Slide 1: Schaeffler AG MainFirst Conference
Schaeffler AG MainFirst Conference March 22, 2018 Copenhagen
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 Schaeffler at a Glance 2 Overview 3 Key Investment Highlights 4 Overview Industrial Business 5 Financial Results 2017 6 Outlook 3 March 22, 2018 Schaeffler AG MainFirst Conference Copenhagen
Slide 4: Schaeffler at a Glance – A global automotive and industrial supplier
1 Schaeffler at a Glance Schaeffler at a Glance – A global automotive and industrial supplier Global Automotive and Industrial supplier of high-precision components and mechatronic systems Quality, technology and innovation as key success factors Well defined strategy 'Mobility for Tomorrow'
Slide 5: Automotive OEM – At a Glance
1 Schaeffler at a Glance Automotive OEM – At a Glance Sales and EBIT margin3) Sales by business division3) in EUR mn 18% 5% E-Mobility Chassis Systems 31% Engine 47% Transmission 8,991 Systems Systems 64%4) 8,525 Sales FY2017: EUR 8,991 mn Sales split by customer mix 2016 2017 2018e 2018 Guidance 40
Slide 6: Automotive Aftermarket – At a Glance
1 Schaeffler at a Glance Automotive Aftermarket – At a Glance Sales and EBIT margin3) Sales by region3) in EUR mn Americas Europe 21% 3% China 2% Asia/Pacific 1,880 13%4) 73% 1,813 Sales FY2017: EUR 1,880 mn Sales split by channel OES business 2016 2017 2018e 2018 18% Guidance Solutions business Gro
Slide 7: Industrial – At a Glance
1 Schaeffler at a Glance Industrial – At a Glance Sales and EBIT margin3) Sales by region3) in EUR mn 15% 9% Asia/Pacific Greater China 18% 3,150 Americas Europe 23%4) 57% 3,000 Sales FY2017: EUR 3,150 mn Industrial sales by sector cluster 2016 2017 2018e Wind 2018 10% 7% 8% Raw Materials Guidance A
Slide 8: Strategy "Mobility for tomorrow" – Preferred technology partner for our customers
1 Schaeffler at a Glance Strategy "Mobility for tomorrow" – Preferred technology partner for our customers Vision / Mission 4 Focus areas 8 Strategic pillars 8 March 22, 2018 Schaeffler AG MainFirst Conference Copenhagen
Slide 9: Solid results 2017 – Transformation to be accelerated
2 Overview Solid results 2017 – Transformation to be accelerated Key aspects 1 FY 2017 Schaeffler Group Sales +5.9%1) – All divisions and regions contributed FY 2017 EBIT margin2) at 11.3% (FY 2016: 12.7%) – 2 Net Income3) increased to EUR 980 mn (+14% vs. Prior Year) FY 2017 Free Cash Flow of EUR 4
Slide 10: New board member – Andreas Schick becomes new COO as of April 1st
2 Overview New board member – Andreas Schick becomes new COO as of April 1st Decisions Supervisory Board, 2nd March Andreas Schick becomes Member of the Board of Managing Directors of Schaeffler AG, responsible for Production, Logistics and Purchasing as of April 1st, 2018 Oliver Jung leaves Sch
Slide 11: Performance 2017 – Highlights and Lowlights
2 Overview Performance 2017 – Highlights and Lowlights 10 Performance Indicators 2017 Growth Earnings Quality Cash flow Gearing EPS + - - + + Financial Performance +5.9% -1.4%pts -247mn <100% +14% EBIT-Margin before special Sales growth vs. prior year items, vs. prior year 2016 in Free Cash Flow vs.
