Schaeffler Ag · XETR:SHA0
Schaeffler — 10th Annual Goldman Sachs Automotive Conference 2018
46 slides from Schaeffler's conference presentation, Nov 30, 2018
Slide 1: Schaeffler AG – 10th Annual Automotive Conference
Schaeffler AG 10th Annual Automotive Conference Goldman Sachs November 30, 2018
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 “Mobility for Tomorrow” Strategy – Agenda 4 plus One Initiatives 3 Divisional Highlights 4 Long-term value creation 3 November 30, 2018 Schaeffler AG – 10th Annual Goldman Sachs Automotive Conference
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 72 plants systems Quality, technology and innovation as 18 R&D centers key success factors Well defined strategy
Slide 5: Diversified business portfolio with global footprint
1 Schaeffler at a Glance Schaeffler at a Glance – Diversified business portfolio with global footprint Sales by division FY 2017 Customer proximity – Global plants and R&D centers Industrial 23% 13% Automotive Aftermarket Automotive OEM 64% Sales by region FY 2017 Asia/Pacific 10% Greater China 18%
Slide 6: 10-year look-back – Sales and EBIT
1 Schaeffler at a Glance 10-year look-back – Sales and EBIT Development of Sales Development of EBIT2) 2007 - 20171) 2007 - 20171) in EUR mn in EUR mn CAGR 2007-2017 +5% 14,021 13,338 1,736 1,700 13,179 1,676 12,124 1,561 1,584 1,509 1,469 11,125 11,205 1,436 10,694 9,013 9,495 1,139 8,905 1,040 7,3
Slide 7: The Schaeffler Executive Team
1 Schaeffler at a Glance The Schaeffler Executive Team Executive Team Klaus Rosenfeld (52) Chief Executive Officer Joined Schaeffler in 2009 CEO Functions Prof. Dr. Peter Pleus (64) / Michael Söding (56) Dr. Stefan Spindler (57) Matthias Zink (49) CEO Automotive Aftermarket CEO Industrial CEO’s Auto
Slide 8: Agenda
Agenda 1 Schaeffler at a Glance 2 “Mobility for Tomorrow” Strategy – Agenda 4 plus One Initiatives 3 Divisional Highlights 4 Long-term value creation 8 November 30, 2018 Schaeffler AG – 10th Annual Goldman Sachs Automotive Conference
Slide 9: Schaeffler Roadmap 2016-2020 – Navigating through a complex environment
2 “Mobility for Tomorrow” Strategy – Agenda 4 plus One Initiatives Schaeffler Roadmap 2016-2020 – Navigating through a complex environment Roadmap Schaeffler Group Key aspects Today Strategy „Mobility for tomorrow“ to position Schaeffler for key future trends Excellence program "Agenda 4 plus On
Slide 10: Strategy Mobility for tomorrow – Preferred technology partner for our customers
2 “Mobility for Tomorrow” Strategy – Agenda 4 plus One Initiatives Strategy "Mobility for tomorrow" – Preferred technology partner for our customers Vision / Mission 4 Focus areas 8 Strategic pillars 10 November 30, 2018 Schaeffler AG – 10th Annual Goldman Sachs Automotive Conference
Slide 11: Strategy Mobility for tomorrow – 8 strategic pillars
2 “Mobility for Tomorrow” Strategy – Agenda 4 plus One Initiatives Strategy "Mobility for tomorrow" – 8 strategic pillars 1 Preferred technology partner 2 Automotive and Industrial supplier 3 Components and systems 4 Global player with local presence One Schaeffler Approach 5 E-Mobility, Industry 4.
