Schaeffler Ag · XETR:SHA0
Schaeffler — 9M 2019 Earnings Presentation
33 slides from Schaeffler's earnings presentation, Nov 5, 2019
Slide 1: Results Q3 and 9M 2019 Schaeffler AG Conference Call
Results Q3 and 9M 2019 Schaeffler AG Conference Call November 5, 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 Q3 and 9M 2019 3 Financial Results Q3 and 9M 2019 4 Outlook November 5, 2019 Results Q3 and 9M 2019 Schaeffler AG 3
Slide 4: Overview: Market environment remains challenging
1 Overview Market environment remains challenging – Q3 2019 with sequentially improved earnings quality Key messages Q3 2019 Sales growth1 Q3 Gross margin Q3 Group sales growth1 Q3’19 of +1.2% (9M’19: -0.1%) with LVP4 1 outperformance of 460 bps in Automotive OEM, slowdown of growth in Industrial +1
Slide 5: Schaeffler Group Q3 2019 – Highlights and lowlights
1 Overview Schaeffler Group Q3 2019 – Highlights and lowlights Automotive OEM: 460 bps LVP1 Q3 outperformance Continued topline weakness of Automotive OEM driven by Americas and especially Greater China; business in Europe (-5.6%2) E-Mobility Business Division grew more than 40%2 in Q3 Automotive Af
Slide 6: Automotive OEM – Earnings quality improving as flexing of costs progresses
2 Business Highlights Q3 and 9M 2019 Automotive OEM – Earnings quality improving as flexing of costs progresses Sales in EUR mn -1.5%1 Q3 Outperformance of LVP3 by 460 bps, driven by ramp-ups both in Americas and +1.4%1 6,778 6,768 in Greater China 2,191 2,254 Business Division E-Mobility up 43.9%1
Slide 7: Automotive OEM – New Innovations at IAA and Tokyo Motor Show
2 Business Highlights Q3 and 9M 2019 Automotive OEM – New Innovations at IAA and Tokyo Motor Show IAA in Frankfurt Innovation Highlights Showcasing solutions for powertrain and chassis concepts Presentation of latest electric motor models with different winding technologies Autonomous driving Sc
Slide 8: Automotive Aftermarket – Stabilization in Europe drives sequential earnings improvement
2 Business Highlights Q3 and 9M 2019 Automotive Aftermarket – Stabilization in Europe drives sequential earnings improvement Sales in EUR mn Independent Aftermarket +3.5%1 sales growth in Q3, driven by stabilization in -1.5%1 Europe +0.1%1 1,403 1,386 480 Price increases on selected parts of the por
Slide 9: Automotive Aftermarket – Focus on Europe operations
2 Business Highlights Q3 and 9M 2019 Automotive Aftermarket – Focus on Europe operations Aftermarket Kitting Operation – Phasing and impacts AKO construction and relocation timeline 2018 2019 2020 2021 2022 Cornerstone Start of operation laying mid 2018 mid 2020 Building & logistics installations, c
Slide 10: Industrial – Decline in cyclical sectors, strong performance in Greater China
2 Business Highlights Q3 and 9M 2019 Industrial – Decline in cyclical sectors, strong performance in Greater China Sales +4.3%1 in EUR mn Continued strong growth in Wind and Railway Sector Clusters in Q3 2,533 2,685 +1.2%1 854 879 Despite overall lower growth momentum, further expansion of Gross Pro
Slide 11: Industrial – Business and product portfolio expansion
2 Business Highlights Q3 and 9M 2019 Industrial – Business and product portfolio expansion to support growth in a weakening market environment Growth with customized bearings Growth with digitally enabled services Largest-ever spherical plain bearing produced for marine application Increased busines
Slide 12: Capital allocation – Well on track to reach 2019 goal of Capex ratio below 8%
