Schaeffler Ag · XETR:SHA0
Schaeffler — H1 2020 Earnings Presentation
48 slides from Schaeffler's earnings presentation, Aug 4, 2020
Slide 1: Results Q2 and H1 2020 Schaeffler AG Conference Call
Results Q2 and H1 2020 Schaeffler AG Conference Call Aug 4, 2020 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: Dr. Klaus Patzak appointed CFO of Schaeffler AG as of August 1, 2020
Dr. Klaus Patzak appointed CFO of Schaeffler AG as of August 1, 2020 Dr. Klaus Patzak – CFO and Member of the Board of Managing Directors Dr. Klaus Patzak – Career • Dr. Klaus Patzak (55) was most recently a managing partner responsible for selected portfolio companies at Siemens, managing director
Slide 4: Agenda
Agenda 1 Overview 2 Business Highlights Q2 and H1 2020 3 Financial Results Q2 and H1 2020 4 Outlook Aug 4, 2020 Results Q2 and H1 2020 Schaeffler AG 4
Slide 5: Overview: Q2 2020 negatively impacted by the Coronavirus pandemic
1 Overview Q2 2020 negatively impacted by the Coronavirus pandemic – Encouraging order development Key messages Sales growth1 Q2 EBIT margin2 Q2 Group sales impacted by the pandemic – Automotive OEM affected 1 the most (-42%1), Aftermarket -31%1 and Industrial -18%1 -34.5% -6.5% EUR 2,292 mn EUR -15
Slide 6: Schaeffler Group Q2 2020 – Highlights and lowlights
1 Overview Schaeffler Group Q2 2020 – Highlights and lowlights Substantial business improvement seen in June and Negative Coronavirus impact in Q2: sales, EBIT and FCF related to all divisions and regions affected China – Strong recovery in Automotive OEM, ongoing Automotive divisions with significa
Slide 7: Agenda
Agenda 1 Overview 2 Business Highlights Q2 and H1 2020 3 Financial Results Q2 and H1 2020 4 Outlook Aug 4, 2020 Results Q2 and H1 2020 Schaeffler AG 7
Slide 8: Automotive OEM – Strong sales decline and negative EBIT in Q2
2 Business Highlights Q2 and H1 2020 Automotive OEM – Strong sales decline and negative EBIT in Q2 Sales Solid Outperformance of 250bps in Q2 (H1: 640bps), driven by all regions; strong in EUR mn -26.8%1 recovery in China in Q2 with 17%1 sales growth, other regions improved during the -42.0%1 quarte
Slide 9: Automotive OEM – Additional EUR 1.1bn Order intake in E-Mobility
2 Business Highlights Q2 and H1 2020 Automotive OEM – Additional EUR 1.1bn Order intake in E-Mobility Automotive OEM Order Intake1 Business Highlights in EUR bn 15.0 E-Mobility – Electric Axle Systems 12.6 11.3 “3 in 1” E-Axle System 1 • Delivery of a complete electric axle 7.3 system including e-mo
Slide 10: Automotive Aftermarket – Strong sales decline in Q2, earnings quality robust
2 Business Highlights Q2 and H1 2020 Automotive Aftermarket – Strong sales decline in Q2, earnings quality robust Sales in EUR mn -14.8%1 Improving sales trend in June in our core markets Europe and Americas, underpinned by increasing mobility rates -30.5%1 904 747 461 Good flexing of overhead costs
Slide 11: Automotive Aftermarket – Improving trend in demand
2 Business Highlights Q2 and H1 2020 Automotive Aftermarket – Improving trend in demand, but global revenues still below pre-coronavirus pandemic levels REPXPERT sessions1 Revenue Order Book (next 30 days) Relative deviation to baseline average 2019 In EUR mn Relative deviation to baseline average 2
Slide 12: Industrial – Strong overall sales decline in Q2, earnings quality robust
2 Business Highlights Q2 and H1 2020 Industrial – Strong overall sales decline in Q2, earnings quality robust Sales in EUR mn -12.8%1 Lowest point in sales due to lockdowns and restrictions passed, -18.1%1 sales picked up in May and June 2020 1,804 1,562 911 Double digit growth in China continued, d
Slide 13: Industrial – New orders and innovations in future growth fields
2 Business Highlights Q2 and H1 2020 Industrial – New orders and innovations in future growth fields, despite a challenging market environment Orderbook 3M Business Highlights yoy growth • Schaeffler OPTIME: Plug. Play. Predict. + Launch of cost-effective and highly scalable wireless condition monit