Slide 12: Automotive and Industrial Supplier – Balanced business portfolio
2 “Mobility for Tomorrow” Strategy – Agenda 4 plus One Initiatives Automotive and Industrial Supplier – Balanced business portfolio Pro Forma – Sales 9M 2018 EBIT1) 9M 2018 SVA2) LTM Sept 2018 For illustration purposes EBIT Margin ~15% 24% 11.8% 26% 63% ~45% 52% 13% 22% ~40% EBIT Margin EBIT Margin
Slide 13: Components and Systems – Enriching our core competencies
2 “Mobility for Tomorrow” Strategy – Agenda 4 plus One Initiatives Components and Systems – Enriching our core competencies Key aspects System Understanding / Industry 4.0 Long-standing experience in development and manufacturing of best-in-class mechanical components Proven system-level underst
Slide 14: Excellence program Agenda 4 Plus One – Completion ratio increased to 50%
2 “Mobility for Tomorrow” Strategy – Agenda 4 plus One Initiatives Excellence program "Agenda 4 Plus One" – Completion ratio increased to 50%2) Agenda 4 plus One 20 strategic initiatives Customer Focus Operational Excellence 1 Customer Excellence 4 Quality for Tomorrow 5 Global Footprint 2 E-Mobilit
Slide 15: Rigorous execution of efficiency initiatives
2 “Mobility for Tomorrow” Strategy – Agenda 4 plus One Initiatives Rigorous execution of efficiency initiatives – Continuously improving our performance Overview initiatives Start Date Cost Efficiency HCO1) Reduction Restructuring Full Financial Focus Completion Target Target Cost Impact Ratio 1 EUR
Slide 16: Agenda
Agenda 1 Schaeffler at a Glance 2 “Mobility for Tomorrow” Strategy – Agenda 4 plus One Initiatives 3 Divisional Highlights 4 Long-term value creation 16 November 30, 2018 Schaeffler AG – 10th Annual Goldman Sachs Automotive Conference
Slide 17: Schaeffler Group – Diversified business portfolio with three divisions
3 Divisional Highlights Schaeffler Group – Diversified business portfolio with three divisions Automotive OEM Automotive Aftermarket Industrial 64%3) 13%3) 23%3) Sales1) 8,991 mn Sales1) 1,880 mn Sales1) 3,150 mn EBIT margin2) 10.8% EBIT margin2) 19.0% EBIT margin2) 8.0% Chassis 18% E-Mobility OES b
Slide 18: Automotive OEM – At a Glance
3 Divisional Highlights 1 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 4
Slide 19: Powertrain evolution – Our E-Mobility Strategy
3 Divisional Highlights Powertrain evolution – Our E-Mobility Strategy More than 30 customer projects and ICE HEV BEV 8 series contracts Vision Powertrain E-Mobility Production Roadmap Global vehicle production [in mn units] 117 110 70% 102 12% 90 30% 4% 11% 33% 40% 95% 86% 2017 2018 2019 2020 2021
Slide 20: E-Mobility – Content per vehicle
3 Divisional Highlights E-Mobility – Content per vehicle excl. Aftermarket, Heavy Duty & Motorcycles Content per Vehicle 1) in EUR 1 ICE 2 HEV 3 BEV x 2.5 x 1.5 ~150 x 4.0 ~125 ~100 ~90 ~60 ~25 2016 2025 2016 2025 2016 2025 90 mn 56 mn 3 mn 39 mn 0.5 mn 16 mn Average Content per Vehicle 2025 ~EUR 13
Slide 21: Automotive Aftermarket – At a Glance
3 Divisional Highlights 2 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 Gr
Slide 22: Growth drivers in the Independent Aftermarket
3 Divisional Highlights Growth drivers in the Independent Aftermarket – Components and Solutions Components Solutions Outlook Traditional business with Complete sets and kits for Trends in OEM business fuel future replacements parts plug n' play repair solutions Aftermarket potential Growing
Slide 23: Dedicated pull strategy for whole value chain
3 Divisional Highlights Dedicated pull strategy for whole value chain – Workshop satisfaction key for success The 7 levels of our market Top 7 player NPS* 71 Pull Strategy along all distribution levels 55 53 50,000+ workshops trained p.a. Plants SAAM Distributors Workshop Consumers 5,000 distribu
Slide 24: Industrial – At a Glance