Slide 12: Sales Schaeffler Group FX-adjusted plus 5.9%
2 Overview 1 Sales Schaeffler Group FX-adjusted plus 5.9% – All regions and divisions contributed Sales Sales by region FY 2017 Asia/Pacific in EUR mn y-o-y growth1) +5.6% +5.9%1) vs FY 2016 10% Greater China 14,021 18% +24.1% 51% Europe 13,338 +1.4% 13,179 Americas 21% +4.6% Sales by division2) y-o
Slide 13: EBIT Margin at 11.3% – Net Income further increased by 14%
2 Overview 2 EBIT Margin1) at 11.3% – Net Income2) further increased by 14% to EUR 980 mn EBIT before special items Net Income2) and EPS3) in EUR mn in EUR mn -7% +14% vs FY 2016 vs FY 2016 1,700 1,676 980 1,584 859 591 R&D to EPS3) 5.1% 5.6% 6.0% 1.28 1.30 1.48 sales in EUR 2015 2016 2017 2015 2016
Slide 14: Free Cash Flow EUR mn – Capex ratio increased to 9.1%
2 Overview 3 Free Cash Flow EUR 488 mn – Capex ratio increased to 9.1% Free Cash Flow FCF excluding M&A Key aspects in EUR mn EUR 515mn 735 Free Cash Flow decreased from EUR 735 mn to EUR 488 mn due to lower profitability and higher capital expenditures Capex to sales at 9.1% in FY 2017 (8.6% in F
Slide 15: FY 2017 Guidance achieved – Financial Ambitions 2020 confirmed
2 Overview 4 FY 2017 Guidance1) achieved – Financial Ambitions 2020 confirmed FY 2017 Guidance FY 2018 Financial Ambitions 2020 Sales Growth +5.9% FX-adjusted 5-6% FX-adjusted Ø 4-6% p.a. FX-adjusted EBIT Margin 11.3% before special items 10.5-11.5% before special items 12-13% before special ite
Slide 16: New business structure with 3 divisions
2 Overview 5 New business structure with 3 divisions – More transparency, more accountability New business structure Key performance indicators FY 20164) FY 20174) 64%3) 13%3) 23%3) Divisions Automotive Automotive Industrial Sales1) 8,525 mn 8,991 mn OEM Aftermarket Automotive OEM Business Divisions
Slide 17: Excellence program "Agenda 4 Plus One" – Increased to 20 initiatives
2 Overview 6 Excellence program "Agenda 4 Plus One" – Increased to 20 initiatives Completion ratio as of Dec 31,2017: 35%2) Agenda 4 plus One 20 strategic initiatives Customer Focus Operational Excellence 1 Customer Excellence 4 Quality for Tomorrow 5 Global Footprint 2 E-Mobility 6 Factory for Tomo
Slide 18: Acceleration of transformation – 5 key questions
3 Key Investment Highlights Acceleration of transformation – 5 key questions 5 key questions A What is the financial impact of Agenda 4 plus One? B What is the expected profitability of your 3 divisions in 2018? C Accelerating our How will you close the gap to your Financial Ambitions 2020? transfor
Slide 19: What is the financial impact of Agenda 4 plus One?
3 Key Investment Highlights A "What is the financial impact of Agenda 4 plus One?" Financial impact Agenda 4 plus One Key aspects in EUR mn Agenda 4 plus One with its 20 initiatives led to EUR 159 mn expenditures in 2017 reducing the EBIT before special items EBIT impact before special Items in EUR
Slide 20: What is the expected profitability of your 3 divisions?
3 Key Investment Highlights B "What is the expected profitability of your 3 divisions?" Includes impact of "Agenda 4 Plus One" Proforma Proforma Divisional Guidance FY 2016 FY 2017 FY 2018 64%3) Sales Growth1) +4.8% +6.5% Sales growth1) 6-7% Automotive OEM EBIT margin2) 12.8% 10.8% EBIT margin2) 9.5
Slide 21: How will you close the gap to your Financial Ambitions 2020?
3 Key Investment Highlights C "How will you close the gap to your Financial Ambitions 2020?" Gap to Financial Ambitions 2020 - EBIT before special items2) Key aspects in EUR mn ̴ 2,000 Financial Ambition for 2020 based upon operating performance and realization of Agenda 4 plus One Agenda 4 plus On
Slide 22: How is your order book developing?
3 Key Investment Hightlights D "How is your order book developing?" For illustration Automotive OE Order Intake1)3) Industrial Order book 3M purposes only in EUR bn y-o-y growth2) 12.6 Business expectation based upon order book 3M3) 11.9 11.5 + 35 5.4 H2 5.2 30 25 6.8 20 15 10 5 0 H1 6.7 7.2
Slide 23: How do you plan to allocate capital and use your cash flow going forward?
