – Strong Q3 results driven by Automotive divisions
3 CURRENT TRADING AND OUTLOOK Schaeffler Group – Strong Q3 results driven by Automotive divisions 9M 2023 Financial Results1 Schaeffler Group Automotive Technologies Automotive Aftermarket Industrial 9M 2023 9M 2023 9M 2023 9M 2023 Sales growth2 +6.6% +5.4% +14.5% +5.7% EBIT margin3 7.9% 4.8% 16.9%
Slide 16: FY 2023 Guidance – Guidance confirmed on Group and divisional level
3 CURRENT TRADING AND OUTLOOK FY 2023 Guidance – Guidance confirmed on Group and divisional level FY 2023 Guidance1 Schaeffler Group Automotive Technologies Automotive Aftermarket Industrial Guidance Guidance Guidance Guidance FY 20231 FY 2023 FY 2023 FY 2023 Sales Outperformance growth2 5 – 8% 10 –
Slide 17: On track to achieve our FY 2023 Guidance
3 CURRENT TRADING AND OUTLOOK Current Trading Update – Q4 in line with expectations 1 Automotive Technologies – Solid market demand in specific Regions (Europe and Greater China). Q4 EBIT margin expected to be seasonally weaker, but FY EBIT margin trending comfortably within FY guidance range 2 Auto
Slide 18: Business Update – We keep on delivering on Commercial Success Wins
3 CURRENT TRADING AND OUTLOOK Business Update – We keep on delivering on Commercial Success Wins Automotive Technologies – Presenting Automotive Aftermarket – Customer- Industrial – Ramp-up of high-growth innovative solutions at CES 2024 centricity well acknowledged in the market business fields • U
Slide 19: Conclusion & Outlook – Transaction on track
3 CURRENT TRADING AND OUTLOOK Conclusion & Outlook – Transaction on track, while keeping our strong focus on the business 1 Transaction Update – We are proceeding with diligence and momentum in our transaction. BCA signed and Integration Committee set up to prepare a smooth integration. Tender offer
Slide 20: Thank you
Thank you Investor Relations Contact Phone +49 9132 82-4440 Email ir@schaeffler.com Web www.schaeffler.com.ir Jan 17, 2024 Schaeffler | Kepler Cheuvreux German Corporate Conference 20 PUBLIC
Slide 21: Transaction Update Vitesco
- Transaction Update Vitesco - Jan 17, 2024 Schaeffler | Kepler Cheuvreux German Corporate Conference 21 PUBLIC
Slide 22: Key Transaction Steps – Clear path to business combination
BACKUP – TRANSACTION UPDATE VITESCO Key Transaction Steps – Clear path to business combination 1 2 3 9 Oct 2023 January 2024 February 2024 April 2024 Q4 2024 Announcement Closing EGM AGMs Closing Tender Offer Tender Offer Conversion of Schaeffler Statutory Merger Merger Non-voting Common Shares 1 2
Slide 23: E-Mobility – Combining highly complementary strengths and capabilities
BACKUP – TRANS ACTION UPDATE VITES CO E-Mobility – Combining highly complementary strengths and capabilities for future growth Complementary strengths Significant market growth potential1 EUR 190 bn Systems Integration Understanding Capabilities Total addressable market 2022-30 EUR 70 bn >EUR 10 bn
Slide 24: Combining complementary strengths – Leading E-Mobility offering across all dimensions
BACKUP – TRANSACTION UPDATE VITESCO Combining complementary strengths – Leading E-Mobility offering across all dimensions New Talent E-drive system Talent E-drive system Talent E-drive system retention retention retention E-motor E-motor E-motor Technology Technology Technology roadmap roadmap roadm
Slide 25: Powertrain & Chassis – Maximize value with a broad Powertrain portfolio
BACKUP – TRANSACTION UPDATE VITESCO Powertrain & Chassis – Maximize value with a broad Powertrain portfolio and grow Chassis Transformation Market SG&A Margins FCF share Key characteristics • Leveraging joint scale to optimize profitability with Mature capacity consolidation • Broad product portfoli
Slide 26: Vehicle Lifetime Solutions – Becoming a leading integrated platform
BACKUP – TRANSACTION UPDATE VITESCO Vehicle Lifetime Solutions – Becoming a leading integrated platform Growth drivers Key characteristics • Increased relevance due to enlarged future-ready • Integrated multi-vendor service platform enhanced by Share of Wallet product portfolio Vitesco • Further tra
Slide 27: Bearings & Industrial Solutions – Building a global market leader
