Slide 1: Schaeffler AG – 2017 Global Auto Industry Conference
Schaeffler AG 2017 Global Auto Industry Conference January 10, 2017 Detroit
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: Schaeffler Executive Team – Introducing Matthias Zink and Marc McGrath
Schaeffler Executive Team – Introducing Matthias Zink and Marc McGrath u Matthias Zink (47) joined the Executive Board on January 1, 2017 u Co-CEO Automotive Schaeffler Group succeeding Norbert Indlekofer u 22 years with Schaeffler u Execute the mobility for tomorrow strategy with a focus on future
Slide 4: Agenda
Agenda 1 Schaeffler at a glance 2 Strategy "Mobility for tomorrow" 3 Investment Highlights 4 Summary 4 January 10, 2017 2017 Global Auto Industry Conference | © Schaeffler 2017
Slide 5: Schaeffler AG – A leading automotive and industrial supplier
1 Schaeffler at a glance Schaeffler AG – A leading automotive and industrial supplier Schaeffler at a glance Sales growth 2012-2016 (in EUR bn) 13,2 12,1 10,7 11,1 11,2 u Leading automotive and industrial supplier of high-precision components and systems u Global footprint with around 85,000 employe
Slide 6: Strategy "Mobility for tomorrow" – 4 key elements
2 Strategy "Mobility for tomorrow" Strategy "Mobility for tomorrow" – 4 key elements Vision / Mission 4 Focus areas 8 Strategic pillars 16 Strategic initiatives 6 January 10, 2017 2017 Global Auto Industry Conference | © Schaeffler 2017
Slide 7: Financial Ambitions for 2020 – Sustainable value creation
2 Strategy "Mobility for tomorrow" Financial Ambitions for 2020 – Sustainable value creation Financial Ambitions 2020 Market assumptions Sales Growth Ø 4-6% p.a. 4 Automotive: Growth of global passenger car production around 2% w/o external growth, FX-adjusted 4 Industrial: Low single-digit growth o
Slide 8: The Schaeffler Equity Story – key elements
3 Investment highlights The Schaeffler Equity Story – 3 key elements 3 key elements Key objectives Growth u Consistent growth above markets; Outperformance targeting at least 4%-pts OE sales above market until 2020 1 in Automotive u Best-in-class margin Margin Profitable growth q u CORE program laun
Slide 9: Schaeffler Automotive – Strong track record of above market growth
3 Investment highlights – Outperformance Automotive 1 Schaeffler Automotive – Strong track record of above market growth Sales and EBIT margin Out-performance in all regions1) Global Market +4% 9,993 10,169 8,164 8,986 Schaeffler Automotive +9% 7,658 Market Schaeffler 15% 24% 2012 2013 2014 2015 LTM
Slide 10: Outperformance Automotive – Four main growth drivers
3 Investment highlights – Outperformance Automotive 1 Outperformance Automotive – Four main growth drivers Growth drivers Current examples Finger follower Finger follower (not switchable) ~ 4 x more (switchable) Growth from content1) 1 new technologies / products Conventional Double clutch clutch wi
Slide 11: Outperformance to increase again in 2017
3 Investment highlights – Outperformance Automotive 1 Outperformance to increase again in 2017 – 4%-pts OE sales growth above market targeted 1) Outperformance YTD September 2016: Targeted outperformance 2017 u Trucks effect: u Order book shows strong growth potential in all regions Truck sales is p
Slide 12: Market growth based on increasing production of hybrid and electric vehicles
3 Investment highlights – Outperformance Automotive 1 Market growth based on increasing production of hybrid and electric vehicles – Two scenarios Global production volume 1) Basic scenario 2) Global production volume 1) Accelerated in millions of units in millions of units scenario 2) CAGR 2010/203
Slide 13: Strong starting position in e-mobility – Six series contracts
3 Investment highlights – Outperformance Automotive 1 Strong starting position in e-mobility – Six series contracts for hybrid modules and e-axles Product portfolio Key aspects 1999 C02 – Reduction 1st Schaeffler E-Mobility symposium 2002 1st E-Mobility concept car 2005 1st serial production of comp
Slide 14: Example Schaeffler North America – Developing components and systems
3 Investment highlights – Outperformance Automotive 1 Example Schaeffler North America – Developing components and systems for future technology 48V transmission driven accessories Hybrid module HV E-Axle u Mild hybrid system invented and u Expertise in components saved u R&D in-place in the region
Slide 15: Compact Dynamics acquired – Broadening competence and scope
3 Investment highlights – Outperformance Automotive 1 Compact Dynamics acquired – Broadening competence and scope 1 System and Powertrain Competence 2 Acquisition u Schaeffler acquires a 51% stake in Compact Dynamics GmbH from SEMIKRON International GmbH. u Closing expected in Q1 2017; call option f
Slide 16: Schaeffler Industrial – Bearing solutions for 8 sector clusters and distribution
3 Investment highlights – Margin upside Industrial 2 Schaeffler Industrial – Bearing solutions for 8 sector clusters and distribution Sales development 2012 – 2015 Sales split by region 2015 Americas 3,406 3,233 19% 3,138 Greater China Europe 3,041 2012 2013 2014 2015 15% 56% Growth rate (y-o-y) -1.
