Slide 1: Commented Slides / Conference Call Q1 2023 Earnings
COMMENTED SLIDES / CONFERENCE CALL Q1 2023 EARNINGS 1 PUBLIC
Slide 2: Company Representatives and Call Participants
Company Representatives Klaus Rosenfeld, CEO Claus Bauer, CFO Renata Casaro, Head of Investor Relations Conference Call (Active) Participants Christoph Laskawi, Deutsche Bank Akshat Kacker, J.P. Morgan Sanjay Bhagwani, Citi Michael Punzet, DZ Bank 2 PUBLIC
Slide 3: Introduction by Renata Casaro and Klaus Rosenfeld
Renata Casaro Dear investors and dear analysts, thank you for joining the Schaeffler Group first quarter 2023 earnings call. As usual, our call will be conducted under the disclaimer. Without further ado, I will pass the floor on to Mr. Klaus Rosenfeld, CEO of the Schaeffler Group, and to Mr. Claus
Slide 4: Overview
SCHAEFFLER Overview Business Highlights Q1 2023 Financial Results Q1 2023 Outlook mWD =| May 9, 2023 GENDA PUBLIC
Slide 5: Key messages Q1 2023
Klaus Rosenfeld I think you saw the results already, 10.4% growth in the first quarter, all divisions contributing, and region Europe leading with double digit growth. An improvement in the Gross Profit margin of half a percentage point over the first quarter 2022, mainly driven by the exceptionally
Slide 6: Breakdown by division and region
If you go to page number five, you'll see the breakdown that you're used to by division and by the different regions. And as I said, all the divisions and all the regions contributed. 6 PUBLIC
Slide 7: Highlights and lowlights by division
Then on the next page, page number six, some highlights and lowlights. I think, on Automotive Technologies, we can say that our strategy, in terms of managing the portfolio of the transformation from mature to E-Mobility and new Chassis, is definitely paying off. We saw continued strong growth in E-
Slide 8: Highlights, ECO-Adapt acquisition and concerns
The ECO-Adapt little acquisition that we signed and closed is one of the next examples why we will continue to invest into our Industrial division. Free cash flow, I already said this, solid, better than expected, underlying cash generation. And I'm confident that that continues over the rest of the
Slide 9: Business Highlights Q1 2023
SCHAEFFLER Overview Business Highlights Q1 2023 Financial Results Q1 2023 mWD =| Outlook soy. G E N DA PUBLIC
Slide 10: Automotive Technologies key numbers
Let me go to page eight, and you see the new format is a little lighter than what you had in the past. You have all the key numbers on here. Automotive Technologies 4.3% margin. The sales growth was with 6%, rather moderate, driven by Europe. As I said, there is a negative outperformance in the Amer
Slide 11: Order intake E-Mobility
You see the Order Intake on the next page, number nine, as I said, around a billion for E-Mobility, on track to achieve our annual target. You see two of the interesting Order Intakes, one for E-Mobility, one for the more Mature business. The one for E-Mobility is truly something exciting. We are en
Slide 12: Automotive Aftermarket
Aftermarket, I think I said it already, three greens, exceptionally high double-digit sales growth, clearly driven by the low comps, but also, by strong demand. Then sales growth across the board, but in particular, driven by Europe, where we have the Independent Aftermarket business, as you know, a
Slide 13: Aftermarket business details
11 is then a little bit more business detail. We think we can claim a leading market position, in particular in Europe. When it comes to innovative Repair Solutions, we have said this on and on, and that is exemplified by a variety of different customer awards. The technical support is seen as a dif
Slide 14: Industrial division
12 is then Industrial, double-digit sales growth. That is, more or less half and half, organic and inorganic. Ewellix consolidated for the first quarter, and that has led, as we indicated, to a PPA effect on the margin. We have decided not to retroactively adjust the margin for 2022, so if you compa
Slide 15: Outlook and orderbook
In terms of outlook, for sure, you see this on page 13. If you look at the Orderbook, the growth dynamic is coming down a little bit, but we are still positive in terms of growth. The environment is certainly getting a little bit more difficult here. You saw what happened with the German manufacturi
Slide 16: Capex and investment allocation
14 is a page that you know. I'm not going to say much more than what is on this page here. We continue to be disciplined on Capex, 221 million Capex, and the investment allocation, 179 million. The ratios are all in line, Reinvestment Rate below one, and we continue with our strategic capital alloca
Slide 17: M&A
The last page from my side, before I hand over to Claus, is on M&A. We have done now with Ewellix, and also, with Melior Motion and the other smaller things, enough in the year 2022. It's now time to make sure that all of that gets integrated in a very careful manner. And we signed ECO-Adapt, a smal
Slide 18: Financial Results Q1 2023
SCHAEFFLER Overview Business Highlights Q1 2023 Financial Results Q1 2023 mWD =| Outlook - GENDA 18 PUBLIC
Slide 19: Sales
Claus Bauer Thank you very much, Klaus. Ladies and gentlemen, on page 17, we are looking at sales. And you see it's the third quarter in a row now with sales above EUR 4 billion. That translates, as Klaus has already said, to a foreign exchange adjusted growth, versus prior year, of 10.4%. And Klaus
Slide 20: Gross profit
On the next slide, you'll see the Gross Profit, definitely a good Gross Profit margin development, with sustained positive pricing across all regions. You see, then, on the bottom part of the right side, the development by division, which I will talk a little bit more, when we talk about the divisio
Slide 21: Overhead costs