BACKUP – TRANSACTION UPDATE VITESCO Bearings & Industrial Solutions – Building a global market leader Well-diversified portfolio focused on 4 market clusters Key characteristics • Secular growth markets • Addressing full spectrum of bearings and linear 56%1 Transportation motion solutions & Mobility
Slide 28: Strong combined portfolio – Positioned for maximum value
BACKUP – TRANSACTION UPDATE VITESCO Strong combined portfolio – Positioned for maximum value with enlarged global footprint in key markets Pro-forma New Sales FY 2022 EUR 16 bn EUR 9 bn EUR 25 bn Automotive Automotive Electrification Powertrain Bearings & E-Mobility Aftermarket Technologies Solution
Slide 29: Significant synergy potential – EUR 600 mn p.a. revenue and cost synergies
BACKUP – TRANS ACTION UPDATE VITES CO Significant synergy potential – EUR 600 mn p.a. revenue and cost synergies identified Revenue and cost synergies1 Synergy breakdown FCF impact in EUR mn EBIT impact 100% ~50% Revenue EUR 100 mn synergies 2023 2024 2025 2026 2027 2028 2029 Cost synergies EUR 500
Slide 30: Financial impact – Earnings per share accretive in 2026
BACKUP – TRANS ACTION UPDATE VITES CO Financial impact – Earnings per share accretive in 2026 and leverage positive in 2025 Development of Leverage ratio over transaction1,2 Earnings per share Only marginally dilutive in 2025 and increasingly accretive <2.0x from 2026 1.75x Accelerating EPS grow
Slide 31: Strict Financial Performance Management – 30-50% dividend payout ratio
BACKUP – TRANSACTION UPDATE VITESCO Strict Financial Performance Management – 30-50% dividend payout ratio • Rigorous financial discipline, throughout the transformation phase and beyond Strong Cash Flow • Efficient working capital management • Strong resilience through the cycle with steady improve
Slide 32: Summary – Creating a leading Motion Technology Company
BACKUP – TRANSACTION UPDATE VITESCO Summary – Creating a leading Motion Technology Company Key highlights ⚫ Attractive Public Tender Offer for all outstanding shares of Vitesco Technologies Group AG Compelling Strategic ⚫ Clear 3-step overall transaction to merge Vitesco Technologies Logic Group AG
Slide 33: Financials
- Financials - Jan 17, 2024 Schaeffler | Kepler Cheuvreux German Corporate Conference 33 PUBLIC
Slide 34: Schaeffler Group – Strong Q3 results driven by Automotive divisions
BACKUP – FINANCIALS Schaeffler Group – Strong Q3 results driven by Automotive divisions Key messages Q3 2023 Sales growth1 Q3 Gross Margin Q3 Q3 Sales1 +0.5% – Good growth in Europe and Asia/Pacific. 1 Greater China declining on very high comps Q3 Gross margin 22.3% – Very strong contribution from +
Slide 35: Automotive Technologies – Q3 with continued strong EBIT momentum
BACKUP – FINANCIALS Automotive Technologies – Q3 with continued strong EBIT momentum Sales EBIT2 KEY ASPECTS in EUR mn in EUR mn Flat sales yoy1 on very strong comps (+25%). In 2022 our Q3 +5.4%1 +135 mn included also retroactive price compensation +0.2%1 7.280 349 +20 mn Chassis systems and Bearing
Slide 36: Automotive Technologies – E-Mobility EUR 2-3 bn Order Intake annual target already achieved
BACKUP – F INANCIALS Automotive Technologies – E-Mobility EUR 2-3 bn Order Intake annual target already achieved Business Highlights Order Intake1 in EUR bn Thereof Winning in the US Pick-Up 2.7 3.2 5.0 2.9 YTD E-Mobility market: Extension of business with innovative powertrain solutions 12,3 for el
Slide 37: Automotive Aftermarket – Q3 with strong sales growth and very strong EBIT margin
BACKUP – F INANCIALS Automotive Aftermarket – Q3 with strong sales growth1 and very strong EBIT margin2 Sales EBIT2 KEY ASPECTS in EUR mn in EUR mn High single-digit sales growth1 on +14.5%1 strong comps, driven by continued strong demand, +88 mn improved logistical performance +8.8%1 1.716 and favo
Slide 38: Automotive Aftermarket – Acquisition of B2B e-commerce platform Koovers in India
BACKUP – F INANCIALS Automotive Aftermarket – Acquisition in September of B2B e-commerce platform Koovers in India Sizable and attractive Indian Automotive Aftermarket in EUR mn E-commerce Market Penetration 2% 10% +15% • Indian automotive 4.198 aftermarket expected to grow to 14bn EUR by 2030 3.085