Slide 14: Coronavirus Update – Average utilization level of plants improving
2 Business Highlights Q2 and H1 2020 Coronavirus Update – Average utilization level of plants improving Global Footprint Americas Greater China • Utilization with strong rebound effect • Strong recovery in China Utilization1,2 starting in May and continuing into Europe continued Q3 in North America
Slide 15: Coronavirus Update – Countermeasures on Group and divisional level
2 Business Highlights Q2 and H1 2020 Coronavirus Update – Countermeasures on Group and divisional level • Strict health and safety measures implemented worldwide Health & Safety • Continued disciplined execution during ramp-up phase • Flexing of cost base (e.g. short-time work) and structural improv
Slide 16: Cost management – Flexing of costs intensified
2 Business Highlights Q2 and H1 2020 Cost management – Flexing of costs intensified Schaeffler Headcount Key aspects as per month end Key aspects • Headcount reduction of almost 7% yoy, achieved by our efficiency programs and divestment of plants -6.9% • Regional split of yoy headcount reduction inc
Slide 17: Capital allocation – Capex ratio of 5.4% in H1
2 Business Highlights Q2 and H1 2020 Capital allocation – Prioritization and differentiated steering resulting in Capex ratio2 of 5.4% in H1 Investment1 allocation | in EUR mn Key aspects • Capex in FY 2020 reprioritized and to be reduced by at least one third compared to previous year FY 18 FY 19 Q
Slide 18: Agenda
Agenda 1 Overview 2 Business Highlights Q2 and H1 2020 3 Financial Results Q2 and H1 2020 4 Outlook Aug 4, 2020 Results Q2 and H1 2020 Schaeffler AG 18
Slide 19: Key figures Q2 and H1 2020
3 Financial Results Q2 and H1 2020 Key figures Q2 and H1 2020 Q2 2020 H1 2020 in EUR mn Q2 2019 Q2 2020 vs. Q2 2019 H1 2019 H1 2020 vs. H1 2019 -36.4% -22.9% Sales 1 3,604 2,292 7,226 5,574 -34.5%1 -21.8%1 Gross Profit 899 339 -560 mn 1,813 1,138 -675 mn 2 Gross Margin 25.0% 14.8% -10.2pp 25.1% 20.4
Slide 20: Sales growth – Severe sales decline in all regions, except Greater China
3 Financial Results Q2 and H1 2020 1 Sales growth – Severe sales decline in all regions, except Greater China Sales | in EUR mn Key aspects -21.8%1 • Sales in Q2 heavily impacted by almost complete lockdown during April vs H1 2019 and May in Europe and Americas • Automotive OEM with declining sales
Slide 21: Gross Profit – Severe volume losses could not be compensated by cost flexing
3 Financial Results Q2 and H1 2020 2 Gross Profit – Severe volume losses could not be compensated by cost flexing Gross Profit Q2 2019 vs. Q2 2020 | in EUR mn Key aspects • Normal negative price effect in Automotive OEM, Industrial still with positive price momentum, but less material • Negative vol
Slide 22: EBIT margin – Strong margin decline in Q2
3 Financial Results Q2 and H1 2020 3 EBIT margin1 – Strong margin decline in Q2, EBIT margin1 H1 positive EBIT1 | in EUR mn Key aspects -491 mn • Biggest impact on declining EBIT margin1 due to negative EBIT in vs H1 2019 Automotive OEM • Both Automotive Aftermarket and Industrial with subdued but c
Slide 23: Automotive OEM – Outperformance achieved in all regions, negative EBIT
3 Financial Results Q2 and H1 2020 Automotive OEM – Outperformance achieved in all regions, negative EBIT Sales by business division | yoy growth EBIT2 Q2 2019 vs. Q2 2020 | in EUR mn Q2 2019 Q2 2020 ∆1 E-Mobility 159 128 -18.8% Engine Systems 689 384 -43.6% 108 Transmission Systems 987 548 -43.1% C
Slide 24: Automotive Aftermarket – Severe sales decline in core regions
3 Financial Results Q2 and H1 2020 Automotive Aftermarket – Severe sales decline in core regions, good overhead cost control Sales by region | yoy growth EBIT5 Q2 2019 vs. Q2 2020 | in EUR mn Q2 2019 Q2 2020 ∆1 Europe 320 212 -31.7% Americas 95 56 -33.3% Greater China 22 21 -0.8% Asia/Pacific 25 13
