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EQS-News: Schaeffler AG
/ Key word(s): Half Year Results
In the Automotive Technologies division, the 8.3 percent constant-currency revenue growth in the first half of 2023 resulted from higher volumes in all business divisions. The constant-currency rise in revenue in the Automotive Aftermarket division amounted to 17.6 percent in the first six months of the year, thanks in particular to the strong increase in volumes at the Independent Aftermarket business in the Europe region. In the Industrial division, the constant-currency increase in revenue of 10.6 percent was largely attributable to the contribution made by the Ewellix Group, which was acquired at the beginning of the year, and the favorable impact of sales prices.
All regions contributed to revenue growth in the first half of 2023. The Europe region generated the highest constant-currency growth rate, increasing its revenue by 14.0 percent. Asia/Pacific region revenue was up 10.9 percent at constant currency, while revenue in the Greater China and Americas regions was 6.6 percent and 5.6 percent above the prior-year level, respectively, at constant currency.
The Schaeffler Group generated 625 million euros (prior year: 458 million euros) in EBIT before special items in the first six months, representing an EBIT margin before special items of 7.6 percent (prior year: 6.1 percent). The increase in the EBIT margin before special items in the first half of 2023 was primarily attributable to the favorable impact of volumes and sales prices.
“The Schaeffler Group once again performed well in a challenging market environment in the second quarter,” said Klaus Rosenfeld, CEO of Schaeffler AG. “All divisions and regions contributed to revenue growth. On the whole, our earnings improved significantly year on year. The Automotive Technologies and Automotive Aftermarket divisions reported double-digit growth rates at constant currency in the second quarter and further improved their operating earnings, offsetting the declining earnings trend in the Industrial division.”
Automotive Technologies – operating earnings improved
The division generated 207 million euros (prior year: 92 million euros) in EBIT before special items in the first six months. The EBIT margin before special items for the same period was 4.3 percent, significantly ahead of the 2.0 percent reported in the prior year. The increase in the EBIT margin before special items was mainly due to the favorable impact of sales prices and volumes, bolstered by structural improvements.
Automotive Aftermarket – strong growth, strong EBIT margin
The constant-currency revenue growth was driven especially by the 17.1 percent increase in Europe – the region generating the highest revenue. Revenue in the Greater China region was 36.6 percent above the prior-year level at constant currency. In the Asia/Pacific region, revenue increased by 18.1 percent at constant currency, while the Americas region generated constant-currency revenue growth of 14.1 percent.
EBIT before special items amounted to 192 million euros (prior year: 128 million euros), which represents an EBIT margin before special items of 17.0 percent (prior year: 13.2 percent). The increase in EBIT margin before special items was predominantly the result of a higher gross profit margin due to a favorable revenue mix during the reporting period as well as a favorable impact of sales prices.
Industrial – EBIT margin down, countermeasures initiated
At 15.0 percent, the Americas region generated the largest constant-currency increase in revenue in the first six months. In Greater China, revenue was up 11.4 percent at constant currency. Revenue in the Europe region grew by 10.1 percent, while the Asia/Pacific region reported constant-currency revenue growth of 5.4 percent.
The Industrial division generated 225 million euros (prior year: 238 million euros) in EBIT before special items in the first six months, representing an EBIT margin before special items of 10.1 percent (prior year: 11.5 percent). The decline in EBIT margin before special items was primarily attributable to the gross margin trend, which was adversely affected by the revenue mix as well as by higher costs as a result of relocations and other factors. Based on this and in connection with the adjusted outlook for the second half of the year, the division has initiated countermeasures that include reducing inventories and expanding cost reduction measures.
Free cash flow – significantly improved year on year
“The positive free cash flow is primarily attributable to the improvement in the Schaeffler Group’s profitability in the first half of 2023,” said Claus Bauer, CFO of the Schaeffler Group. “In addition, we succeeded in reducing net current assets through effective management of inventories and receivables.”
