Slide 1: Results FY 2019 Schaeffler AG Conference Call
Results FY 2019 Schaeffler AG Conference Call March 10, 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: Agenda
Agenda 1 Overview 2019 2 Business Highlights FY 2019 3 Financial Results FY 2019 4 Outlook March 10, 2020 Results FY 2019 Schaeffler AG 3
Slide 4: Challenging environment remains – Strong Free Cash Flow generation
1 Overview 2019 Challenging environment remains – Strong Free Cash Flow generation Key messages 2019 Sales growth1 EBIT margin2 Stable Group sales development – Growth in Industrial, slight 1 declines in Automotive divisions +0.1% 8.1% EUR 14,427 mn EUR 1,161 mn Record order intake of EUR 15 bn with
Slide 5: Group and divisional guidance 2019 achieved – FCF guidance overachieved
1 Overview 2019 Group and divisional guidance 2019 achieved – FCF guidance overachieved Group Results FY 2019 Divisional Results FY 2019 Automotive Automotive Guidance Actual Industrial OEM Aftermarket Sales growth1 -1 - 1% ( ) +0.1% Guidance Actual Guidance Actual Guidance Actual -2 - 0% -0.8% -2 -
Slide 6: Schaeffler Group FY 2019 – Highlights and lowlights
1 Overview 2019 Schaeffler Group FY 2019 – Highlights and lowlights Automotive OEM: 480 bps LVP1 outperformance driven Continued topline weakness of Automotive OEM by Americas and Greater China; business in Europe (-6.0%2) E-Mobility business division grew more than 35%2 Accountability of divisional
Slide 7: Automotive OEM – Strong outperformance of LVP and improved flexing of costs
2 Business Highlights FY 2019 Automotive OEM – Strong outperformance of LVP3 (FY 19: 480 bps) and improved flexing of costs Sales -0.8%1 in EUR mn Q4 outperformance of LVP3 by 560 bps, driven by ramp-ups both in Americas and +1.2%1 8,996 9,038 in Greater China 2,218 2,270 E-Mobility up 31.5%1 in Q4
Slide 8: Automotive OEM – Book-to-bill-Ratio at 1.7x in FY 2019
2 Business Highlights FY 2019 Automotive OEM – Book-to-bill-Ratio2 at 1.7x in FY 2019 Automotive OEM Order Intake1 Business Highlights 1 Received orders in given time period | 2 Lifetime Sales / Current period revenue in EUR bn 1 E-Mobility – Hybrid Transmission 15.0 12.6 12.6 Complete powertrain
Slide 9: Automotive Aftermarket – Initial savings of program GRIP support earnings quality
2 Business Highlights FY 2019 Automotive Aftermarket – Initial savings of program GRIP support earnings quality Sales -1.1%1 in EUR mn Independent Aftermarket +0.8%1 sales growth in Q4 (FY: +2.1%1) +0.1%1 1,862 1,848 463 Initial impact of program GRIP mainly in the area of pricing, sourcing and 459
Slide 10: Automotive Aftermarket – New and exclusive E-Mobility repair solutions
2 Business Highlights FY 2019 Automotive Aftermarket – New and exclusive E-Mobility repair solutions Front End Auxiliary Drive As the first supplier in the aftermarket, Schaeffler Automotive Aftermarket offers a repair solution for the front end auxiliary Thanks to the INA FEAD KIT for hybrid driv
Slide 11: Industrial – Decline in cyclical sector clusters intensified, Wind with strong growth
2 Business Highlights FY 2019 Industrial – Decline in cyclical sector clusters intensified, Wind with strong growth Sales Very strong growth in sector cluster Wind with over 50% in Q4, mainly driven by +3.1%1 in EUR mn demand in Greater China for Offshore turbines -0.6%1 3,383 3,541 Sector cluster R