Slide 39: Industrial – Q3 sales and EBIT development driven by market downturn
BACKUP – FINANCIALS Industrial – Q3 sales1 and EBIT development driven by market downturn Sales EBIT2 KEY ASPECTS in EUR mn in EUR mn +5.7%1 Volumes in all regions below strong Q3 2022 due to weakening -71 mn economic environment and destocking -3.0%1 3.274 3.205 397 EBIT margin in Q3 driven by 326
Slide 40: Industrial – Orderbook reduction mainly due to downturn in China and Wind
BACKUP – FINANCIALS Industrial – Orderbook reduction mainly due to downturn in China and Wind Orderbook 3-month1, 2 Orderbook 3M1 Sales2 Business Highlights yoy growth % 40 New order gains in Aerospace by long-term agreements with key 30 OEMs covering roller bearings for high volume applications 20
Slide 41: FCF – Strong Q3 FCF, effective Working Capital management
BACKUP – FINANCIALS FCF – Strong Q3 FCF, effective Working Capital management Free Cash Flow before M&A1 in EUR mn Reconciliation Q3 2023 in EUR mn 567 -58 mn 240 244 182 -108 103 +58 182 14 -247 -13 -76 -73 EBITDA ∆ Net Capex Net Interest Taxes Others FCF -219 Q3 2023 Working Q3 20231 Capital Q1 22
Slide 42: Capital allocation – Continued prioritization of Capex for growth business
BACKUP – FINANCIALS Capital allocation – Continued prioritization of Capex for growth business Investment1 allocation KEY ASPECTS in EUR mn • Automotive Technologies: E-Motor production investments in FY 2021 FY 2022 Q3 2022 Q3 2023 9M 2023 the US and Eastern Europe as well as Chassis rear-wheel ste
Slide 43: Sustainability
- Sustainability - Jan 17, 2024 Schaeffler | Kepler Cheuvreux German Corporate Conference 43 PUBLIC
Slide 44: Path to Climate Neutrality – Ambitious Scope targets defined
BACKUP – SUSTAINABILITY Path to Climate Neutrality – Ambitious Scope targets defined Long-Term Sustainability Targets KEY ASPECTS • Decarbonization as top priority • Emissions occurring in the supply chain (Scope 3 upstream): 2019 2025 2030 2035 2040 − Climate neutral from 2040 − Emission reduction
Slide 45: Sustainability – Our goal is to be climate-neutral from 2040 onwards
BACKUP – SUSTAINABILITY Sustainability – Our goal is to be climate-neutral from 2040 onwards Ten Action Fields: In order to achieve the goal of climate neutrality by 2040, we Key Aspects have refined our sustainability strategy in a holistic approach and designed it • Successful sustainability manag
Slide 46: Sustainability Targets – We set clear ESG related targets
BACKUP – SUSTAINABILITY Sustainability Targets – We set clear ESG related targets Climate-neutral Supply Chain Achieve a climate-neutral supply chain (Scope 3 upstream) by 2040 Green Own Power Generation Climate-neutral Production 10 % of the electricity demand worldwide with Achieve climate neutral
Slide 47: Overview Sustainability Ratings – strong track record
BACKUP – SUSTAINABILITY Overview Sustainability Ratings – strong track record Climate Change Water Security 100 A A 75 A- A- B A- 75 76 79 B- B- 50 60 65 50 D D D D 25 43 0 2017 2018 2019 2020 2021 2022 2023 2017 2018 2019 2020 2021 2022 2017 2018 2019 2020 2021 2022 50 100 100% severe 10.3: Low ris
Slide 48: Credit
- Credit - Jan 17, 2024 Schaeffler | Kepler Cheuvreux German Corporate Conference 48 PUBLIC
Slide 49: Schaeffler maintains prudent leverage metrics with stable leverage development
BACKUP – CREDIT Schaeffler maintains prudent leverage metrics with stable leverage development despite global volatility – Moody’s upgraded Schaeffler’s ratings in March 2023 to Baa3 Net financial debt and leverage ratio Key aspects Net financial debt (EUR mn) 5.778 Leverage ratio 1 • Schaeffler’s l
Slide 50: Well balanced financing structure with diversified debt instruments
BACKUP – CREDIT Well balanced financing structure with diversified debt instruments and no maturity in 2023 Key aspects Finance structure Schaeffler AG | as of September 30, 2023 Debt Instrument Nominal (EUR m) Interest Maturity Rating (Fitch/Moody’s/S&P) • Schaeffler AG maintains a strong liquidity
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