3 Key Investment Highlights E "How do you plan to allocate capital and use your cash flow going forward?" Free Cash Flow Analysis Key aspects in EUR mn FCF generation Actual Actual Guidance 2016 2017 2018 Schaeffler Group generates significant Free Cash Flow from its EBITDA 2,293 2,295 operating bu
Slide 24: Schaeffler "Mobility for tomorrow" – Transformation to be accelerated
3 Key Investment Highlights Schaeffler "Mobility for tomorrow" – Transformation to be accelerated Schaeffler Group Key aspects Today Strategy "Mobility for tomorrow" successfully implemented Excellence program "Agenda 4 plus One" increased to 20 initiatives 3 divisions from January 1st 2018 Su
Slide 25: Industrial division – Broad range of standard and customized products
4 Overview Industrial Business Industrial division – Broad range of standard and customized products Standard product business, e.g. Ball Bearings Cylindrical Spherical Tapered Needle Roller Linear Plain Systems Mechatronics Roller Bearings Roller Bearings Roller Bearings Bearings Technology Bearing
Slide 26: Industrial market – Moderate growth expected until 2023
4 Overview Industrial Business Industrial market – Moderate growth expected until 2023 Industrial Market Key aspects Market recovered in 2017 Americas Europe Market is expected to grow between 20% 40% 2 to 3 % p.a. between 2017 and 2023, including price effects Greater China Greater China an
Slide 27: Business Portfolio – From components to Industry 4.0
4 Overview Industrial Business Business Portfolio – From components to Industry 4.0 Portfolio Region Sector split Channel Industry 4.0 services Wind Raw Industry 4.0 Mechatronics Materials Europe Aerospace OEM & MRO Railway Mechanical Systems Offroad Two Wheelers Americas Power Transmission Componen
Slide 28: Business Portfolio – Value proposition and strategy
4 Overview Industrial Business Business Portfolio – From components to Industry 4.0 Portfolio Our value proposition Our strategy Industry 4.0 services 1 Be an innovation leader for Industry 4.0 solutions in combination with 1 extended service offerings. Industry 4.0 Mechatronics 2 Grow with customiz
Slide 29: Components – Digitalization to handle component business efficiently
4 Overview Industrial Business 3 Components – Digitalization to handle component business efficiently Industry 4.0 services 1 Mechatronics Innovative Solution 2 Partner Mechanical Systems Components Efficient 3 Bearing Expert State of the art e-commerce & support solutions Application Central ac
Slide 30: Mechanical Systems – Planetary Roller Screw (PWG)
4 Overview Industrial Business 2 Mechanical Systems – Planetary Roller Screw (PWG) Industry 4.0 services Scope of delivery 1 Bearing Mechatronics Innovative Solution 2 Partner Mechanical Systems Components Efficient 3 Bearing Expert Powertools industry, domestic sanitary installation Application
Slide 31: Mechanical Systems & Mechatronics combined – Sliding gantry
4 Overview Industrial Business 2 Mechanical Systems & Mechatronics combined – Sliding gantry Industry 4.0 services 1 Mechatronics Innovative Solution 2 Partner Mechanical Systems Components Efficient 3 Bearing Expert Medical industry Scope of delivery Application Ceiling module Computer Tomograp
Slide 32: Mechanical Systems & Mechatronics combined – Rotary table kit
4 Overview Industrial Business 2 Mechanical Systems & Mechatronics combined – Rotary table kit Industry 4.0 services 1 Mechatronics Innovative Solution 2 Partner Mechanical Systems Components Efficient 3 Bearing Expert Food and packaging Scope of delivery Application Bottling machinery Slewing r
Slide 33: Mechatronics & Industry 4.0 Services – Smart linear guidance DuraSense
4 Overview Industrial Business 2 1 Mechatronics & Industry 4.0 Services – Smart linear guidance "DuraSense" Industry 4.0 services Use case: Automotive Assembly line 1 Mechatronics Innovative Solution 2 Partner Mechanical Grappler Systems Components Efficient 3 Bearing Expert Industrial Automation
Slide 34: Industry 4.0 Services – Condition Monitoring