Slide 17: Program CORE – Revitalizing the Industrial division
3 Investment highlights – Margin upside Industrial 2 Program CORE – Revitalizing the Industrial division 4 key drivers 1 u Strengthen sales organizations in the regions Customer u Strengthen regional engineering / customer support centers focus and growth u Establish dedicated global key account man
Slide 18: Program CORE – Overall target remains in place
3 Investment highlights – Margin upside Industrial 2 Program CORE – Overall target remains in place Successful implementation Financial ambitions Today Indicative Stable market Timing environment Continuous improvement through further optional measures EBIT margin 500 HCO Industrial Division Cost re
Slide 19: Use of cash – M&A strategy based on selected add-on acquisitions
3 Investment highlights – Strong Free Cash Flow Generation 3 Use of cash – M&A strategy based on selected add-on acquisitions M&A strategy Use of cash Approach 4 Focus on technological competence to maintain our strong position as technology and innovation leader External growth 4 Focus on smaller a
Slide 20: Summary – Mobility for tomorrow
4 Summary Key messages Schaeffler is a leading global automotive and industrial supplier with superior 1 technologies Strategy "Mobility for tomorrow" implemented; Financial Ambitions 2020 with focus on 2 sales growth, EBIT margin, FCF generation, EPS, gearing ratio and dividend payout ratio 3 Retur
Slide 21: IR Contact
IR Contact Investor Relations Financial Calendar FY 2016 results: March 8, 2017 Phone: + 49 9132 82 4440 Q1 2017 results: May 11, 2017 Email: ir@schaeffler.com H1 2017 results: August 8, 2017 Web: www.schaeffler.com/ir 9M 2017 results: November 8, 2017 21 January 10, 2017 2017 Global Auto Industry C
Slide 22: Cost reduction and efficiency improvements – First wave mostly completed
Backup 2 Cost reduction and efficiency improvements – First wave mostly completed Key aspects Indicative Financial Impact Δ EBIT in EUR mn 40 4 First wave announced in August 2015 31 152) 4 Cost savings through HCO reduction in overhead functions of the Industrial Division 4 Reduction of 500 HCO mai
Slide 23: Cost reduction and efficiency improvements – Second wave initiated
Backup 2 Cost reduction and efficiency improvements – Second wave initiated Key aspects Indicative Financial Impact Δ EBIT in EUR mn 58 4 Second wave announced in November 2016 41 23 50 60 4 Cost savings through consolidation of plants in Europe and Americas 37 and HCO reduction in overhead function
Slide 24: Sales growth 9M 2016 2.7% (FX-adjusted)
Backup Sales growth 9M 2016 2.7% (FX-adjusted) Sales Sales by region 9M 2016 in EUR mn y-o-y growth (w/o FX effects) Asia/Pacific +2.7%1) +2.9% (+4.4%) vs 9M 2015 Greater China 10.3% 3,339 3,382 3,343 3,369 3,237 3,221 3,265 +5.5% (+10.5%) 14.3% 54.2% 21.2% Americas Europe -5.0% (-0.4%) +0.5% (+1.7%
Slide 25: Automotive – Strong growth in Greater China
Backup Automotive – Strong growth in Greater China Automotive sales and market development 9M Automotive sales by division 9M Europe Americas Greater China Asia/Pacific in EUR mn 9M 2015 +22% +4.7%1) 9M 2016 +11% +7% +2.4%1) 3,150 3,217 +4% +3% 0% +1% 1,946 1,960 +10.3%1) +6.2%1) -3% 1,317 1,384 1,0
Slide 26: Industrial – Mixed development across sectors
Backup Industrial – Mixed development across sectors Industrial sales by sector cluster 9M1) Industrial sales by region 9M in EUR mn 9M 2015 9M 2016 Two-Wheelers Wind -0.9%1) Aerospace 1,382 1,352 -6.4%1) Industrial Automation -20.4%1) 466 423 -5.3%1) Offroad 361 279 238 220 Power Transmission Rail
Slide 27: Overview Corporate and Financing Structure
Backup Overview Corporate and Financing Structure Corporate Structure (simplified) Financing Structure as of October 14, 2016 as of October 14, 2016 INA-Holding Schaeffler IHO Verwaltungs GmbH (HoldCo) GmbH & Co. KG Nominal Nominal Debt instrument Interest Maturity Rating (USD mn) (EUR mn) Term loan