3 Divisional Highlights 3 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
Slide 25: Broad range of standard and customized products
3 Divisional Highlights Broad range of standard and customized products Portfolio Region Sector split Channel Industry 4.0 services Wind Industry 4.0 Mechatronics Raw Materials Europe Aerospace OEM & MRO Railway Mechanical Systems Offroad Two Wheelers Americas Power Components Transmission Greater D
Slide 26: Mechatronics & Industry 4.0 Services – Hanover Fair 2018
3 Divisional Highlights Mechatronics & Industry 4.0 Services – Hanover Fair 2018 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 openness Smart E
Slide 27: Agenda
Agenda 1 Schaeffler at a Glance 2 “Mobility for Tomorrow” Strategy – Agenda 4 plus One Initiatives 3 Divisional Highlights 4 Long-term value creation 27 November 30, 2018 Schaeffler AG – 10th Annual Goldman Sachs Automotive Conference
Slide 28: Sustainable value creation – Four main building blocks
4 Long-term value creation Sustainable value creation – Four main building blocks Building blocks Key aspects Growth Outperformance 3 divisions with different business 1 in Automotive Consistent growth above markets characteristics and value drivers OEM Resilient Aftermarket business compensat
Slide 29: Use of cash – Focus on future growth and attractive dividend
4 Long-term value creation Use of cash – Focus on future growth and attractive dividend Our Cash Flow formula Key aspects + Operating Cash Flow1) Strong cash flow generation from operating business and 3 main uses of cash: Cash Δ Working Capital generation +/- 1 Dividend - Capex (Internal Growth)
Slide 30: Free Cash Flow details YTD 2018
4 Long-term value creation Free Cash Flow details YTD 2018 – Capex Ratio Q3 at 7.4% Free Cash Flow FY 2017 Target: Key aspects in EUR mn FCF ~ EUR 500mn1) FCF before M&A at EUR 201 mn in Q3’18 (PY: EUR 333 mn), FCF -119 mn vs 9M 2017 conversion ratio 17% 333 Lower EBIT and higher inventory level
Slide 31: M&A strategy – Focus on technology and execution
4 Long-term value creation M&A strategy – Focus on technology and execution 7 Search fields Key aspects (Power) E-Motor Electronics Clearly defined M&A strategy based on 7 search fields with Manufacturing Industry 4.0 / Mechatronics focus on technology, innovation and smaller add-on Competence acq
Slide 32: Steer by wire Acquisition
4 Long-term value creation “Steer by wire" Acquisition – Positioning Chassis business for autonomous driving growth potential “Steer by wire” – Key aspects Selected components of the "Steer by wire"-technology ▪ Steer by wire is a key-enabling technology for the fast-growing market segment autonomou
Slide 33: Elmotec Statomat Acquisition
4 Long-term value creation Elmotec Statomat Acquisition – Another key step to implement our E-Mobility strategy Elmotec Statomat – Key aspects Innovative technology & production processes ▪ Elmotec is a pioneer in the production of stator manufacturing machines and one of the leading suppliers of ma
Slide 34: IR Contact
IR Contact Investor Relations Phone: + 49 9132 82 4440 Email: ir@schaeffler.com Web: www.schaeffler.com/ir 34 November 30, 2018 Schaeffler AG – 10th Annual Goldman Sachs Automotive Conference
Slide 35: Sales growth Q3'18 +3.7% – Americas and Greater China highest growth
Backup - Financial Highlights Q3 2018 1 Sales growth Q3'18 +3.7%1) – Region Americas and Greater China with highest growth rates Sales Key aspects Q3'18 in EUR mn +5.1%1) Group sales up by +3.7%1) (Q3'17: +7.4%1)), all regions vs 9M 2017 contributed 3,574 3,472 3,434 3,541 3,551 Sales growth mai
Slide 36: EBIT Margin Q3'18 10.1%
Backup - Financial Highlights Q3 2018 2 EBIT Margin Q3’18 10.1% – 2.0%-pts. below prior year quarter EBIT1) Key aspects Q3'18 in EUR mn Gross profit margin decreased from 28.1% to 26.5% mainly -46 mn driven by ramp up costs, project delays in China and higher vs 9M 2017 production costs (including