On the next page, we look at the overhead. The overhead cost increase was in line with sales with 10.3%. As you see, if you look at the table on the right side, you'll see a little bit more detail, and see that it's especially driven by the two divisions that had significant volume growth, Automotiv
Slide 22: EBIT margin
EBIT margin, on the next slide, pretty much follows the Gross Profit development. And, again, I will talk a little bit more into the detail by division, which leads me to the next slide, already diving into the Automotive Technologies division. 22 PUBLIC
Slide 23: Automotive Technologies sales growth and outperformance
Here, you see, on the left, top side, the sales growth by business division. All business divisions grew year over year, including Engine and Transmission. You might remember that wasn't necessarily the trend of last year. E-Mobility significantly outgrew the other divisions, and Engine and Transmis
Slide 24: Automotive Technologies Americas and EBIT bridge
implementation, not just because of the inflation that we have seen in the last two years. And obviously, you all know that material prices are relaxing significantly, and that then has, now for the first time in a long time, a negative pricing impact on our sales numbers in the Americas, because no
Slide 25: Automotive Aftermarket
Let's go to the next slide, Automotive Aftermarket. Much was said already, and the numbers are doing the talking here. Double-digit sales growth across all regions. And you see, especially in Europe, it's even more significant with over 30% of sales growth year over year. Klaus said it a little bit
Slide 26: Industrial
On the next slide. I will talk to Industrial. You can see that we have growth across all regions, and also, market clusters. About half of the growth, a little bit less, actually, is related inorganically to the first consolidation of Ewellix. And you see that also somewhat reflected in the lower ta
Slide 27: Net income
That leads me away from the divisions and back to the Group, and the consolidated financial statements, Net Income stands at 129 million for the quarter. Normally, that follows closely EBIT, however, we have one volatile component that we also talked a little bit about already for the full year. We
Slide 28: Free cash flow
That leads me to Free cash flow. I start on the right side, minus 73 million. You can see the development. There’s some seasonal normal significant investment in working capital. I think we also prepared you already for that in our year-end conference call. You see also and that was also anticipated
Slide 29: Leverage ratio and liquidity
That brings me to my last slide. Klaus already said it, leverage ratio of 1.4. Clearly, due to the Ewellix acquisition, we have drawn the term loan with EUR 500 million, and that is the consequence. Klaus already said it too, but I think we have been upgraded by Moody's, and Moody's, especially, exp
Slide 30: Outlook
SCHAEFFLER Overview Business Highlights Q1 2023 Financial Results Q1 2023 mWD =| Outlook soy. G E N DA 30 PUBLIC
Slide 31: Market assumptions
Klaus Rosenfeld Thank you. Page 28, ladies and gentlemen, is the usual page on market assumptions. They are, from our point of view, broadly unchanged. Yes, we saw a Q1, in terms of production volumes and auto, with 21.1 million cars. That showed some growth, 5.7%. However, we have decided to stay w
Slide 32: Guidance 2023
Against that backdrop, 29, we have decided to confirm the Guidance for 2023, despite the strong and encouraging first quarter. You have this on the table here, and let's see what the second quarter brings and what that means, then, for the rest of the year. 32 PUBLIC
Slide 33: Summary
Let me summarize on 30 very briefly. Good Q1 performance. The hard work from the past starts to pay off. Also, in terms of cash generation, Claus explained this, and we will continue to proactively execute on what our strategy says. The roadmap is our framework, and it has proven to be exactly right
Slide 34: Financial calendar
What is more near term is on 31, ladies and gentlemen, that's the calendar. The colleagues, Renata and the team, will go on roadshow tomorrow in Frankfurt, then in London, also do a credit conference, and will also be available at the June 6 th Auto Conference JP Morgan. That's it for today, thanks
Slide 35: Q&A Session
Q&A SESSION Christoph Laskawi, Deutsche Bank Good morning, and thank you for taking my question. The first one will be on the auto margin and how we should think about the shape of the year going forward. I'd say in general, the perception in the market is that Q1 should be the weakest quarter for t
Slide 36: Q&A Session continued
expects the fourth quarter to be the highest production quarter, therefore, also depending on the product mix, we would benefit from a positive volume development. As Klaus just said, what is our assumption is for the total year’s volume, we are not quite following yet in our Guidance this volume pr
Slide 37: Q&A Session continued
the bridges will look similar throughout the year with that impact. Maybe we displayed it a little bit differently, because we already saw before the conference call that many people have been questioning what's going on. So, maybe we think a little bit to make that impact operationally more transpa
Slide 38: Q&A Session continued
The second one is on overall pricing in the quarter. So, you have reported 110 million positive pricing for the Group. Could you please just provide us with more detail on how that is split between Automotive, Industrial, and Aftermarket? And finally, on the Industrial division. I know the Orderbook
Slide 39: Q&A Session continued
Klaus Rosenfeld Maybe I will add one more sentence. The guys have done a terrific job in 2022. They have gained a lot of experience in how to do this, find the right balance between a customer and our interest. What is most important to me is that the price increases from last year are sustainable.
