Schaeffler Ag · XETR:SHA0
Schaeffler — Baader Investment Conference 2022
61 slides from Schaeffler's conference presentation, Sep 21, 2022
Slide 1: Schaeffler AG Baader Investment Conference
Schaeffler AG Baader Investment Conference September 21, 2022 PUBLIC
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 Module 1 – Overview Schaeffler Group 2 Module 2 – Our Divisions 3 Module 3 – Q2 2022 Financials 4 Backup Sep 21, 2022 Schaeffler AG – Baader Investment Conference 3 PUBLIC
Slide 4: Schaeffler Group – A strong starting point
1 Overview Schaeffler Group Schaeffler Group – A strong starting point Strong customer base with Approximately Approximately approx. 11,800 EUR 13.9 bn 1,800 customers Sales in 20211 patents filed in 2021 Approximately 75 plants 1.1 mn tons of processed steel p.a. 20 R&D centers Around 200 locations
Slide 5: Schaeffler Group at a glance – Automotive and Industrial supplier
1 Overview Schaeffler Group Schaeffler Group at a glance – We are an Automotive and Industrial supplier 3 Divisions Schaeffler Group 4 Regions In % of FY 2021 In % of FY 2021 Asia Pacific • Leading positions in 14% Industrial 26% technology and innovation • 10 customer sectors Europe 42% EUR 13.9 bn
Slide 6: Our company strategy Roadmap 5 – We pioneer motion
1 Overview Schaeffler Group Our company strategy Roadmap 2025 – We pioneer motion Tomorrow Our Roadmap 2025 Transform Focus Execute Today Where we play How we win How we create value Sep 21, 2022 Schaeffler AG – Baader Investment Conference 6 PUBLIC
Slide 7: Roadmap 2025 – Building on our strong foundations
1 Overview Schaeffler Group Roadmap 2025 – Building on our strong foundations and innovating as a diversified Automotive and Industrial Group Automotive Technologies Automotive Aftermarket Industrial Driving innovation with systems and services Mature New Platform ▪ One-stop-shop Robotics Wireless c
Slide 8: Capital Allocation Framework
1 Overview Schaeffler Group Capital Allocation Framework – Driving an efficient and impactful use of resources Portfolio Management Capital Allocation Key aspects Build • Reinvestment Rate1 at Group level is the Growth Grow dominant logic Harvest • Reinvestment Rate for “Build” and “Grow” significan
Slide 9: We focus on compelling M&A
1 Overview Schaeffler Group We focus on compelling M&A – Further complementing and strengthening our business portfolio M&A radar Key aspects • Clearly defined M&A Strategy with 7 search fields, focus on small and mid-sized bolt-on acquisitions Hydrogen Power electronics & Electronics Lifetime Solut
Slide 10: We focus on our core competencies
1 Overview Schaeffler Group We focus on our core competencies – Further leveraging our best-in-class manufacturing technologies Our manufacturing technologies Our key strengths Superior Innovation Quality Large forging Cold forming Heat treatment Combining + 4 USPs to a unique strength Machining Gri
Slide 11: We leverage our synergistic potential
1 Overview Schaeffler Group We leverage our synergistic potential – Benefitting from scope and scale Scope of interdependencies Technology transfer Economies of scale • Same production technologies • Dedicated Innovation Clusters • Joint procurement and supply chain management • Equal materials and
Slide 12: We see hydrogen as a unique growth chance
1 Overview Schaeffler Group We see hydrogen as a unique growth chance – Schaeffler manufacturing and industrialization excellence is key Fuel cell – Usage of hydrogen Electrolysis – Production of hydrogen + Siemens AG Bipolar plate Fuel cell systems Bipolar plate + Electrolyzers Gas diffusion layer
Slide 13: Sustainability – Eight non-financial targets
1 Overview Schaeffler Group Sustainability – Eight non-financial targets underline clear commitment to sustainability Climate Neutral Supply Chain Climate Neutral Supply Chain until 2040 Climate Neutral Production Sustainable Suppliers at all Schaeffler production 90% of the purchasing volume of pro
Slide 14: Path to Climate Neutrality