Slide 25: Industrial – Polarized sales development, earnings quality robust
3 Financial Results Q2 and H1 2020 Industrial – Polarized sales development, earnings quality robust Sales by region | yoy growth EBIT2 Q2 2019 vs. Q2 2020 | in EUR mn Q2 2019 Q2 2020 ∆1 Europe 422 308 -26.5% Americas 160 120 -24.2% Greater China 191 218 +14.6% Asia/Pacific 138 89 -32.7% Total 911 7
Slide 26: EBIT before special items – Reconciliation H1 2020
3 Financial Results Q2 and H1 2020 3 EBIT before special items – Reconciliation H1 2020 Reconciliation H1 2020 | in EUR mn Key aspects • Expansion of voluntary severance scheme in Europe, leading to EUR 39 mn additional provision for programs RACE and FIT in H1 -39 • Goodwill impairment of EUR 249 m
Slide 27: Net income Q2 2020 EUR -168 mn – EPS at EUR -0.25
3 Financial Results Q2 and H1 2020 4 Net income1 Q2 2020 EUR -168 mn – EPS2 Q2 2020 at EUR -0.25 (PY: EUR 0.21) Net income1 | in EUR mn Key aspects -626 mn • In H1 Net income1 reached EUR -353 mn, Net income before special vs H1 2019 items amounted to EUR -76 mn • EPS2 decreased to EUR -0.25 (Q2 19:
Slide 28: Free Cash Flow before M&A H1 at EUR -148 mn
3 Financial Results Q2 and H1 2020 5 Free Cash Flow before M&A1 FY at EUR -148 mn (PY: EUR -229 mn) Free Cash Flow before M&A1 | in EUR mn Key aspects +81 mn • FCF1 in Q2 amounted to EUR -285 mn, mainly driven by negative EBIT vs H1 2019 and Working Capital; in addition higher non recurring items as
Slide 29: Free Cash Flow details H1 2020 – Net Working Capital and Capex prioritization
3 Financial Results Q2 and H1 2020 5 Free Cash Flow details H1 2020 – Net Working Capital and Capex prioritization FCF1 H1 2019 vs. H1 2020 | in EUR mn Key aspects • Positive Net Working Capital Delta of EUR +307 mn contributed materially to the FCF composition in H1 2020 ∆ Net Working Capital EUR +
Slide 30: Working Capital ratio 20.2% – Capex ratio 5.9% in Q2
3 Financial Results Q2 and H1 2020 6 Working Capital ratio 20.2% – Capex ratio 5.9% in Q2 Working capital1 | in EUR mn Capex2 | in EUR mn 2,579 2,734 2,749 2,530 2,452 2,584 373 221 229 222 164 136 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 594 300 in % of sales (LTM) in
Slide 31: Net debt of EUR 3,002 mn – Leverage ratio at 1.8x
3 Financial Results Q2 and H1 2020 7 Net debt of EUR 3,002 mn – Leverage ratio1 at 1.8x Net financial debt and Leverage ratio1 | in EUR mn Key aspects Leverage ratio1 • Net financial debt increased to EUR 3.0 bn and including dividend payment, Leverage ratio1 1.8x • Completion of Schuldschein transa
Slide 32: Agenda
Agenda 1 Overview 2 Business Highlights Q2 and H1 2020 3 Financial Results Q2 and H1 2020 4 Outlook Aug 4, 2020 Results Q2 and H1 2020 Schaeffler AG 32
Slide 33: Post-Coronavirus world reinforces global investment trends
4 Outlook Post-Coronavirus world further reinforces some global investment trends – Schaeffler strongly positioned Governments supporting Key themes for automotive Schaeffler areas growth in new technologies and industrial suppliers of competence 1 SUPPORT JOB CREATION • Significant annual order int
Slide 34: The strategic relevance of sustainability further increased
4 Outlook The strategic relevance of sustainability further increased Sustainability is an integral part of our Systematic process Schaeffler’s sustainability to analyze management Five sustainability targets with direct link Corporate Values is based on three stakeholder requirements pillars establ
Slide 35: Conclusion & Outlook – Solid Q2 performance
4 Outlook Conclusion & Outlook – Solid Q2 performance, acting on all levers under our control Solid Q2 performance, despite severe Coronavirus impact, sequentially improving 1 in June and July Relentless commercial push in all divisions – Encouraging Order intake in E- 2 Mobility, new orders and pro
Slide 36: Financial calendar 2020 / 2021