4 Overview Industrial Business 1 Industry 4.0 Services – Condition Monitoring Industry 4.0 services 1 Remote Service Center Certified service engineers Innovative (according to ISO18436 ) Mechatronics Over 400 installations Solution monitored worldwide 2 Partner Mechanical Systems Components Eff
Slide 35: Mechatronics & Industry 4.0 Services – Outlook Hanover Fair
4 Overview Industrial Business 2 1 Mechatronics & Industry 4.0 Services – Outlook Hanover Fair Showcase SPIT – E-Motors Showcase PERLENBACH – Pumps Handling of SmartCheck + Plain text messages SmartQB + easy access to the Schaeffler autonomous relubrication + Services Cloud & digital services op
Slide 36: Key figures FY 2017
5 Financial Results 2017 Key figures FY 2017 FY 2017 Q4 2017 in EUR mn FY 2016 FY 2017 vs. FY 2016 Q4 2016 Q4 2017 vs. Q4 2016 +5.1% +5.4% Sales 1 13,338 14,021 +5.9%1) 3,361 3,541 +8.5%1) 1,556 1,528 -28 mn 280 319 +39 mn EBIT 1,7002) 1,5842) -116 mn 4242) 3882) -36 mn 2 11.7% 10.9% -0.8%-pts. 8.3%
Slide 37: Sales Schaeffler Group – Sales growth FY 2017 5.9%
5 Financial Results 2017 1 Sales Schaeffler Group – Sales growth FY 2017 5.9%1) Sales Key aspects in EUR mn +8.5%1) vs Q4 2016 FY 2017 growth of +5.9%1) with acceleration in Q4 3,574 Automotive growth with outperformance of 3.8% for the Full 3,541 3,343 3,369 3,265 3,361 3,472 3,434 Year 2017
Slide 38: Sales Automotive Division – Sales growth FY 2017 5.9%
5 Financial Results 2017 1 Sales Automotive Division – Sales growth FY 2017 5.9%1) Sales Sales by region FY 2017 in EUR mn y-o-y growth1) Asia/Pacific +8.3%1) +5.8% vs Q4 2016 Greater China 11% +22.9% 2,791 2,771 18% 2,631 2,664 2,643 2,578 2,604 50% 2,525 21% Americas Europe +4.9% +1.3% Sales by bu
Slide 39: Sales Industrial Division – Sales growth FY 2017 5.7%
5 Financial Results 2017 1 Sales Industrial Division – Sales growth FY 2017 5.7%1) Sales Industrial sales growth by sector cluster FY 20171) in EUR mn Industrial Distribution Wind +9.0% 1) Two-Wheelers vs Q4 2016 Aerospace Rail 808 Industrial Automation 783 791 770 765 765 740 Raw Materials 730 Offr
Slide 40: Group EBIT margin – Q4 2017 weaker than expected
5 Financial Results 2017 2 Group EBIT margin – Q4 2017 weaker than expected EBIT1) Moving parts Q4 2017 in EUR mn Very high level of demand in Q4 compared to previous -1.6%-pts. vs Q4 2016 quarters led to: 438 435 421 417 424 416 388 Inefficiencies in plants caused by strained supply 3452) chain
Slide 41: Automotive EBIT – EBIT margin FY 2017 at 12.2%
5 Financial Results 2017 2 Automotive EBIT – EBIT margin1) FY 2017 at 12.2% EBIT1) EBIT1) FY 2016 vs. FY 2017 in EUR mn in EUR mn -2.3%-pts. +5 vs Q4 2016 1,481 -95 367 368 362 384 367 345 341 277 -54 1,481 1,330 -22 +15 1,330 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 EBIT Gross R&D Selling Administrative O
Slide 42: Industrial EBIT – EBIT margin FY 2017 at 8.1%
5 Financial Results 2017 2 Industrial EBIT – EBIT margin1) FY 2017 at 8.1% EBIT1) EBIT1) FY 2016 vs. FY 2017 in EUR mn in EUR mn +0.6%-pts. -26 vs Q4 2016 +7 +55 0 -1 70 71 68 68 254 54 55 47 40 219 254 219 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 EBIT Gross R&D Selling Administrative Others EBIT EBIT FY 2
Slide 43: Net income – FY 2017 plus 14%
5 Financial Results 2017 3 Net income1) – FY 2017 plus 14% Net income1) Key aspects in EUR mn 306 FY 2017 EPS improved by 14% to EUR 1.48 279 Significant improvement of financial result due to lower 253 241 interest expenses on financial debt 206 Benefit from lower tax rate of 25.4% in FY 2017 vs
Slide 44: Working Capital ratio at 16.7% per year end – Capex ratio 11.3% in Q4
5 Financial Results 2017 4 Working Capital ratio at 16.7% per year end – Capex ratio 11.3% in Q4 2017 Working capital1) Capex2) in EUR mn Q4 2017 includes in EUR mn 150 mn EUR Receivable 400 Sale Program 318 317 299 295 279 268 243 2,796 2,802 2,820 2,756 2,740 2,733 2,498 2,342 1,146 1,273 Q1 Q2 Q3
Slide 45: Solid Free Cash Flow generation – Capex Ratio increased to 9.1%
5 Financial Results 2017 4 Solid Free Cash Flow generation – Capex Ratio increased to 9.1% Free Cash Flow development Key aspects in EUR mn Free Cash Flow decreased from EUR 735 mn to EUR 488 mn due to lower profitability1) and higher capex 328 333 263 256 244 Capex to sales at 9.1% in FY 2017 (8.
