Schaeffler Ag · XETR:SHA0
Schaeffler — J.P. Morgan Credit Conference 2023
44 slides from Schaeffler's conference presentation, May 12, 2023
Slide 1: J.P. Morgan – Credit Conference
J.P. Morgan – Credit Conference May 12, 2023 London PUBLIC
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements. The words “anticipate”, This presentation is intended to provide a general overview of Schaeffler Group’s “assume”, “believe”, “estimate”, “expect”, “intend”, “may”, “plan”, “project”, “should” business and does not purport to deal wi
Slide 3: Introduction to Schaeffler Group, Key financials & Q1 2023 results, Financial Framework
1 Introduction to Schaeffler Group 2 Key financials & Q1 2023 results 3 Financial Framework 12/05/2023 J.P. Morgan - Credit Conference PUBLIC
Slide 4: Schaeffler Group – A strong starting point
1 INTRODUCTION TO S CH AEF FLER GROUP Schaeffler Group – A strong starting point Strong customer base with Approximately Approximately approx. 11,800 EUR 15.8 bn 1,800 customers Sales in 2022 patents filed in 2021 Approximately 76 plants 1.1 mn tons of processed steel p.a. 20 R&D centers Around 200
Slide 5: Schaeffler Group at a glance – We are an Automotive and Industrial supplier
1 INTRODUCTION TO S CH AEF FLER GROUP Schaeffler Group at a glance – We are an Automotive and Industrial supplier 3 Divisions Schaeffler Group 4 Regions in % of FY 2022 in % of FY 2022 • Leading positions in technology and innovation EUR 1,087 mn1 Europe Asia/Pacific Industrial +11.6% 2 42% 13% 27%
Slide 6: Our company strategy Roadmap 2025 – We pioneer motion
1 INTRODUCTION TO S CH AEF FLER GROUP Our company strategy Roadmap 2025 – We pioneer motion Tomorrow Our Roadmap 2025 Transform Focus Execute Where we play How we win How we create value Today 12/05/2023 J.P. Morgan - Credit Conference 6 PUBLIC
Slide 7: Roadmap 2025 – Building on our strong foundations and innovating
1 INTRODUCTION TO S CH AEF FLER GROUP Roadmap 2025 – Building on our strong foundations and innovating as a diversified Automotive and Industrial Group Automotive Technologies Automotive Aftermarket Industrial Mature New Driving innovation with systems and services Platform ▪ One-stop-shop business
Slide 8: We focus on our core competencies – Further leveraging manufacturing technologies
1 INTRODUCTION TO S CH AEF FLER GROUP We focus on our core competencies – Further leveraging our best-in-class manufacturing technologies Our manufacturing technologies Our key strengths Large forging Cold forming Heat treatment Innovation Superior Quality EUR 1,087 mn1 +11.6%2 + Combining 4 USPs to
Slide 9: We leverage our synergistic potential – Benefitting from scope and scale
1 INTRODUCTION TO S CH AEF FLER 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 mate
Slide 10: We focus on compelling M&A – Complementing our business portfolio
1 INTRODUCTION TO S CH AEF FLER GROUP We focus on compelling M&A – Further complementing and strengthening our business portfolio M&A Radar Collaborations and partnerships Automotive Technologies and Automotive Aftermarket Hydrogen Power Mechatronics electronics and systems & Electronics manufacturi
Slide 11: Automotive Technologies: Driving the transition to innovative propulsion and chassis technologies
1 INTRODUCTION TO S CH AEF FLER GROUP Automotive Technologies: Driving the transition to innovative propulsion and chassis technologies Revenue in EUR bn Engine & E-Mobility 9.5 Transmission Europe Greater China 8.4 54% 14% 36% 25% of sales in 2022 of sales in 2022 of sales in 2022 of sales in 2022
Slide 12: Automotive Technologies: Portfolio Management – Electrification is further accelerating
1 INTRODUCTION TO S CH AEF FLER GROUP Automotive Technologies: Portfolio Management Automotive Technologies – Electrification is further accelerating Vision Powertrain – NEW Mature Business New Business Global Light Vehicle Production Powertrain Powertrain Products for Products for agnostic1 agnosti