2 Business Highlights Q3 and 9M 2019 Capital allocation – Well on track to reach 2019 goal of Capex ratio below 8% Investment1 allocation | in EUR mn Key aspects Measures to improve capital efficiency in place; Q3 Capex ratio2 at 6.3% shows clear Capex prioritization FY 17 FY 18 Q3 18 Q3 19 9M 19
Slide 13: Key figures Q3 and 9M 2019
3 Financial Results Q3 and 9M 2019 Key figures Q3 and 9M 2019 Q3 2019 9M 2019 in EUR mn Q3 2018 Q3 2019 vs. Q3 2018 9M 2018 9M 2019 vs. 9M 2018 +2.6% +1.2% Sales 1 3,521 3,613 10,714 10,839 +1.2%1 -0.1%1 Gross Profit 934 917 -17 mn 2,867 2,729 -138 mn 2 Gross Margin 26.5% 25.4% -1.1pp 26.8% 25.2% -1
Slide 14: Sales growth – Strong in Americas and China, weak in Europe
3 Financial Results Q3 and 9M 2019 1 Sales growth – Strong sales development in Americas and China, weak in Europe Sales | in EUR mn Key aspects Q3 -0.1%1 Europe: negative sales development of Automotive OEM (-5.6%1) vs 9M 2018 continued, turning negative in Q3 for the Industrial division (-5.0%1)
Slide 15: Gross Profit – Negative volume effect in Europe partly offset by improved mix
3 Financial Results Q3 and 9M 2019 2 Gross Profit – Negative volume effect in Europe partly offset by improved mix Gross Profit Q3 2018 vs. Q3 2019 | in EUR mn Key aspects Q3 1 Negative volume effect related to Auto OEM in Europe 1 2 3 2 Positive Mix driven by lower ramp-up costs yoy in Auto OEM -21
Slide 16: EBIT margin – Sequential improvement in Automotive divisions, lower for Industrial
3 Financial Results Q3 and 9M 2019 3 EBIT margin1 – Sequential improvement in Automotive divisions, lower for Industrial EBIT1 | in EUR mn Key aspects Q3 -267 mn Automotive OEM EBIT margin with clear sequential improvement, vs 9M 2018 driven by strong growth in Americas and China as well as flexin
Slide 17: EBIT Reported vs. EBIT before special items – Overview Q3 2019
3 Financial Results Q3 and 9M 2019 3 EBIT Reported vs. EBIT before special items – Overview Q3 2019 EBIT Reported vs. EBIT bsi1 Q3 2019 | in EUR mn Key aspects Q3 From Q3 onwards we will provide you the Restructuring and one-off details for the special items 0 Restructuring includes EUR 10 mn fo
Slide 18: Automotive OEM – Strong Outperformance, sequentially improved earnings quality
3 Financial Results Q3 and 9M 2019 Automotive OEM – Strong Outperformance, sequentially improved earnings quality Sales by business division | yoy growth EBIT2 Q3 2018 vs. Q3 2019 | in EUR mn Q3 2018 Q3 2019 ∆1 Engine Systems 690 700 0.0% Transmission Systems 995 995 -1.7% +5 -10 -243 +10 +7 E-Mobil
Slide 19: Automotive Aftermarket – Stabilization in European market improves earnings quality
3 Financial Results Q3 and 9M 2019 Automotive Aftermarket – Stabilization in European market improves earnings quality Sales by region | yoy growth EBIT4 Q3 2018 vs. Q3 2019 | in EUR mn Q3 2018 Q3 2019 ∆1 Europe 355 359 +0.7% Americas 88 86 -3.7% +3 -3 -45 +1 0 Greater China 19 22 +15.2% Asia/Pacifi
Slide 20: Industrial – Lower earnings quality as positive volume and price effects are offset
3 Financial Results Q3 and 9M 2019 Industrial – Lower earnings quality as positive volume and price effects are more than offset by higher production and overhead costs Sales by region | yoy growth EBIT2 Q3 2018 vs. Q3 2019 | in EUR mn Q3 2018 Q3 2019 ∆1 Europe 469 449 -5.0% Americas 150 159 +1.8% -
Slide 21: Net income Q3 2019 EUR 212 mn – EPS at EUR 0.31
3 Financial Results Q3 and 9M 2019 4 Net income1 Q3 2019 EUR 212 mn – EPS Q3 2019 at EUR 0.31 (PY: EUR 0.38) Net income1 | in EUR mn Key aspects Q3 -277 mn Net income decreased to EUR 212 mn (Q3’18: EUR 256 mn) vs 9M 2018 Decrease driven by lower EBIT EPS decreased to EUR 0.31 (Q3’18: EUR 0.38
Slide 22: Free Cash Flow before M&A 9M at EUR 133 mn