Slide 40: Q&A Session continued
Sanjay Bhagwani, Citi Thank you, that's very helpful. And then coming back on North America. I think you mentioned that, so, let's say if the commodity prices stay where they are, then these technical effects of, let's say, indexed commodity price downs enhance negative rising, this will continue to
Slide 41: Q&A Session continued
was largely, let's say, raw materials, and the next one will maybe be the wages and energy. So, if you could provide a little bit of detail on that. Thank you. Claus Bauer We were very outspoken about that in the last year. And then I was tested every quarter on what I said, and I don’t think I was
Slide 42: Q&A Session continued
Klaus Rosenfeld And maybe I add two sentences. I think the company has shown that it's able to manage its cost structure. So, the strategic cost management is proven over years now, and you see this also, when you look at FTE figures. And the company showed last year that it's able to manage costs o
Slide 43: Q&A Session continued
at the hedged price, and not settling them financially. And therefore, what we would enter into very transparently with our customers is, indeed, the hedged price, and not some artificial market price. Michael Punzet, DZ Bank Do you think you are able to pass through the hedged prices to your custom
Slide 44: Backup - Thank you, Investor Relations Contact
Backup SCHAEFFLER Thank you Investor Relations Contact Phone +49 9132 82-4440 Email ir@schaeffler.com Web www.schaeffler.com/ir May 9, 2023 2 PusLiC SCHAEFFLER May9, 2023 QU 2023 Schaeffler AG earnings 44 PUBLIC
Slide 45: Equity Story and Roadmap 2025
BACKUP SCHAEFFLER Equity Story - Positioning Schaeffler for long-term value creation Roadmap 2025 in execution - Focus on capital allocation, portfolio management and FCF generation Automotive Technologies - Conquer leadership positions in New Business for electrified Powertrains and Chassis applica
Slide 46: Road to 2025 mid-term targets and key figures Q1 2023
BACKUP SCHAEFFLER Road to 2025 - Mid-term targets are reflected in Schaeffler’s comprehensive Financial Framework Mid-term targets 2025 Automotive Technologies Automotive Aftermarket Industrial ant ue gr Constant-c nue > GDP growth > Ind. Prod. growth Schaeffler Group ROCE 15% Group parameters Capit
Slide 47: Net income and EBIT reconciliation and special items
BACKUP Net Income’ - EBIT reconciliation and special items SCHAEFFLER Reconciliation Q1 2023 incurmn KEY ASPECTS. ‘© Special items amounted to EUR 92 mn in Q1, mainly related to valuation of energy forward contracts 336 + Financial Result lower yoy due to higher interest payments and higher expenses
Slide 48: Automotive Technologies outperformance by quarters
Automotive Technologies (AT) outperformance by quarters SCHAEFFLER Adjusted comparative figures 2022 aa Outper- S&Pt AT? formance World +5.7% — +6.0% —+0.3pp Europe 413.7% 415.1% — +1.4pp Americas +10.0% +0.8% — -9.2pp Greater China 7.2% = -8.2% —-0.9pp Asia/Pacific +11.3% 415.5% — +4.2pp az can eon
Slide 49: Corporate and financing structure
BACKUP Overview Corporate and Financing Structure Corporate structure (simplified) 2: ovaren 31,2023 INA-Holding Schaeffler GmbH & Co, KG i 100% + THO Beteiligungs GmbH I 100% soam | 9.9% 249% 75.1% 260% | 540% Schaeffler AG May9, 2023 QU 2023 Schaeffler AG earnings EURIUSD = 09748 | *After crass cu