Slide 13: Automotive Technologies: How we fund our own growth and create value
1 INTRODUCTION TO S CH AEF FLER GROUP Automotive Technologies: How we fund our own growth and create value EUR 5.0 bn Order Intake in BD E-Mobility in FY 2022 Mature Business Order Intake2 FY 2019 - 2021 New Business Products for Products for Powertrain Powertrain Electrified ICE and HEV agnostic1 p
Slide 14: Automotive Aftermarket: Leading supplier of Aftermarket components and systems
1 INTRODUCTION TO S CH AEF FLER GROUP Automotive Aftermarket: Leading supplier of Aftermarket components and systems Revenue Independent in EUR bn Others Aftermarket 8% of sales (IAM) Europe Greater China 78% of sales 2.0 1.8 Original Equipment Services 67% 6% of sales in 2022 of sales in 2022 (OES)
Slide 15: Automotive Aftermarket: Capturing new growth opportunities
1 INTRODUCTION TO S CH AEF FLER GROUP Automotive Aftermarket: Capturing new growth opportunities Growth drivers Growth enabler We realize untapped potential Share of Wallet at current customer base We offer advanced digital Digital services to improve customer Competence experience We upgrade compon
Slide 16: Industrial: Leading global component and system supplier
1 INTRODUCTION TO S CH AEF FLER GROUP Industrial: Leading global component and system supplier Revenue in EUR bn Europe Greater China 4.3 3.6 41% 27% Bearings Linear of sales in 2022 of sales in 2022 Technology Broad range 2021 2022 of products EBIT margin (before special items) Mechanical Systems M
Slide 17: Industrial: Diversified portfolio with significant growth potential
1 INTRODUCTION TO S CH AEF FLER GROUP Industrial: Diversified portfolio with significant growth potential Market clusters Sector clusters Industrial Distribution Industrial sales development share of total sales: ~30% in EUR mn 3,535 3,568 4,271 Renewables 18% 3,132 EUR 793 mn Hydrogen +5.6%1 Wind (
Slide 18: Sustainability is integral part of the Schaeffler strategy
1 INTRODUCTION TO SCHAEFFLER GROUP Sustainability is integral part of the Schaeffler strategy – Eight non-financial targets underline clear commitment to sustainability Climate Neutral Production Renewable Energy at all Schaeffler production 100% purchased power from locations until 2030 renewable s
Slide 19: Path to Climate Neutrality – Ambitious Scope targets defined
1 INTRODUCTION TO 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 chain (Scope 3 upstream): 2019 2025 2030 2035 2040 − Climate neutral from 2040 − Emission
Slide 20: Schaeffler to be climate neutral by 2040
1 INTRODUCTION TO SCHAEFFLER GROUP Sustainability Update – Important milestones achieved in FY 2022 Sustainability Report 2022 Climate Targets validated CDP “A” Score for released by SBTi Climate and Water • 10 Action Fields along the dimensions of • Science Based Targets initiative (SBTi) • Improve
Slide 21: Schaeffler’s commitment to sustainability also reflected in its financing
1 INTRODUCTION TO SCHAEFFLER GROUP Schaeffler’s commitment to sustainability also reflected in its financing Green Schuldschein ESG-linked RCF & Term Loan Schaeffler debuted with a Green Margins of the credit agreement Schuldschein in 2020. linked to reducing CO2 emissions from own production (Scope
Slide 22: Introduction to Schaeffler Group, Key financials & Q1 2023 results, Financial Framework
1 Introduction to Schaeffler Group 2 Key financials & Q1 2023 results 3 Financial Framework 12/05/2023 J.P. Morgan - Credit Conference PUBLIC
Slide 23: Schaeffler Group with strong Sales growth and good performance in Q1 2023
2 KEY FINANCIALS / Q1 2023 RESULTS Schaeffler Group with strong Sales growth and good performance in Q1 2023 Key messages Q1 2023 Sales growth1 Q1 Gross Margin Q1 1 Q1 Sales1 +10.4% – All Divisions growing thanks to price and volume; Region Europe leading with double-digit growth Q1 Gross margin 23.