1 Overview Schaeffler Group Path to Climate Neutrality – Ambitious Scope targets defined Long-Term Sustainability Targets Key aspects • Decarbonization as top priority • Emissions occurring in the supply 2019 2025 2030 2035 2040 chain (Scope 3 upstream): − Climate neutral from 2040 − Emission reduct
Slide 15: Agenda
Agenda 1 Module 1 – Overview Schaeffler Group 2 Module 2 – Our Divisions 3 Module 3 – Q2 2022 Financials 4 Backup Sep 21, 2022 Schaeffler AG – Baader Investment Conference 15 PUBLIC
Slide 16: Automotive Technologies – Driving the transition to innovative propulsion
2 Our Divisions – Automotive Technologies Automotive Technologies – Driving the transition to innovative propulsion and chassis technologies Revenue2 Engine & E-Mobility Europe Greater China 8.4 7.8 Transmission 56%1 of sales in 2021 12%1 of sales in 2021 37% of sales in 2021 26% of sales in 2021 20
Slide 17: Portfolio Management Automotive Technologies – Operating Model
2 Our Divisions – Automotive Technologies Portfolio Management Automotive Technologies – Operating Model sharpened in 2021 Mature Business New Business • E-Motors • Cam phaser Engine & E-Mobility • Gearboxes / Torque Transfer • Variable Valve train Transmission Solutions Powertrain- • Dual mass fly
Slide 18: Electrification is further accelerating
2 Our Divisions – Automotive Technologies Portfolio Management Automotive Technologies – Electrification is further accelerating Vision Powertrain – OLD Vision Powertrain – NEW Global Light Vehicle Production Global Light Vehicle Production Climate targets towards zero 15% emission in major markets
Slide 19: We actively manage our Product Portfolio
2 Our Divisions – Automotive Technologies We actively manage our Product Portfolio – Harvesting the Mature, Growing the New Business Vision Powertrain – NEW Mature Business New Business Global Light Vehicle Production Products for Powertrain agnostic1 Powertrain agnostic1 Products for ICE and HEV pr
Slide 20: Eco-system – Optimizing our leading technological platform
2 Our Divisions – Automotive Technologies Eco-system – Optimizing our leading technological platform, leveraging our strong industrialization capabilities Mature Business New Business How we harvest Mature Business • We right-size investments and resource allocation in our Mature We business by cons
Slide 21: Eco-system – Creating a leading technological platform
2 Our Divisions – Automotive Technologies Eco-system – Creating a leading technological platform with strong industrialization capabilities Mature Business New Business Growing our New Business • We continuously leverage our Automotive + Industrial supplier eco- We system – Our New Business thrives
Slide 22: Unlimited innovation potential with our E-Mobility USP
2 Our Divisions – Automotive Technologies Automotive Technologies – Unlimited innovation potential with our E-Mobility USP 3in1 E-Motors Transmission Xin1 2in1 e-Axle 4in1 Systems Thermal Management PEU Thermal 3in1 E-Motor Transmission Power Electronics management 2in1 3in1 4in1 Sep 21, 2022 Schaef
Slide 23: How we fund our own growth and create value
2 Our Divisions – Automotive Technologies How we fund our own growth and create value Mature Business Order Intake2 FY 2019 - 2021 New Business Products for Powertrain Powertrain Products for ICE and HEV agnostic1 agnostic1 Electrified products products Powertrains 36% Priority Margin HEV Priority G
Slide 24: Automotive Aftermarket – Leading supplier of Aftermarket components
2 Our Divisions – Automotive Aftermarket Automotive Aftermarket – Leading supplier of Aftermarket components and systems Revenue2 Original Equipment Services (OES) Others Europe Greater China 1.8 7% of sales 1.6 15% of sales 69% of sales in 2021 5% of sales in 2021 2020 2021 Independent Aftermarket
Slide 25: Automotive Aftermarket – Capturing new growth opportunities
2 Our Divisions – Automotive Aftermarket Automotive Aftermarket – Capturing new growth opportunities Growth drivers Growth enablers We realize untapped Share of Wallet potential at current customer base We offer advanced Digital digital services to Competence Solutions & We upgrade components to sol
Slide 26: REPXPERT Remote Support