Slide 46: Net debt and Gearing ratio – Gearing ratio with 93% at all time low
5 Financial Results 2017 5 Net debt and Gearing ratio – Gearing ratio with 93% at all time low Net financial debt and Gearing ratio Key aspects in EUR mn Lower net debt level in FY 2017 due to full redemption of a bond with a principal of USD 700 mn in Q2 2017 4,909 4,874 Gearing ratio further i
Slide 47: Schaeffler Value Added EUR mn – ROCE 19.9%
5 Financial Results 2017 Schaeffler Value Added EUR 787 mn – ROCE 19.9% Schaeffler Value Added 1) 2) Key aspects Schaeffler Value Added in EUR mn Schaeffler Value Added 1) measures internal value creation on 952 939 a group-wide basis 902 801 Schaeffler Value Added 2017 of EUR 787 mn below prior y
Slide 48: FY 2018 Guidance
6 Outlook FY 2018 Guidance Group Guidance Divisional Guidance published on February 1st published on March 7th Group Automotive OEM Automotive AM Industrial Sales growth 5-6% 6-7% 3-4% 3-4% FX-adjusted FX-adjusted FX-adjusted FX-adjusted + EBIT margin 10.5-11.5% 9.5-10.5% 16.5-17.5% 9-10% before spe
Slide 49: Financial calendar 2018
6 Outlook Financial calendar 2018 Mar 22 MainFirst Conference, Copenhagen Apr 20 AGM, Nuremberg May 8 Q1 2018 Earnings Release June 12 Exane BNP CEO conference, Paris June 22 Deutsche Bank E-Mobility Conference, London Aug 7 H1 2018 Earnings Release Sept 20 Capital Markets Day, Berlin Nov 7 9M 2018
Slide 50: IR Contact
IR Contact Contacts Renata Casaro +49 9132 82 88125 renata.casaro@schaeffler.com Niels Fehre, CFA +49 9132 82 85805 niels.fehre@schaeffler.com Jens-Philipp Briemle +49 9132 82 86377 jens-philipp.briemle@schaeffler.com Johann Eisenmann +49 9132 82 88987 johann.eisenmann@schaeffler.com www.schaeffler.
Slide 51: Key figures by division – new structure
Backup Key figures1) by division – new structure Automotive OEM Industrial in EUR mn in EUR mn Q1 '17 Q2 '17 Q3 '17 Q4 '17 FY '17 Q1 '17 Q2 '17 Q3 '17 Q4 '17 FY '17 Sales 2,308 2,220 2,138 2,325 8,991 Sales 782 808 790 770 3,150 Sales Growth2) +6.4% +3.5% +7.4% +8.7% +6.5% Sales Growth2) +0.2% +4.5%
Slide 52: Sales by region, business division and sector cluster – old structure
Backup Sales by region, business division and sector cluster – old structure Automotive sales growth1) by region Industrial sales growth1) by region Q1 '17 Q2 '17 Q3 '17 Q4 '17 FY '17 Q1 '17 Q2 '17 Q3 '17 Q4 '17 FY '17 Europe +3.8% -5.8% +2.3% +5.6% +1.3% Europe -1.3% +0.6% 3.1% 4.5% 1.7% Americas +
Slide 53: Corporate and Financing Structure
Backup Overview Corporate and Financing Structure Corporate structure (simplified) Financing structure as of December 31, 2017 in EUR2) mn, as of December 31, 2017 IHO Verwaltungs GmbH INA-Holding Schaeffler Debt instrument Nominal Nominal Interest Maturity Rating GmbH & Co. KG (USD mn) (EUR mn) (F/