Slide 24: Sales Performance Q1 2023 – Growth across all Divisions and Regions
2 K E Y F I N A N C I A L S / Q 1 2 0 2 3 R E S U L T S Sales Performance Q1 2023 – Growth across all Divisions and Regions Automotive Automotive Industrial Technologies Aftermarket Q1 2023 1 % of Group Region Growth Sales 59% 14% 27% Europe 45% +15.1% +30.3% +12.2% +17.3% Americas 22% +0.8% +15.9%
Slide 25: Schaeffler Group Q1 2023 – Highlights and lowlights
2 K E Y F I N A N C I A L S / Q 1 2 0 2 3 R E S U L T S Schaeffler Group Q1 2023 – Highlights and lowlights • Automotive Technologies • Outperformance Automotive Americas Portfolio strategy paying off – Continued strong In Automotive Technologies negative growth1 in E-Mobility and Chassis; Half of F
Slide 26: Sales – All Regions and Divisions growing, strong performance by Automotive Aftermarket
2 K E Y F I N A N C I A L S / Q 1 2 0 2 3 R E S U L T S Sales – All Regions and Divisions growing, strong performance by Automotive Aftermarket Sales KEY ASPECTS in EUR mn +10.5%1 +10.4%2 • Automotive Technologies: Strong performance by Regions Europe and Asia/Pacific, declining Sales2 in Greater Ch
Slide 27: Gross Profit – Positive Pricing, Volume and Mix effects in Q1 2023
2 K E Y F I N A N C I A L S / Q 1 2 0 2 3 R E S U L T S Gross Profit – Positive Pricing, Volume and Mix effects in Q1 2023 Gross Profit Q1 2022 vs. Q1 2023 KEY ASPECTS in EUR mn • Pricing: Sustained positive pricing effect across all Divisions +64 +11 +2 • Volumes: Increased volumes, particularly in
Slide 28: FCF – Q1 2023 impacted by front-loaded cash-outs
2 K E Y F I N A N C I A L S / Q 1 2 0 2 3 R E S U L T S FCF – Q1 2023 impacted by front-loaded cash-outs for restructuring, German inflation compensation bonus Free Cash Flow before M&A1 in EUR mn Reconciliation Q1 2023 in EUR mn 493 -87 mn 240 244 -210 14 -221 -37 -92 -8 -73 -73 EBITDA ∆ Net Capex
Slide 29: EBIT margin – Good margin level driven by extraordinary strong Automotive Aftermarket
2 K E Y F I N A N C I A L S / Q 1 2 0 2 3 R E S U L T S EBIT margin1 – Good margin level driven by extraordinary strong Automotive Aftermarket EBIT1 KEY ASPECTS in EUR mn +1.2pp • Automotive Technologies: EBIT margin1 improved sequentially and yoy, driven by price and volume effects 355 336 • Automo
Slide 30: Automotive Technologies – All Business Divisions growing, improved EBIT margin
2 K E Y F I N A N C I A L S / Q 1 2 0 2 3 R E S U L T S Automotive Technologies – All Business Divisions growing1, improved EBIT margin2 Sales by business division yoy growth EBIT2 Q1 2022 vs. Q1 2023 in EUR mn Q1 2022 Q1 2023 ∆1 E-Mobility 307 336 +9.5% +5 105 Engine & Transmission 1,257 1,340 +5.8
Slide 31: Automotive Aftermarket – Double-digit Sales growth across all Regions
2 K E Y F I N A N C I A L S / Q 1 2 0 2 3 R E S U L T S Automotive Aftermarket – Double-digit Sales growth1 across all Regions, strong EBIT margin2 expansion Sales by region yoy growth EBIT5 Q1 2022 vs. Q1 2023 in EUR mn Q1 2022 Q1 2023 ∆1 Europe 306 394 +30.3% Americas 99 120 +15.9% +62 0 Greater C
Slide 32: Industrial – Growth across all Regions and Market Clusters, increased EBIT
2 K E Y F I N A N C I A L S / Q 1 2 0 2 3 R E S U L T S Industrial – Growth1 across all Regions and Market Clusters, increased EBIT2 yoy Sales by region yoy growth EBIT2 Q1 2022 vs. Q1 2023 in EUR mn Q1 2022 Q1 2023 ∆1 Europe 427 477 +12.2% Americas 170 201 +14.4% +49 Greater China 255 297 +19.1% -9
Slide 33: Capital allocation – Continued prioritization of Capex for growth business
2 K E Y F I N A N C I A L S / Q 1 2 0 2 3 R E S U L T S Capital allocation – Continued prioritization of Capex for growth business Investment1 allocation KEY ASPECTS in EUR mn • Reinvestment Rate Target: Continued prioritization of Industrial FY 2021 FY 2022 Q1 2022 Q1 2023 division and BD E-Mobilit
