Schaeffler Ag · XETR:SHA0
Schaeffler — Bank of America Merrill Lynch Global Industrials & EU Autos Conference 2017
38 slides from Schaeffler's conference presentation, Mar 22, 2017
Slide 1: Schaeffler AG – Global Industrials & EU Autos Conference 2017
Schaeffler AG Global Industrials & EU Autos Conference 2017 Bank of America Merrill Lynch March 22, 2017 London
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 Investment Highlights 3 Summary 3 March 22, 2017 BAML Global Industrials & EU Autos Conference | © Schaeffler 2017
Slide 4: Strong results 2016 – On track to achieve Financial Ambitions 2020
1 Overview Strong results 2016 – On track to achieve Financial Ambitions 2020 Key aspects Group sales +3.4%1) based on strong Q4 2016 with sales increase of +5.6%1) – 1 FY 2016 EBIT margin2) at 12.7% (FY '15: 12.7%) 2 Record result in Automotive with sales increase of +6.0%1) (Q4 '16: +8.2%) – FY 20
Slide 5: 10 year look back – Sustainable growth and value creation
1 Overview 10 year look back – Sustainable growth and value creation Sales EBIT1) / EBIT margin Free Cash Flow / Capex ratio in EUR mn in EUR mn in EUR mn CAGR CAGR ~ 5% ~ 5% 13,338 1,6761) 7352) 1,5091) 9,495 566 2) 8,313 482 1,073 12.9% 15.9% 12.7% Capex 11.2% 3.8% 8.6% ratio 2006 2010 2016 2006 2
Slide 6: Strategy "Mobility for tomorrow" – E-Mobility, Industry 4.0 and Digitalization
1 Overview Strategy "Mobility for tomorrow" – E-Mobility, Industry 4.0 and Digitalization Vision / Mission 4 Focus areas 8 Strategic pillars 16 Strategic initiatives 6 March 22, 2017 BAML Global Industrials & EU Autos Conference | © Schaeffler 2017
Slide 7: Strong results 2016 - On track to reach Financial Ambitions 2020
1 Overview Strong results 2016 - On track to reach Financial Ambitions 2020 FY 2015 Guidance FY 2016 FY 2016 Guidance FY 2017 Financial Ambitions 2020 Sales Growth +3.5% FX-adjusted 3-4% +3.4% FX-adjusted 4-5% Ø 4-6% p.a. w/o external growth, FX-adjusted ü EBIT Margin 12.7% Before one-off effects 12
Slide 8: Schaeffler Equity Story – 4 key questions
2 Investment Highlights Schaeffler Equity Story – 4 key questions Equity Story – 3 key elements 4 key questions A What is your expectation regarding your Automotive outperformance for 2017? Automotive growth above market + B Are there any news with regard to e-mobility? Margin upside in Industrial C
Slide 9: Schaeffler Automotive at a glance
2 Investment Highlights A Schaeffler Automotive at a glance Sales and EBIT margin 2012 – 2016 Sales by region 2016 in EUR mn 9,977 10,333 8,986 22% 7,658 8,164 51% 16% 2012 2013 2014 2015 2016 11% Growth rate (y-o-y)1) +5.1% +8.6% +10.7% +5.8% +6.0% EBIT margin2) 13.5% 13.0% 14.0% 13.8% 14.4% Europe
Slide 10: Automotive Division – China as major growth driver
2 Investment Highlights A Automotive Division – China as major growth driver Schaeffler in Greater China OEM sales exposure 2016 Key customers Local OEMs +34%1) 34% 66% Ningxia International OEMs Nanjing +20%1) Taicang ì Shanghai Suzhou (Headquarter) Total Sales: EUR 1,675 mn Xiangtan Sales growth C
Slide 11: Automotive Division – Strong performance in Automotive Aftermarket
2 Investment Highlights A Automotive Division – Strong performance in Automotive Aftermarket Two sales channels, three types of business Sales exposure 2016 OES business +20%1) 19% Solutions business +17%1) 81% Components business +6%1) Total Sales EUR 1,810 mn Independent Aftermarket: 81% of sales
Slide 12: Outperformance 2017 – Strong Q4 2016
2 Investment Highlights A Outperformance 2017 – Strong Q4 2016 Outperformance 2013 – 2017 Automotive sales and market development FY 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2016 FY 2016 Europe Americas Greater China Asia/Pacific +24% Growth rate Automotive 1) 5.0% 5.8% 5.1% 8.2% 6.0% +14% Light Vehicle Prod
