Slide 1: Results Q1 2019 Schaeffler AG Conference Call
Results Q1 2019 Schaeffler AG Conference Call May 8th, 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 Q1 2019 3 Financial Results Q1 2019 4 Outlook 08 May 2019 Results Q1 2019 Schaeffler AG 3
Slide 4: Q1 2019 with mixed results – Market environment still subdued
1 Overview Q1 2019 with mixed results – Market environment still subdued Key messages Sales growth1 Gross margin Group sales growth1 of +0.4% with an expected slow start into the 1 year, Auto OEM Outperformance of 500 bps +0.4% 25.2% EUR 3,622 mn EUR 913 mn Gross margin 25.2% (Q1’18: 27.0%), down y-
Slide 5: Schaeffler Group Q1 2019 – Highlights and lowlights
1 Overview Schaeffler Group Q1 2019 – Highlights and lowlights Automotive OEM: LVP1 outperformance of 500 bps Weak Automotive OEM business in Greater China driven by strong growth in Americas (+12.4%2) (-14.5%2) and Europe (-3.3%2) Automotive Aftermarket sales impacted by weak OES Strong growth in I
Slide 6: Automotive OEM – Strong Outperformance, earnings quality still unsatisfactory, albeit stabilized
2 Business Highlights Q1 2019 Automotive OEM – Strong Outperformance, earnings quality still unsatisfactory, albeit stabilized Sales -1.7%1 Strong Outperformance of LVP3 by 500 bps, driven by strong growth in Region in EUR mn Americas with 12.4%1 2,280 2,286 Business division E-Mobility growing by 3
Slide 7: Automotive OEM – Successful Auto Show Shanghai and projects pipeline building up
2 Business Highlights Q1 2019 Automotive OEM – Successful Auto Show Shanghai and projects pipeline building up Business highlights Successful Auto fair in Shanghai (16 - 25 April, 2019) ▪ Showcasing Schaeffler’s Powertrain Matrix and SpaceDrive Technology ▪ E-Axle Production Launch Ceremony parall
Slide 8: Automotive Aftermarket – Slow start with mixed sales and lower EBIT margin
2 Business Highlights Q1 2019 Automotive Aftermarket – Slow start with mixed sales and lower EBIT margin Sales -1.1%1 Good growth in Independent Aftermarket with +3.0%1, driven by strong in EUR mn performance in Region Americas (in particular South America) 447 441 Price increases for selected parts
Slide 9: Automotive Aftermarket – Chassis Specialist and additional NAPA business
2 Business Highlights Q1 2019 Automotive Aftermarket – Chassis Specialist and additional NAPA business Portfolio re-positioning: Portfolio expansion: FAG brand, the chassis specialist Entering the North American bearings & seals business Re-positioning of RUVILLE steering Bearings & seals progra
Slide 10: Industrial – Strong growth and slightly lower earnings quality
2 Business Highlights Q1 2019 Industrial – Strong growth and slightly lower earnings quality Sales +6.9%1 Above average sales growth with positive contribution from all regions (China in EUR mn +14.1%1) 824 895 Continued double digit growth in Wind, Raw Materials and Railway sector clusters Q1 2018
Slide 11: Industrial – Continued growth in key sectors
2 Business Highlights Q1 2019 Industrial – Continued growth in key sectors Sector Wind Significant sales growth with key customer for multi-megawatt turbines Further localization & in China growth in China Local production ramp-up of large size bearings in Nanjing, China Sector Rail New orders
Slide 12: Capital allocation – Focus increased and discipline strengthened