2 Our Divisions – Automotive Aftermarket Automotive Aftermarket – REPXPERT Remote Support is the next level digital service for garages Conventional technical support methods reach their limitations when it comes to complex, demanding vehicle repairs • Service technicians increasingly report difficu
Slide 27: Aftermarket CRM
2 Our Divisions – Automotive Aftermarket Automotive Aftermarket – Aftermarket CRM: Cloud-based, integrated customer relationship management now live Sales • 360° customer view • Business potential identification • Sales planning Marketing • One source for all customer • Reduced complexity informatio
Slide 28: Industrial – Leading global component and system supplier
2 Our Divisions – Industrial Industrial – Leading global component and system supplier Revenue2 Europe Greater China 3.6 3.1 41% of sales in 2021 28% of sales in 2021 Linear Bearings Technology 2020 2021 Broad range of products EBIT margin bsi Mechanical Mechatronic Systems 11.8% Americas Asia / Pac
Slide 29: Industrial – Diversified portfolio with significant growth potential
2 Our Divisions – Industrial Industrial – Diversified portfolio with significant growth potential Market clusters Sector clusters Industrial Industrial sales development [EUR mn] Distribution share Renewables of total sales: ~28% 3,383 3,535 3,568 3,1323 19% EUR 680 mn1 (+8.2%2) Wind Hydrogen as new
Slide 30: Market Cluster Renewables
2 Our Divisions – Industrial 1 Market Cluster Renewables – Strong fundamentals of the market, confirming growth potential Market Drivers Wind energy Renewables • Schaeffler bearings in every ~2nd wind turbine globally − Growing demand for electricity • Core business portfolio complemented by and loc
Slide 31: Market Cluster Transportation & Mobility
2 Our Divisions – Industrial 2 Market Cluster Transportation & Mobility – Well positioned with diversified products and services Market Drivers Comprehensive portfolio Transportation & Mobility • Strong growth with standardized bearings, specialized bearings and sensorized modules − Increasing passe
Slide 32: Market Cluster Machinery & Materials
2 Our Divisions – Industrial 3 Market Cluster Machinery & Materials – Growing demand for sustainable, resource-saving solutions Market Drivers Serving multiple industries Machinery & Materials • Engagement in diverse sectors with leading market positions − Growing demand for aggregates • Bearing sol
Slide 33: Market Cluster Industrial Automation
2 Our Divisions – Industrial 4 Market Cluster Industrial Automation – Harnessing the rapidly increasing digitization and automatization Market Drivers Innovative products Industrial Automation • Expansion of mechatronic solutions such as highly efficient rotary drives − Increasing digitization and •
Slide 34: Agenda
Agenda 1 Module 1 – Overview Schaeffler Group 2 Module 2 – Our Divisions 3 Module 3 – Q2 2022 Financials 4 Backup Sep 21, 2022 Schaeffler AG – Baader Investment Conference 34 PUBLIC
Slide 35: Q2 2022 Overview
3 Q2 2022 Financials Q2 2022 Overview – Despite unprecedented complex macroeconomic environment, Schaeffler delivered a solid Q2 Key messages Q2 2022 Sales growth1 Q2 Order Intake2 H1 Q2 Sales1 +4.4% – Sales contracted in China in Q2 (-12.5%) due to Auto Technologies 1 Covid lockdowns, good growth i
Slide 36: Sales – Moderate growth in Q2 yoy
3 Q2 2022 Financials Sales – Moderate growth2 in Q2 yoy, other regions overcompensated the China Q2 lockdown contraction Sales | in EUR mn Key aspects +9.7%1 • Automotive Technologies: Strong growth2 (+20%) in Americas driven by +4.4%2 New and Mature Business, Region Europe growing2 (+2.4%) despite
Slide 37: Gross Profit – Partial compensation of higher production costs
3 Q2 2022 Financials Gross Profit – Partial compensation of higher production costs thanks to overall positive pricing and increased volumes Gross Profit Q2 2021 vs. Q2 2022 | in EUR mn Key aspects • Pricing realization: Sequentially further improved in all divisions even if to a different extent -1
Slide 38: Overhead costs – Increase yoy