Slide 37: Automotive OEM – 5.2%-pts. outperformance versus market in Q3'18
Backup - Financial Highlights Q3 2018 A Automotive OEM – 5.2%-pts. outperformance versus market in Q3'18 Automotive OEM sales and market development Q3 Sales by business division in EUR mn Europe Americas Greater China Asia/Pacific Q3 2017 Q3 2018 1) +9.9% Engine Systems 669 691 +4.1% +1.6% +2.2%
Slide 38: Automotive OEM – Q3 EBIT margin of 7.9%
Backup - Financial Highlights Q3 2018 A Automotive OEM – Q3 EBIT margin2) of 7.9% (Q3'17: 10.7%) EBIT1) Q3 2017 vs. Q3 2018 Key aspects in EUR mn Gross margin declined from 25.6% to 23.1% mainly driven by ramp up costs, project delays in China and 229 higher production costs (including +1 higher r
Slide 39: Schaeffler e-Axle transmission drives the Audi eTron Quattro
Backup - Financial Highlights Q3 2018 A Automotive OEM – Schaeffler e-Axle transmission is driving the brand new Audi eTron Quattro E-Axle subsystems 2018 Schaeffler‘s new Lightweight E-Axle Transmissions for the Audi eTron Quattro SOP Q3/2018 Schaeffler supplies both E-Axle Power Electronics Tran
Slide 40: Automotive Aftermarket – High comps in Americas, lower sales in Europe
Backup - Financial Highlights Q3 2018 B Automotive Aftermarket – High comps in Region Americas and temporary lower sales in Europe Automotive Aftermarket sales by quarter Sales by region in EUR mn y-o-y growth Q3 2017 Q3 2018 1) +1.3%1) vs 9M 2017 Europe 375 355 -4.3% 484 506 446 479 476 444 446 Am
Slide 41: Automotive Aftermarket – Q3 EBIT margin of 16.8%
Backup - Financial Highlights Q3 2018 B Automotive Aftermarket – Q3 EBIT margin2) of 16.8% (Q3'17: 23.1%) EBIT1) Q3 2017 vs. Q3 2018 Key aspects in EUR mn Gross margin decreased from 38.1% to 34.7% of sales, mainly driven by higher production costs and price pressure in 117 some markets Selling
Slide 42: Industrial Division – All sectors and regions growing in Q3
Backup - Financial Highlights Q3 2018 C Industrial Division – All sectors and regions growing in Q3 Industrial sales by quarter Sales by region in EUR mn +9.8%1) y-o-y growth Q3 2017 Q3 2018 1) vs 9M 2017 826 855 854 Europe 446 469 +6.3% 782 808 790 770 Americas 139 150 +10.1% 2,380 2,535 Greater C
Slide 43: Industrial Division – Q3 EBIT margin of 12.1%
Backup - Financial Highlights Q3 2018 C Industrial Division – Q3 EBIT margin2) of 12.1% (Q3'17: 8.9%) EBIT1) Q3 2017 vs. Q3 2018 Key aspects in EUR mn Gross margin increased to 30.8% (Q3'17: 28.4%) driven by positive volume effects and favourable pricing +392) 103 Successful execution on CORE3)
Slide 44: Guidance FY 2018 – Adjustment triggered by Automotive OEM business in China
Backup - Financial Highlights Q3 2018 Guidance FY 20185) – Adjustment triggered by Automotive OEM business in China Group Guidance Divisional Guidance Old4) New5) Automotive OEM Automotive AM Industrial Sales growth1) +3.5-4.5% +1.5-2.5% +5-6% +4-5% (before 4.5-5.5%) +8-9% (in %) (before 3-4%) EBIT
Slide 45: Guidance FY 2018 – Adapting execution to a more complex market environment
Backup - Financial Highlights Q3 2018 Guidance FY 2018 – Adapting execution to a more complex market environment Sharp expected market decline of China Light Vehicle Production/Sales is the key catalyst 1 for reducing FY 2018 Group and Automotive OEM Guidance for sales and EBIT margin Softness in Au
Slide 46: Key figures by Group and division – new structure
Backup Key figures1) by Group and division – new structure Group Automotive Aftermarket in EUR mn in EUR mn Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 Sales 3,574 3,472 3,434 3,541 3,551 3,642 3,521 Sales 484 444 506 446 446 479 476 Sales Growth
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