2 Business Highlights Q1 2019 Capital allocation – Focus increased and discipline strengthened Investment1) allocation | in EUR mn Mid-term target: Investment priorization going forward Capex ratio: 6-8%2) Automotive OEM: Strategic growth fields E-Mobility and Chassis Mechatronics – clearly linked
Slide 13: Transformation continues – XTRONIC and European footprint
2 Business Highlights Q1 2019 Transformation continues – XTRONIC and European footprint Automotive Acquisition of XTRONIC OEM Divestment of Barden plant, UK Industrial Backward integration for recently acquired Signing of agreement to sell The Barden Corporation (UK), Plymouth Paravan technology
Slide 14: Key figures Q1 2019
3 Financial Results Q1 2019 Key figures Q1 2019 Q1 2019 in EUR mn Q1 2018 Q1 2019 vs. Q1 2018 +2.0% Sales 1 3,551 3,622 +0.4%1 Gross Profit 960 913 -47 mn 2 Gross Margin 27.0% 25.2% -1.8%-pts. EBIT2 391 272 -119 mn EBIT Margin2 3 11.0% 7.5% -3.5%-pts. Net income3 238 137 -101 mn 4 EPS4 (in EUR) 0.36
Slide 15: Sales growth – Region Americas with double-digit growth rates
3 Financial Results Q1 2019 1 Sales growth – Region Americas with double-digit growth rates Sales | in EUR mn Key aspects Group sales up by +0.4%1 (Q1’18: +3.9%1) +0.4%1 Sales growth1 mainly driven by Americas (+11.9%), offsetting negative growth in Greater China (-8.0%) and Europe (-1.5%) Str
Slide 16: Gross Profit – Gross margin lower on negative price, mix and higher production costs
3 Financial Results Q1 2019 2 Gross Profit – Gross margin lower on negative price, mix and higher production costs Gross Profit Q1 2018 vs. Q1 2019 | in EUR mn Key aspects Negative price effect driven by continued price pressure in major 1 1 AOEM end markets, especially in China; Industrial division
Slide 17: EBIT margin – Sequential improvement, but still subdued earnings quality
3 Financial Results Q1 2019 3 EBIT margin – Sequential improvement, but still subdued earnings quality EBIT1 | in EUR mn Key aspects Even if sequentially improving, Automotive OEM division’s Q1 2019 -119 mn EBIT margin is the main driver of the Group’s EBIT margin y-o-y erosion Automotive Afterm
Slide 18: Automotive OEM – Q1 with strong outperformance; low quality of earnings
3 Financial Results Q1 2019 Automotive OEM – Q1 with strong outperformance; low quality of earnings RACE update: Reported EBIT includes EUR 55mn restructuring Sales by business division | y-o-y growth EBIT2 Q1 2018 vs. Q1 2019 | in EUR mn expenses Q1 2018 Q1 2019 ∆1 Engine Systems 710 699 -3.4% Tran
Slide 19: Automotive Aftermarket – Slow start driven by weaker OES business and higher product costs
3 Financial Results Q1 2019 Automotive Aftermarket – Slow start driven by weaker OES business and higher product costs Sales by region | y-o-y growth EBIT4 Q1 2018 vs. Q1 2019 | in EUR mn Q1 2018 Q1 2019 ∆1 Europe 338 321 -4.2% Americas 78 88 +14.1% +0 -105 -1 Greater China 19 20 +1.1% -2 -4 Asia/Pa
Slide 20: Industrial – Q1 with continued growth momentum, gross margin increase offset by higher overhead costs
3 Financial Results Q1 2019 Industrial – Q1 with continued growth momentum, gross margin increase offset by higher overhead costs Sales by region | y-o-y growth EBIT2 Q1 2018 vs. Q1 2019 | in EUR mn Q1 2018 Q1 2019 ∆1 Europe 482 501 +4.4% +333 Americas 141 162 +9.1% -4 Greater China 131 155 +14.1% -
Slide 21: Net income Q1 2019 EUR 137 mn – EPS at EUR 0.21
3 Financial Results Q1 2019 4 Net income1 Q1 2019 EUR 137 mn – EPS Q1 2019 at EUR 0.21 (PY: EUR 0.36) Net income1 | in EUR mn Key aspects Net income decreased to EUR 137 mn (Q1’18: EUR 238 mn) -42.4% Decrease driven by lower EBIT EPS decreased to EUR 0.21 (Q1’18: EUR 0.36) 238 268 256 119 137