Slide 13: Outperformance 2017 – Around 4%-pts above market
2 Investment Highlights A Outperformance 2017 – Around 4%-pts above market Key launches 2017 Key drivers 100% 4 booked business 1 Ramp-up fully variable valve train system UniAir with Jaguar LandRover 4 2 Ramp-up electromechanical camphaser for Renault-Nissan 6 Ball Screw 4 3 Growing Torque Converte
Slide 14: E-Mobility – Accelerated scenario becomes more realistic
2 Investment Highlights B E-Mobility – Accelerated scenario becomes more realistic Global production volume 1) Global production volume 1) Accelerated in millions of units Basic scenario 2) in millions of units scenario 2) CAGR 2010/2030 CAGR 2010/2030 +2.4% p.a. 120 +2.4% p.a. 120 111 111 10% 102 4
Slide 15: E-Mobility – 3 main powertrain structures
2 Investment Highlights B E-Mobility – 3 main powertrain structures 1 Internal combustion engines 2 Hybrid vehicles 3 Battery electric vehicles u Powertrain structure u Powertrain structure u Powertrain structure Battery capacity: Battery capacity: 5- 10 kWh 20- 100 kWh E = Engine E = Engine T = Tra
Slide 16: E-Mobility – Broad portfolio of solutions
2 Investment Highlights B E-Mobility – Broad portfolio of solutions Key aspects 4 Schaeffler with a broad powertrain product portfolio ranging from mild hybrid to full CO2 Reduction battery electric vehicle solutions 4 More than ten years of experience with E-Mobility solutions 4 500 Million Euro in
Slide 17: E-Mobility – E-Clutch, 48V mild and high voltage hybridization
2 Investment Highlights B E-Mobility – E-Clutch, 48V mild and high voltage hybridization ICE HEV HEV/BEV Schaeffler E-Clutch Schaeffler 48 V Solutions Schaeffler High Voltage Solutions Actuator Pedal Options Clutch System 48V Hybrid Module 48V E-Axle HV Hybrid Module HV E-Axle 4 Schaeffler E-Clutch1
Slide 18: E-Mobility – 6 series contracts for High Voltage hybrid modules and e-axles
2 Investment Highlights B E-Mobility – 6 series contracts for High Voltage hybrid modules and e-axles HEV/BEV Americas Europe China 1-Gear Electric Axle Front + Rear Hybrid Module Tier 1 Tier 1 SOP Q3/2018 SOP Q1/2018 Hybrid Module with Integrated Torque Converter Tier 1 SOP Q4/2018 2-Gear Electric
Slide 19: E-Mobility – Key performance indicators to manage transition
2 Investment Highlights B E-Mobility – Key performance indicators to manage transition 2015 2016 Market 4 BEV 360 572 (0.6%) Development1) 4 HEV 2,102 2,865 (3.1%) in Vehicles '000 4 ICE 86,274 89,561 (96.3%) Target 2020 w/o AAM2) # BEV > 2,000 4 BEV 3,484 8,372 (0.1%) 1 # HEV > 13,000 Sales 4 HEV 1
Slide 20: Schaeffler Industrial at a glance
2 Investment Highlights C Schaeffler Industrial at a glance Sales and EBIT margin 2012 – 2016 Sales by region 2016 in EUR mn Americas 3,406 19% 3,202 3,138 Greater China Europe 3,041 3,005 13% 2012 2013 2014 2015 2016 59% Growth rate (y-o-y) 1) -1.6% -8.1% +4.2% -3.1% +3.0% -4.8% 10% EBIT-margin2) 1
Slide 21: Industrial Division – EBIT down in FY 2016 due to volume, price and mix
2 Investment Highlights C Industrial Division – EBIT down in FY 2016 due to volume, price and mix EBIT 1) 2015 vs. 2016 Key aspects in EUR mn 4 Lower EBIT due to negative price, volume and mix impact 303 4 EBIT margin 7.0% in FY2016 after 9.5% in FY2015 4 CORE program on track, Wave I 95% completed
Slide 22: Industrial Division – CORE Wave II successfully started
2 Investment Highlights C Industrial Division – CORE Wave II successfully started Indicative Financial Impact Wave I in EUR mn 40 ü Key aspects 4 CORE Wave II targeting Gross Profit optimization and extended 31 Overhead Cost reduction through consolidation of plants also 17 outside Industrial divisi
Slide 23: Industrial margin – When will the margin pick up again?