3 Q2 2022 Financials Overhead costs – Increase yoy, freight and logistics costs the main drivers Overhead costs | in EUR mn Key aspects • R&D: Slightly higher yoy, mainly related to New Business projects in +12.1% Automotive Technologies and in business fields Hydrogen and Robotics in Industrials 60
Slide 39: EBIT – Solid margin in Industrial and Aftermarket
3 Q2 2022 Financials EBIT1 – Solid margin in Industrial and Aftermarket, decline in Auto Technologies due to stronger headwinds EBIT1 | in EUR mn Key aspects • AT margin: Significantly declined yoy driven by lower absorption of fixed -3.5pp costs, production inefficiencies caused by volatile custome
Slide 40: Automotive Technologies – Q2 Sales affected by China lockdowns
3 Q2 2022 Financials Automotive Technologies – Q2 Sales1 affected by China lockdowns, EBIT margin2 burdened by higher input costs Sales -1.0%1 Strong growth in Region Americas, Region Europe growing even if in a challenging in EUR mn environment; Global Outperformance of 130 bps achieved in Q2 +1.3%
Slide 41: Automotive Technologies – Growth in New Business
3 Q2 2022 Financials Automotive Technologies – Growth1 in New Business, EBIT margin2 sharply burdened by increased input costs, volatile customer call-offs and declined overall volumes Sales by business division | yoy growth EBIT2 Q2 2021 vs. Q2 2022 | in EUR mn Q2 2021 Q2 2022 ∆1 E-Mobility 259 294
Slide 42: Automotive Aftermarket – Q2 sales growth driven by price effects
3 Q2 2022 Financials Automotive Aftermarket – Q2 sales growth1 driven by positive price effects, Q2 EBIT margin2 lower due to 2021 positive one-offs Sales Underlying market conditions in Aftermarket business remain favorable – Sales in EUR mn +3.2%1 growth1 in all regions in Q2 except China; Europe
Slide 43: Automotive Aftermarket – Moderate growth driven by Americas and Asia/Pacific
3 Q2 2022 Financials Automotive Aftermarket – Moderate growth1 driven by Americas and Asia/Pacific, EBIT margin5 down yoy due to positive one-off impact in Q2 2021 Sales by region | yoy growth EBIT5 Q2 2021 vs. Q2 2022 | in EUR mn Q2 2021 Q2 2022 ∆1 Europe 332 337 +1.2% Americas 86 110 +12.4% Greate
Slide 44: Industrial – Strong growth momentum continued
3 Q2 2022 Financials Industrial – Strong growth1 momentum continued, solid EBIT margin2 despite increased cost headwinds Sales +13.6%1 Strong growth1 across all regions except Greater China – Industrial delivering more in EUR mn than EUR 1 bn sales level in Q2 again, despite macro headwinds +11.7%1
Slide 45: Industrial – Strong growth continued, EBIT margin flat
3 Q2 2022 Financials Industrial – Strong growth1 continued, EBIT margin2 flat yoy supported by both positive price and volume effects Sales by region | yoy growth EBIT2 Q2 2021 vs. Q2 2022 | in EUR mn Q2 2021 Q2 2022 ∆1 Europe 357 448 +25.2% -4 Americas 146 179 +9.1% Greater China 272 275 -8.3% -16
Slide 46: Net Income – EPS at EUR 0.17, ROCE reached 11.6%
3 Q2 2022 Financials Net Income1 – EPS2 at EUR 0.17, ROCE3 reached 11.6% Net income1 | in EUR mn Key aspects • Q2 2022 Net income1 follows lower EBIT -115 mn • ROCE3 and Schaeffler Value Added4 reduced as strong prior year quarters rolled off 235 227 149 145 136 113 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2
Slide 47: Free Cash Flow – Impacted by tactical increase in inventory
3 Q2 2022 Financials Free Cash Flow – Impacted by tactical increase in inventory and softer margins in Q2 Free Cash Flow before M&A1 | in EUR mn Reconciliation Q2 2022 | in EUR mn -332 mn -316 429 225 55 14 130 113 -175 -3 -88 -66 -219 -219 EBITDA ∆ Net Capex Net Taxes Others FCF Q1 21 Q2 21 Q3 21 Q
Slide 48: Net debt of EUR 2.6 bn – Leverage ratio at 1.3x
3 Q2 2022 Financials Net debt of EUR 2.6 bn – Leverage ratio1 at 1.3x and solid liquidity position, EUR 328 mn paid in Dividends Net financial debt and Leverage ratio1 | in EUR mn Key aspects Leverage ratio1 • In April 2022 Dividend payment of EUR 328 mn for FY 2021 (44% payout ratio) • No maturitie
Slide 49: Capital allocation – Capex prioritizing growth business