Slide 12: Industrial – Significant downturn in economic cyclic sectors, Wind shows ongoing positive development
2 Business Highlights FY 2019 Industrial – Significant downturn in economic cyclic sectors, Wind shows ongoing positive development Orderbook 3M Business highlights Q4 yoy growth Order book 3M2 + Sales1 Two strategic agreements with top wind OEMs in China for Offshore turbines signed 35 30 25 20 Maj
Slide 13: Capital discipline – Goal of Capex ratio below 8% overachieved
2 Business Highlights FY 2019 Capital discipline – Goal of Capex ratio below 8% overachieved Investment1 allocation | in EUR mn Key aspects Capex ratio2 FY 19 (7.2%) well below the goal of “< 8%” FY 17 FY 18 Q4 18 Q4 19 FY 19 Special target for Short Term Bonus achieved – No “hockey stick” in 20
Slide 14: Cost discipline – More than 5% headcount reduction vs. FY 2018 achieved
2 Business Highlights FY 2019 Cost discipline – More than 5% headcount reduction vs. FY 2018 achieved Schaeffler Headcount Key aspects as per end of period Key aspects Headcount reduction of more than 5% of total employees achieved by various efficiency programs and divestment of plants -5.1% Re
Slide 15: Key figures Q4 and FY 2019
3 Financial Results FY 2019 Key figures Q4 and FY 2019 Q4 2019 FY 2019 in EUR mn Q4 2018 Q4 2019 vs. Q4 2018 FY 2018 FY 2019 vs. FY 2018 +1.7% +1.3% Sales 1 3,527 3,588 14,241 14,427 +0.6%1 +0.1%1 Gross Profit 816 844 +28 mn 3,683 3,574 -109 mn 2 Gross Margin 23.1% 23.5% +0.4pp 25.9% 24.8% -1.1pp EB
Slide 16: Sales growth – Strong sales development in Greater China, weak sales in Europe
3 Financial Results FY 2019 1 Sales growth – Strong sales development in Greater China, weak sales in Europe Sales | in EUR mn Key aspects Q4 +0.1%1 Europe: negative sales development of both Automotive OEM (-8.6%1) vs FY 2018 and Industrial (-9.8%1) continued in Q4 China: strong sales developme
Slide 17: Gross Profit – Negative price and mix effect fully offset by lower production costs
3 Financial Results FY 2019 2 Gross Profit – Negative price and mix effect fully offset by lower production costs Gross Profit Q4 2018 vs. Q4 2019 | in EUR mn Key aspects Q4 Yoy price reduction in Auto OEM – Finalization of ongoing price 1 negotiations until year-end 1 3 2 +8 2 Negative mix effect m
Slide 18: EBIT margin – Improvement in Automotive divisions on a low base, stable in Industrial
3 Financial Results FY 2019 3 EBIT margin1 – Improvement in Automotive divisions on a low base, stable in Industrial EBIT1 | in EUR mn Key aspects Q4 -220 mn Automotive OEM EBIT margin with clear improvement yoy, driven by vs FY 2018 strong growth in China as well as flexing of costs in plants A
Slide 19: Automotive OEM – Strong outperformance in Q4, EBIT margin yoy improved
3 Financial Results FY 2019 Automotive OEM – Strong outperformance in Q4, EBIT margin yoy improved Sales by business division | yoy growth EBIT2 Q4 2018 vs. Q4 2019 | in EUR mn Q4 2018 Q4 2019 ∆1 E-Mobility 138 182 +31.5% Engine Systems 669 706 +4.3% -3 -8 +13 -2 Transmission Systems 1,020 999 -3.5%
Slide 20: Automotive Aftermarket – Improved earnings quality in a flat market environment
3 Financial Results FY 2019 Automotive Aftermarket – Improved earnings quality in a flat market environment Sales by region | yoy growth EBIT4 Q4 2018 vs. Q4 2019 | in EUR mn Q4 2018 Q4 2019 ∆1 Europe 340 339 -1.1% Americas 89 93 +5.2% +4 -2 +4 Greater China 18 18 -3.7% -15 +0 Asia/Pacific 12 13 +6.