Net income attributable to shareholders of the parent company increased to 267 million euros in the first half of 2023 (prior year: 249 million euros). Net income before special items amounted to 338 million euros (prior year: 265 million euros). Earnings per common non-voting share were 0.41 euros (prior year: 0.38 euros).
Structural measures – agreements with employee representatives reached
Overall Group guidance for 2023 raised
Current market assumptions for 2023
 at constant currency
 LVP growth: global growth in production of passenger cars and light commercial vehicles
 before special items
 before cash in- and outflows for M&A activities
 Includes content supplied by S&P Global © [IHS Markit Light Vehicle Production Forecast (Base), July 2023]. All rights reserved.
 Includes content supplied by S&P Global © [IHS Markit Vehicles In Operation (VIO) Forecast, April 2023]. All rights reserved.
Based on the expected performance of the divisions, the Schaeffler Group continues to expect its revenue to grow by 5 to 8 percent at constant currency in 2023. In addition, the company has increased the guidance for the EBIT margin before special items in 2023 to 6 to 8 percent (previously 5.5 to 7.5 percent). The Schaeffler Group anticipates free cash flow before cash in- and outflows for M&A activities of 300 to 400 million euros for 2023 (previously 250 to 350 million euros).
The Schaeffler Group now expects its Automotive Technologies division to grow by 0 to 3 percentage points more than global automobile production of passenger cars and light commercial vehicles in 2023. On that basis, the company continues to expect the Automotive Technologies division to generate moderate constant-currency revenue growth year on year. Additionally, the Automotive Technologies division now expects an EBIT margin before special items of 3 to 5 percent for 2023 (previously 2 to 4 percent).
The guidance for the Automotive Aftermarket division has been corrected upward in terms of both revenue and EBIT margin before special items. The group now anticipates constant-currency revenue growth of 10 to 12 percent (previously 5 to 7 percent) and an EBIT margin before special items of 14 to 16 percent (previously 12 to 14 percent) for the division in 2023.
The company now expects its Industrial division to generate constant-currency revenue growth of 6 to 8 percent (previously 9 to 11 percent) and an EBIT margin before special items of 9 to 11 percent (previously 11 to 13 percent) in 2023.
“Our updated guidance reflects the results of a successful first six months of the year,” said Klaus Rosenfeld, CEO of Schaeffler AG. “The second half of the year is likely to be challenging for our business. The current negotiations with our customers give us reason to be confident that we will once more comfortably achieve our electric mobility order intake target in 2023. At the same time, all signs point to a continuation of the positive trend in the Automotive Aftermarket business going forward. We have already taken countermeasures in the Industrial division against the negative margin trend.”
Forward-looking statements and projections
Certain statements in this press release are forward-looking statements. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial consequences of the plans and events described herein. No one undertakes any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. You should not place any undue reliance on forward-looking statements which speak only as of the date of this press release. Statements contained in this press release regarding past trends or events should not be taken as representation that such trends or events will continue in the future. The cautionary statements set out above should be considered in connection with any subsequent written or oral forward-looking statements that Schaeffler, or persons acting on its behalf, may issue.
Schaeffler Group – We pioneer motion
The Schaeffler Group has been driving forward groundbreaking inventions and developments in the field of motion technology for over 75 years. With innovative technologies, products, and services for electric mobility, CO₂-efficient drives, chassis solutions, Industry 4.0, digitalization, and renewable energies, the company is a reliable partner for making motion more efficient, intelligent, and sustainable – over the entire life cycle. The motion technology company manufactures high-precision components and systems for drive train and chassis applications as well as rolling and plain bearing solutions for a large number of industrial applications. The Schaeffler Group generated sales of EUR 15.8 billion in 2022. With around 84,000 employees, the Schaeffler Group is one of the world’s largest family-owned companies. With more than 1,250 patent applications in 2022, Schaeffler is Germany’s fourth most innovative company according to the DPMA (German Patent and Trademark Office).
02.08.2023 CET/CEST Dissemination of a Corporate News, transmitted by EQS News - a service of EQS Group AG.
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