3 Q2 2022 Financials Capital allocation – Capex prioritizing investments in growth business and regions, Capex ratio2 of 4.6% in Q2 Investment1 allocation | in EUR mn Key aspects Q2 2022 • Reinvestment Rate Target: Continued prioritization of Industrial Division FY 20 FY 21 Q2 21 Q2 22 H1 22 and BD
Slide 50: Market assumptions – What changed since May
3 Q2 2022 Financials Market assumptions – What changed in our market assumptions since May Automotive Technologies – Global LVP1 2022 Automotive Aftermarket – Global LV Parc3 Industrial – Industrial Production4 7% 77.2 ~77 8% 6% Around -3.8 5% 6% World 42.1 mn discount 4% 39.4 37.8 38.7 vs. IHS2 est
Slide 51: FY 2022 Guidance – Outlook for all metrics confirmed
3 Q2 2022 Financials FY 2022 Guidance – Outlook for all metrics confirmed Group Guidance Divisional Guidance Automotive Automotive Industrial Technologies Aftermarket Actuals Guidance Actuals Guidance Actuals Guidance Actuals Guidance FY 2021 FY 2022 FY 2021 FY 2022 FY 2021 FY 2022 FY 2021 FY 2022 O
Slide 52: Road to 2025 – Mid-term Targets
3 Q2 2022 Financials Road to 2025 – Mid-term Targets are reflected in Schaeffler’s comprehensive Financial Framework Mid-term Targets Key aspects Automotive Technologies Automotive Aftermarket Industrial • Consistent with incentive system Outperformance1 FX-adj. sales growth FX-adj. sales growth • C
Slide 53: Agenda
Agenda 1 Module 1 – Overview Schaeffler Group 2 Module 2 – Our Divisions 3 Module 3 – Q2 2022 Financials 4 Backup Sep 21, 2022 Schaeffler AG – Baader Investment Conference 53 PUBLIC
Slide 54: H1 2022 Sales development by division and region
Backup H1 2022 Sales1 development – All divisions were impacted by China lockdowns in Q2, even if to a different extent Automotive Automotive Industrial Technologies Aftermarket % of Group sales H1 2022 60% 13% 27% Europe 42% +6.0% +0% +0% +26% Americas 23% +9.5% +9% +12% +10% Greater China 21% -8.0
Slide 55: Net Income – EBIT reconciliation and special items
Backup Net Income1 – EBIT reconciliation and special items Reconciliation H1 2022 | in EUR mn Key aspects • Special items amounted to EUR 24 mn in H1, mainly related to the consolidation of the Footprint in Europe within “Roadmap 2025” • Financial Result EUR -22 mn below prior year mainly driven by
Slide 56: Free Cash Flow details H1 2022
Backup Free Cash Flow1 details H1 2022 – FCF hampered by lower EBITDA and Working Capital outflow FCF1 H1 2021 vs. H1 2022 | in EUR mn Key aspects • Negative EBITDA development yoy mainly due to challenging conditions ∆ Net Working Capital EUR -58 mn • Net Working Capital negative with EUR -58 mn dr
Slide 57: Working Capital ratio 22.1% – Capex ratio 4.6% in Q2
Backup Working Capital1 ratio 22.1% – Capex ratio2 4.6% in Q2 Working capital1 | in EUR mn Capex2 | in EUR mn +458 mn +39 mn 2,543 2,726 2,752 2,700 2,803 3,184 132 136 215 188 156 175 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 in % of sales (LTM) in % of sales 19.8% 19.
Slide 58: Automotive Technologies outperformance by quarters
Backup Automotive Technologies (AT) outperformance by quarters YTD Q1 22 Q2 22 Outperformance: +0.8pp Outper- Outper- IHS1 AT2 formance IHS1 AT2 formance World -3.4% -3.2% +0.2pp 0.0% +1.3% +1.3pp Europe -15.0% -1.9% +13.1pp -2.9% +2.4% +5.3pp Americas -3.3% +0.3% +3.6pp +11.4% +19.5% +8.1pp Greater
Slide 59: Key figures by Group and Division
Backup Key figures by Group and Division Adjusted comparative figures 2021 Group | in EUR mn Automotive Aftermarket | in EUR mn Q1 21 Q2 21 Q3 21 Q4 21 FY 21 Q1 22 Q2 22 Q1 21 Q2 21 Q3 21 Q4 21 FY 21 Q1 22 Q2 22 Sales 3,560 3,454 3,332 3,506 13,852 3,758 3,790 Sales 444 467 500 437 1,848 463 506 Sal
Slide 60: Overview Corporate and Financing Structure
Backup Overview Corporate and Financing Structure Corporate structure (simplified) | as of June 30, 2022 Financing structure | as of June 30, 2022 A IHO Verwaltungs GmbH INA-Holding Schaeffler Debt instrument Nominal Nominal Interest Maturity Rating GmbH & Co. KG (USD m) (EUR1 m) (Fitch/Moody’s/S&P)
Slide 61: IR Contact
IR Contact Investor Relations Phone: + 49 9132 82-4440 Email: ir@schaeffler.com Web: www.schaeffler.com/ir PUBLIC