2 Investment Highlights C Industrial margin – When will the margin pick up again? EBIT 1) development 2016 – 2018 Key aspects in EUR mn 4 EBIT gap of around EUR 100 mn due to lower FY2016 EBIT level Δ 34 307 4 CORE Wave I and Wave II on track to deliver 413) EUR 64 mn contribution to EBIT Remaining
Slide 24: Industrial Division – New business picking up
2 Investment Highlights C Industrial Division – New business picking up Example 1 Example 2 Example 3 Wind Power Transmission Industrial Automation u Coated tapered and cylindrical roller bearings u Standard and customized bearings for u Bearings for machine tool applications incl. Industry for wind
Slide 25: Strong Free Cash Flow generation in FY 2016
2 Investment Highlights D Strong Free Cash Flow generation in FY 2016 – FCF conversion ratio improved to 32% Free Cash Flow Key aspects in EUR mn FY 2015 FY 2016 Q4 2015 Q4 2016 4 Free Cash Flow increased by EUR 365 mn to EUR 735 mn in FY 2016 in EBITDA 2,096 2,293 331 476 particular due to higher E
Slide 26: EPS increased to EUR 1.30 – Proposed regular dividend to 50 cents
2 Investment Highlights D EPS increased to EUR 1.30 – Proposed Regular dividend to raise to 50 cents w/o special dividend4) Net income Dividend amount in EUR mn in EUR mn +45% vs FY 2015 859 +15 cents vs FY 2015 329 654 250 591 229 EPS 1.30 Pro Forma EPS 0.971) 35 cents 50 cents 5) 2014 2015 2016 20
Slide 27: Use of cash – Balanced approach
2 Investment Highlights D Use of cash – Balanced approach Use of cash Use of cash priorities in EUR mn 2014A 2015A 2016A Guidance 2017 FCF w/o External Growth 48 370 735 ~600 0 0 0 1 Dividends 3 External Growth ? 30-40% of FCF 48 370 735 net income Financing proceeds1) 298 1,214 1,773 -1 -251 -3292)
Slide 28: Summary – Mobility for tomorrow
3 Summary Key messages 2016 with strong results (FX-adjusted sales growth 3.4%, adj. EBIT margin 12.7%; 1 FCF EUR 735mn), comfortably achieving Guidance for 2016 2 Outperformance Automotive below-average in 2016, but back to 4%-pts target in 2017 3 Powertrain electrification requires alignment of pr
Slide 29: IR Contact
IR Contact Investor Relations Financial Calendar Annual General Meeting: April 26, 2017 Phone: + 49 9132 82 4440 Q1 2017 results: May 11, 2017 Email: ir@schaeffler.com Capital Markets Day: July 20, 2017 Web: www.schaeffler.com/ir H1 2017 results: August 8, 2017 9M 2017 results: November 8, 2017 29 M
Slide 30: Key figures FY 2016
Backup Key figures FY 2016 FY '16 Q4 '16 in EUR mn FY '15 FY '16 vs. FY '15 Q4 '15 Q4 '16 vs. Q4 '15 +1.2% +4.3% Sales 1 13,179 13,338 +3.4%1) 3,221 3,361 +5.6%1) 1,6762) 1,7002) +1.4% 4182) 4242) +1.4% EBIT 1,402 1,556 +154 mn 151 280 +129 mn 12.7%2) 12.7%2) +0.0%-pts. 13.0%2) 12.6%2) -0.4%-pts. EB
Slide 31: Sales growth FY 2016 3.4% (FX-adjusted) – 12.7% EBIT margin before one-offs