Slide 21: Industrial – Good earnings quality in a overall weak market environment
3 Financial Results FY 2019 Industrial – Good earnings quality in a overall weak market environment Sales by region | yoy growth EBIT2 Q4 2018 vs. Q4 2019 | in EUR mn Q4 2018 Q4 2019 ∆1 Europe 480 437 -9.8% Americas 156 157 -1.6% Greater China 139 184 +31.3% -103 +13 -1 +4 -3 Asia/Pacific 75 78 +2.3
Slide 22: EBIT before special items – Reconciliation FY 2019
3 Financial Results FY 2019 3 EBIT before special items – Reconciliation FY 2019 Reconciliation FY 2019 | in EUR mn Key aspects Restructuring includes EUR 204 mn for Program RACE, EUR 137 mn for Program FIT and EUR 15 mn for Program GRIP Divisional programs include provisions for additional volu
Slide 23: Net income FY 2019 EUR 428 mn – EPS FY 2019 at EUR 0.65
3 Financial Results FY 2019 4 Net income1 FY 2019 EUR 428 mn – EPS FY 2019 at EUR 0.65 (PY: EUR 1.33) Net income1 | in EUR mn Key aspects -453 mn Reported Net Income negative in Q4 with EUR -56 mn due to vs FY 2018 EUR 284 mn special items Decrease driven by lower EBIT and higher tax rate caused
Slide 24: Free Cash Flow before M&A FY at EUR 473 mn (PY: EUR 384 mn)
3 Financial Results FY 2019 5 Free Cash Flow before M&A1 FY at EUR 473 mn (PY: EUR 384 mn) Free Cash Flow before M&A1 | in EUR mn Key aspects +89 mn Strong FCF development in Q4 was again supported by strict Capex vs FY 2018 discipline and further inventory optimization FY 19 FCF1 reached EUR 47
Slide 25: Working Capital ratio 17.5% – Capex ratio 6.2% in Q4
3 Financial Results FY 2019 6 Working Capital ratio 17.5% – Capex ratio 6.2% in Q4 Working capital1 | in EUR mn Capex3 | in EUR mn 2,577 2,738 2,672 2,219 2,579 2,734 2,749 2,530 306 289 261 376 373 221 229 222 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19
Slide 26: Net debt of EUR 2,526 mn – Gearing ratio at 87%
3 Financial Results FY 2019 7 Net debt of EUR 2,526 mn – Gearing ratio1 at 87% Net financial debt and Gearing ratio | in EUR mn Key aspects Gross debt sequentially reduced in the course of the year, in Q4 full repayment of Term Loan with EUR 500 mn Net leverage ratio2 at 1.2x (vs. 1.2x at FY 19)
Slide 27: COVID-19 – Operations showing strong resilience
4 Outlook COVID-19 – Operations showing strong resilience Current evaluation Greater China China Footprint Key aspects Health protection measures for Schaeffler employees initiated in Greater China at an early stage, no Schaeffler employee infected China footprint 2019: Sales: EUR 2.8 bn Schaeff
Slide 28: Cautious Guidance 2020 – Foreseeable negative implications by COVID-19 taken into account
4 Outlook Cautious Guidance 2020 – Foreseeable negative implications by COVID-19 taken into account Group Guidance Divisional Guidance Actuals Guidance Automotive Automotive Industrial OEM Aftermarket FY 20194 FY 2020 Actuals Guidance Actuals Guidance Actuals Guidance FY 20194 FY 2020 FY 20194 FY 20
Slide 29: Conclusion & Outlook – Guidance 2019 achieved, preparedness and discipline crucial in 2020
4 Outlook Conclusion & Outlook – Guidance 2019 achieved, preparedness and discipline crucial in 2020 Automotive OEM with strong outperformance in Americas and Greater China – 1 Margin still subdued, but better flexing of costs in plants secured margin floor Automotive Aftermarket with improved earni
Slide 30: Financial calendar 2020 – Strategy CMD on March 24th 2020
4 Outlook Financial calendar 2020 – Strategy CMD on March 24th 2020 in Herzogenaurach and online Roadshows / Conferences Regular capital market communication Mar 30th Frankfurt, Digital Roadshow Mar 10th FY 2019 Earnings Release London, Digital Roadshow Strategy CMD 2020 with Webcast live streaming,
Slide 31: IR Contact
IR Contact Investor Relations Phone: + 49 9132 82 4440 Email: ir@schaeffler.com Web: www.schaeffler.com/ir
Slide 32: Backup
Backup (For updating your models please refer to pages 33 to 37) March 10, 2020 Results FY 2019 Schaeffler AG 32
Slide 33: Regional reorganization – India to become part of our Asia/Pacific region with FY 2020
Backup Regional reorganization – India to become part of our Asia/Pacific region with FY 2020 (before: Europe region) Until FY 2019 – India was part of our Europe region From FY 2020 – India is now part of our Asia/Pacific region Sales by region FY 2019 India is now part of our Asia/Pacific region
Slide 34: Reported and adjusted comparative figures FY 2019 – Adjustments on divisional level
Backup Reported and adjusted comparative figures FY 2019 – Adjustments on divisional level FY 19 – Reported and adjusted comparative figures Key aspects FY 19 – Adjusted Strengthening of divisional management accountability Group FY 19 – Reported comp. figures ∆ Direct assignment of costs increa
Slide 35: Automotive OEM outperformance by quarters
Backup Automotive OEM outperformance by quarters FY 19 Q1 19 Q2 19 Q3 19 New regional Q4 19 Outperformance: +4.8pp structure Outper- Outper- Outper- Outper- IHS1 Auto OEM2 formance IHS1 Auto OEM2 formance IHS1 Auto OEM2 formance IHS1 Auto OEM2 formance World -5.8% -1.7% +4.1pp -8.2% -4.2% +4.0pp -3.