Slide 34: Net Income – EPS at EUR 0.19, ROCE reached 12.5%
2 K E Y F I N A N C I A L S / Q 1 2 0 2 3 R E S U L T S Net Income1 – EPS² at EUR 0.19, ROCE³ reached 12.5% Net income1 KEY ASPECTS in EUR mn • Q1 2023 Net income1 slightly below Q1 2022, mainly related to -7 mn valuation of energy forward contracts 169 • ROCE³ and Schaeffler Value Added4 sequential
Slide 35: Overhead costs – Overhead cost increased yoy, driven by higher Selling expenses
2 K E Y F I N A N C I A L S / Q 1 2 0 2 3 R E S U L T S Overhead costs – Overhead cost increased yoy, driven by higher Selling expenses Overhead costs KEY ASPECTS in EUR mn +10.3% • R&D: Slight increase in R&D cost driven by innovation projects in the Industrial division 649 666 622 628 604 • Sellin
Slide 36: Net debt of EUR 3.0 bn – Schaeffler credit rating upgraded to Investment grade
2 K E Y F I N A N C I A L / Q 1 2 0 2 3 R E S U L T S Net debt of EUR 3.0 bn – Schaeffler credit rating upgraded to Investment grade (Baa3) by Moody’s Net financial debt and Leverage ratio1 KEY ASPECTS in EUR mn 2.999 • Leverage ratio increased to 1.4x due to the Ewellix acquisition 2.552 • Term Loa
Slide 37: Conclusion & Outlook – Good Q1, Guidance confirmed, strong Balance Sheet
2 K E Y F I N A N C I A L S / Q 1 2 0 2 3 R E S U L T S Conclusion & Outlook – Good Q1, Guidance confirmed, strong Balance Sheet 1 Good Q1 performance – Sales growth across all Divisions and Regions, good Group profitability driven by Automotive Aftermarket and Automotive Technologies 2 Solid cash g
Slide 38: Introduction to Schaeffler Group, Key financials & Q1 2023 results, Financial Framework
1 Introduction to Schaeffler Group 2 Key financials & Q1 2023 results 3 Financial Framework 12/05/2023 J.P. Morgan - Credit Conference PUBLIC
Slide 39: Road to 2025 – Mid-term Targets reflected in Financial Framework
3 F INANCIAL F RAMEWORK Road to 2025 – Mid-term Targets are reflected in Schaeffler’s comprehensive Financial Framework Mid-term Targets 2025 KEY ASPECTS AUTOMOTIVE TECHNOLOGIES AUTOMOTIVE AFTERMARKET INDUSTRIAL • Consistent with incentive system Outperformance1 Constant-currency revenue growth Cons
Slide 40: Market assumptions for 2023 broadly unchanged
3 F INANCIAL F RAMEWORK Market assumptions for 2023 broadly unchanged – Environment assumed to remain challenging in 2023 Automotive Technologies – Global LVP1 2023 Automotive Aftermarket – Global LV Parc3 Industrial – Industrial Production4 ~82- 3.2% 82.3 85.5 83.9 World 5.3% 1.3% 0.4% 2.5% World 1
Slide 41: FY 2023 Guidance confirmed – Good Q1 but we remain cautious
3 F INANCIAL F RAMEWORK FY 2023 Guidance confirmed – Good Q1 but we remain cautious on market development FY 2023 Guidance Schaeffler Group Automotive Technologies Automotive Aftermarket Industrial Guidance Guidance Guidance Guidance FY 20231 FY 2023 FY 2023 FY 2023 Sales Outperformance growth2 5 –
Slide 42: Schaeffler maintains prudent leverage metrics – Moody’s upgraded to Baa3
3 F INANCIAL F RAMEWORK Schaeffler maintains prudent leverage metrics with stable leverage development despite global volatility – Moody’s upgraded Schaeffler’s ratings recently to Baa3 Net financial debt and leverage ratio Key aspects Net financial debt (EUR mn) 5.778 Leverage ratio 1 • Schaeffler’
Slide 43: Well balanced financing structure with diversified debt instruments
3 F INANCIAL F RAMEWORK Well balanced financing structure with diversified debt instruments and no major maturity in 2023 Key aspects Finance structure Schaeffler AG | as of March 31, 2023 Debt Instrument Nominal Interest Maturity Rating • Schaeffler AG maintains a strong liquidity position with no
Slide 44: Thank you
Thank you Investor Relations Contact Phone +49 9132 82-4440 Email ir@schaeffler.com Web www.schaeffler.com/ir 12/05/2023 J.P. Morgan - Credit Conference PUBLIC