3 Financial Results Q3 and 9M 2019 5 Free Cash Flow before M&A1 9M at EUR 133 mn (PY: EUR 127 mn) Free Cash Flow before M&A1 | in EUR mn Key aspects Q3 +6 mn FCF1 in 9M reached EUR 133 mn (PY: EUR 127 mn) vs 9M 2018 FCF1 development helped by strict Capex discipline and effective inventory manag
Slide 23: Working Capital ratio 19.1% – Capex ratio 6.3% in Q3
3 Financial Results Q3 and 9M 2019 6 Working Capital ratio 19.1% – Capex ratio 6.3% in Q3 Working capital1 | in EUR mn Capex3 | in EUR mn 2,577 2,738 2,672 2,219 2,579 2,734 2,749 306 289 262 375 373 221 229 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 857 823
Slide 24: Net debt of EUR 2,842 mn – Gearing ratio at 103%
3 Financial Results Q3 and 9M 2019 7 Net debt of EUR 2,842 mn – Gearing ratio1 at 103% Net financial debt and Gearing ratio | in EUR mn Key aspects Q3 Gross debt sequentially reduced, including full repayment of Revolving Credit Facility with EUR 225 mn Net leverage ratio2 at 1.4x (vs. 1.6x at H
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 9M 2019 FY 20194 Actuals Guidance Actuals Guidance Actuals Guidance 9M 2019 FY 20194 9M 2019 FY 20194 9M 2019 FY 20194 Sales growth1
Slide 26: Conclusion & Outlook – Robust quarter, further execution of self-help measures
4 Outlook Conclusion & Outlook – Robust quarter, further execution of self-help measures Robust quarter with strong performance in Americas and Greater China leading to 1 a sequential margin improvement in Automotive OEM Automotive Aftermarket with strong Q3 margin driven by stabilization of 2 Indep
Slide 27: Financial calendar 2019 / 2020
4 Outlook Financial calendar 2019 / 2020 – Strategy CMD on March 24th 2020 in Herzogenaurach Roadshows / Conferences Regular capital market communication Nov 6th London, Roadshow J.P. Morgan Nov 5th 9M 2019 Earnings Release Nov 8th Frankfurt, Roadshow Oddo BHF Dec 4th New York, Roadshow Exane Mar 10
Slide 28: IR Contact
IR Contact Investor Relations Phone: + 49 9132 82 4440 Email: ir@schaeffler.com Web: www.schaeffler.com/ir
Slide 29: Gross Profit – Negative price and mix effects, higher production costs
Backup Gross Profit – Negative price and mix effects, higher production costs Gross Profit 9M 2018 vs. 9M 2019 | in EUR mn Key aspects 9M 1 Price concessions in major Auto OEM end markets, in particular in 1 China and Europe 2 3 -60 -10 2 Negative mix effect driven by Auto OEM due to ramp-ups in sys
Slide 30: EBIT Reported vs. EBIT before special items – Overview 9M 2019
Backup EBIT Reported vs. EBIT before special items – Overview 9M 2019 EBIT Reported vs. EBIT bsi1 9M 2019 | in EUR mn Key aspects 9M Restructuring includes EUR 82 mn for Program RACE and EUR 18 mn for UK reorganization launched in 2018 One-Offs include EUR 13 mn positive effect (booked in Q1) fr
Slide 31: 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 Q2’19 Q3’19 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Sales 3,551 3,641 3,521 3,527 3,622 3,604 3,613 Sales 447 480 476 459 441 465 480 Sales
Slide 32: Automotive OEM Outperformance by quarters
Backup Automotive OEM Outperformance by quarters FY 19 (YTD) Q1 19 Q2 19 Q3 19 Outperformance: +4.4pp Outper- Outper- Outper- IHS1 Auto OEM2 formance IHS1 Auto OEM2 formance IHS1 Auto OEM2 formance World -5.8% -1.7% +4.1pp -8.3% -4.2% +4.1pp -3.2% +1.4% +4.6pp Europe -6.2% -3.3% +2.9pp -9.6% -6.8% +
Slide 33: Overview Corporate and Financing Structure
Backup Overview Corporate and Financing Structure Corporate structure (simplified) | as of September 30, 2019 Financing structure | as of September 30, 2019 A IHO Verwaltungs GmbH Nominal Nominal Rating INA-Holding Schaeffler Debt instrument (USD mn) (EUR1 mn) Interest Maturity (Fitch/Moody’s/S&P) G