Slide 36: Key figures by Group and division – Reported figures 2019
Backup Key figures by Group and division – Reported figures 2019 Group | in EUR mn Automotive Aftermarket | in EUR mn Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Sales 3,551 3,641 3,521 3,527 3,622 3,604 3,613 3,588 Sales 447 480 476 459 441 465 48
Slide 37: Key figures by Group and division – Adjusted comparative figures 2019
Backup Key figures by Group and division – Adjusted comparative figures 2019 Adjusted comparative figures 2019 Group | in EUR mn Automotive Aftermarket | in EUR mn Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Sales 3,551 3,641 3,521 3,527 3,622 3,60
Slide 38: Automotive OEM – Strong outperformance in China and Americas, weaker development in Europe
Backup Automotive OEM – Strong outperformance in China and Americas, weaker development in Europe Sales by business division | yoy growth EBIT2 FY 2018 vs. FY 2019 | in EUR mn FY 2018 FY 2019 ∆1 Engine Systems 2,782 2,793 -1.0% Transmission Systems 4,167 4,006 -5.5% E-Mobility 493 676 +36.7% -1443 +
Slide 39: Automotive Aftermarket – IAM with good growth, OES with negative development
Backup Automotive Aftermarket – IAM with good growth, OES with negative development Sales by region | yoy growth EBIT4 FY 2018 vs. FY 2019 | in EUR mn FY 2018 FY 2019 ∆1 Europe 1,395 1,355 -3.1% Americas 339 362 +6.6% Greater China 76 81 +5.7% -305 +2 +8 -10 -11 Asia/Pacific 51 50 -5.4% Total 1,862
Slide 40: Industrial – Strong growth in Greater China, weak H2 in Europe
Backup Industrial – Strong growth in Greater China, weak H2 in Europe Sales by region | yoy growth EBIT2 FY 2018 vs. FY 2019 | in EUR mn FY 2018 FY 2019 ∆1 Europe 1,904 1,867 -2.4% Americas 596 638 +2.9% -8 -7 -23 Greater China 575 723 +23.4% +653 -24 Asia/Pacific 308 314 -0.1% Total 3,383 3,541 +3.
Slide 41: Gross Profit – Still subdued in Automotive divisions, although stabilized in H2
Backup Gross Profit – Still subdued in Automotive divisions, although stabilized in H2 Gross Profit FY 2018 vs. FY 2019 | in EUR mn Key aspects FY 1 Yoy price reduction in Auto OEM – Still at lower rate than previous 1 years, positive development in Industrial 2 3 2 Negative mix effect driven by Aut
Slide 42: EBIT before special items – Reconciliation Q4 2019
Backup EBIT before special items – Reconciliation Q4 2019 Reconciliation Q4 2019 | in EUR mn Key aspects Q4 Restructuring includes EUR 122 mn for Program RACE, EUR 137 mn for Program FIT and EUR 15 mn for Program GRIP Divisional programs include provisions for additional voluntary severance sche
Slide 43: Overview Corporate and Financing Structure
Backup Overview Corporate and Financing Structure Corporate structure (simplified) | as of December 31, 2019 Financing structure | as of December 31, 2019 A IHO Verwaltungs GmbH Nominal Nominal Rating INA-Holding Schaeffler Debt instrument (USD m) (EUR1 m) Interest Maturity (Fitch/Moody’s/S&P) GmbH