Slide 22: Free Cash Flow before M&A – Capex Ratio Q1 19 at 10.3%
3 Financial Results Q1 2019 5 Free Cash Flow before M&A1 FY at EUR -235 mn (PY: EUR -69 mn) – Capex Ratio Q1 19 at 10.3% Free Cash Flow before M&A1 | in EUR mn Key aspects -166 mn FCF before M&A decreased to EUR -235mn (PY: EUR -69mn) Lower profitability and higher Capex FCF before M&A impacte
Slide 23: Working Capital ratio 18.0% – Capex ratio 10.3% in Q1
3 Financial Results Q1 2019 6 Working Capital ratio 18.0% – Capex ratio 10.3% in Q1 Working capital1 | in EUR mn Capex3 | in EUR mn 2,575 2,737 2,672 2,219 2,579 306 289 262 375 373 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 1,232 in % of sales (LTM) in % of sales 18.4% 19.3% 18.7%
Slide 24: Net debt of EUR 2,805 mn – Gearing ratio at 89%
3 Financial Results Q1 2019 7 Net debt of EUR 2,805 mn – Gearing ratio1 at 89% Net financial debt and Gearing ratio | in EUR mn Key aspects Net debt increased slightly to EUR 2,805 mn (FY’18: EUR 2,547 mn) due to seasonally negative FCF; Net leverage ratio2 at 1.3x Successful placement of Invest
Slide 25: Guidance 2019 confirmed on Group and divisional level
4 Outlook Guidance 2019 confirmed on Group and divisional level Group Guidance Divisional Guidance Actuals Guidance Automotive Automotive Industrial OEM Aftermarket Q1 2019 FY 2019 Actuals Guidance Actuals Guidance Actuals Guidance Q1 2019 FY 2019 Q1 2019 FY 2019 Q1 2019 FY 2019 Sales growth1 +0.4%
Slide 26: Conclusion & Outlook – Full focus on cost and capex discipline, cash generation and transformation
4 Outlook Conclusion & Outlook – Full focus on cost and capex discipline, cash generation and transformation Q1 sales development impacted by subdued market conditions, better second 1 half expected in the Automotive divisions, but visibility remains low Automotive OEM: Program RACE on track, on top
Slide 27: Financial calendar 2019 – CMD 2019 moved to September 11th, 2019
4 Outlook Financial calendar 2019 – CMD 2019 moved to September 11th, 2019 Roadshows Regular capital market communication May 9th London May 8th Q1 2019 Earnings Release May 10th Frankfurt Aug 6th Q2 2019 Earnings Release Capital Markets Day 2019, Deutsche Bank IAA May 16th Paris Sep 11th Conference
Slide 28: IR Contact
IR Contact Investor Relations Phone: + 49 9132 82 4440 Email: ir@schaeffler.com Web: www.schaeffler.com/ir
Slide 29: 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 Q3’18 Q4’18 Q1’19 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Sales 3,551 3,642 3,521 3,527 3,622 Sales 447 480 476 459 441 Sales Growth1 +3.9% +7.9% +3.7% +0.3% +0.4% Sales
Slide 30: Automotive OEM Outperformance by quarters
Backup Automotive OEM Outperformance by quarters FY 19 (YTD) Q1 19 Outperformance: +5.0pp Outper- IHS1 Auto OEM2 formance World -6.7% -1.7% +5.0pp Americas -2.7% +12.4% +15.1pp Europe -7.0% -3.3% +3.7pp Greater China -13.7% -14.5% -0.8pp Asia/Pacific -0.1% +2.4% +2.5pp FY 18 Q1 18 Q2 18 Q3 18 Q4 18
Slide 31: Overview Corporate and Financing Structure
Backup Overview Corporate and Financing Structure Corporate structure (simplified) | as of March 31, 2019 Financing structure | as of March 31, 2019 INA-Holding Schaeffler A IHO Verwaltungs GmbH Nominal Nominal Rating GmbH & Co. KG Debt instrument (USD mn) (EUR1 mn) Interest Maturity (Fitch/Moody’s/