4 Outlook Financial calendar 2020 / 2021 – Capital Market Update in CW 48 Roadshows Regular capital market communication Aug 6 London, Virtual Roadshow HSBC Aug 4 H1 2020 Earnings Release Aug 7 Frankfurt, Virtual Roadshow DZ Bank Nov 10 9M 2020 Earnings Release CW 48 Capital Market Update Mar 4 FY 2
Slide 37: IR Contact
IR Contact Investor Relations Phone: + 49 9132 82 4440 Email: ir@schaeffler.com Web: www.schaeffler.com/ir
Slide 38: Backup – Usual information top-up
Backup 1 Backup 1 – Usual information top-up Aug 4, 2020 Results Q2 and H1 2020 Schaeffler AG 38
Slide 39: Gross Profit – Severe volume losses could not be compensated by cost flexing
Backup Gross Profit – Severe volume losses could not be compensated by cost flexing Gross Profit H1 2019 vs. H1 2020 | in EUR mn Key aspects • Normal negative price effect in Automotive OEM, Industrial still with positive price momentum • Negative volume effects across all divisions representing maj
Slide 40: Automotive OEM – Strong Outperformance achieved in all regions
Backup Automotive OEM – Strong Outperformance achieved in all regions, negative EBIT Sales by business division | yoy growth EBIT2 H1 2019 vs. H1 2020 | in EUR mn H1 2019 H1 2020 ∆1 E-Mobility 306 271 -10.6% Engine Systems 1,388 988 -28.6% 221 Transmission Systems 2,026 1,450 -27.9% Chassis Systems
Slide 41: Automotive Aftermarket – Sales decline in all regions
Backup Automotive Aftermarket – Sales decline in all regions, robust earnings quality Sales by region | yoy growth EBIT5 H1 2019 vs. H1 2020 | in EUR mn H1 2019 H1 2020 ∆1 Europe 632 541 -13.3% Americas 183 137 -19.5% Greater China 41 35 -12.3% Asia/Pacific 48 34 -27.0% +3 -5 Total 904 747 -14.8% -5
Slide 42: Industrial – Sales decline in all sector clusters except Wind
Backup Industrial – Sales decline in all sector clusters except Wind, earnings quality robust Sales by region | yoy growth EBIT2 H1 2019 vs. H1 2020 | in EUR mn H1 2019 H1 2020 ∆1 Europe 860 680 -20.6% Americas 322 269 -16.8% Greater China 346 407 +17.6% Asia/Pacific 276 207 -23.4% Total 1,804 1,562
Slide 43: Automotive OEM outperformance by quarters
Backup Automotive OEM outperformance by quarters YTD 20 Q1 20 Q2 20 Outperformance: +6.4pp Outper- Outper- IHS1 Auto OEM2 formance IHS1 Auto OEM2 formance World -22.2% -12.0% +10.2pp -44.5% -42.0% +2.5pp New regional Europe -16.1% -13.5% +2.6pp -61.1% -59.5% +1.6pp structure for 2019 and Americas -1
Slide 44: Key figures by Group and division
Backup Key figures by Group and division Adjusted comparative figures 2019 Group | in EUR mn Automotive Aftermarket | in EUR mn Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Sales 3,622 3,604 3,613 3,588 3,282 2,292 Sales 443 461 482 462 446 301 Sales Growth1 +0.4% -2,0% +1
Slide 45: Overview Corporate and Financing Structure
Backup Overview Corporate and Financing Structure Corporate structure (simplified) | as of June 30, 2020 Financing structure | as of June 30, 2020 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&P5
Slide 46: Backup – Additional information
Backup 2 Backup 2 – Additional information Aug 4, 2020 Results Q2 and H1 2020 Schaeffler AG 46
Slide 47: Coronavirus Update – Market Indicators for our three divisions
Backup Coronavirus Update – Market Indicators for our three divisions Auto OEM – Global LVP1 2020 Auto AAM – Mobility trends Industrial – Industrial production 2020 -19.4 mn light vehicles / -21.9% Source: Apple in % vs. 2019, Source: Oxford Economics June 2nd, 2020 88.9 87.2 4 2 0 77.9 -2 -1.9% -4
Slide 48: Strong liquidity position of more than EUR 2.4 bn at the end of June
Backup Strong liquidity position of more than EUR 2.4 bn at the end of June – Schuldschein loans successfully raised in Q2 Liquidity Maturity Profile • Cash balance Schaeffler Group as per end of June 2020 EUR 919 mn • Robust debt maturity profile, no major redemptions until March 2022; (end of Marc