Backup 1 Sales growth FY 2016 3.4% (FX-adjusted) – 12.7% EBIT margin before one-offs Sales EBIT before one-off effects in EUR mn in EUR mn +3.4%1) vs FY 2015 3,339 3,382 3,343 3,369 3,361 441 438 3,237 3,221 3,265 433 418 421 417 424 384 13,179 13,338 1,676 1,700 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 32: Sales by region, business division and sector cluster
Backup 1 Sales by region, business division and sector cluster Automotive sales growth1) by region Industrial sales growth1) by region Q1 '16 Q2 '16 Q3 '16 Q4 '16 FY '16 Q1 '16 Q2 '16 Q3 '16 Q4 '16 FY '16 Europe +0.9% +6.6% +0.2% +3.9% +2.9% Europe -1.9% +1.5% -2.4% -2.3% -1.3% Americas +1.9% +2.9%
Slide 33: Net income of EUR 859 mn in FY 2016
Backup 2 Net income of EUR 859 mn in FY 2016 Net income1) Financial result2) in EUR mn 253 in EUR mn 241 EUR -206 mn 212 vs FY 2015 167 178 187 176 161 167 142 125 85 88 70 65 21 591 859 547 341 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 2015 2016 2) For presentation purposes negative
Slide 34: Working Capital ratio optimized – Capex ratio 8.6%
Backup 3 Working Capital ratio optimized – Capex ratio 8.6% Working capital1) Capex2) in EUR mn in EUR mn 2,820 2,796 2,802 318 317 2,738 2,740 2,666 282 2,498 257 268 2,430 244 242 243 1,025 1,146 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 2015 2016 In % of sales In % of sales 22.6 2
Slide 35: Leverage ratio FY 2016 1.1x – Gearing ratio at 132%
Backup 4 Leverage ratio FY 2016 1.1x – Gearing ratio at 132% Net financial debt and leverage ratio Change in net financial debt in EUR mn in EUR mn 6,245 5,688 6,190 5,950 4,889 4,909 4,874 981 46 3,707 2.636 -3,009 -1,071 2.7 2.7 2.6 2,876 2.1 2.1 2.0 2,636 1.2 Gross debt Repay- New FX effect Gross
Slide 36: Schaeffler Value Added EUR 915 mn – RoCE 21.7%
Backup 5 Schaeffler Value Added EUR 915 mn – RoCE 21.7% Schaeffler Value Added 1) Key aspects Schaeffler Value Added in EUR mn 4 Schaeffler Value Added 1) measures internal value creation on a group- 885 2.7 931 915 wide basis 803 787 4 Schaeffler Value Added 2016 of EUR 915 mn slightly below prior
Slide 37: Earnings per share
Backup 6 Earnings per share Earnings per common non-voting share (as reported) Earnings per common non-voting share (ProForma) in EUR in EUR 0.53 0.42 0.36 0.38 0.37 0.36 0.38 0.37 0.27 0.28 0.28 0.27 0.28 0.24 0.11 0.11 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 2015 2016 1.28 1.30 0
Slide 38: Overview Corporate and Financing Structure
Backup Overview Corporate and Financing Structure Corporate structure (simplified) Financing Structure as of December 31, 2016 in EUR2) mn, as of December 31, 2016 IHO Verwaltungs INA-Holding Schaeffler Nominal Nominal GmbH & Co. KG Debt instrument Interest Maturity Rating (USD mn) (EUR mn) Term loa
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