Schaeffler continues its successful path
- Sales for the first nine months 2011 reach €8.1 billion, up 15 percent from prior year
- EBIT grows by 19 percent to €1.3 billion
- Net income of €743 million
- Free cash flow improves to €229 million
- Slight increase in sales expected for 4th quarter 2011 compared to prior year
Schaeffler AG, one of the leading global automotive and industrial suppliers, has remained on its course of success during the third quarter of 2011. Based on the very encouraging development of its business during the first nine months, the company is confident it will meet its targets for the year. Schaeffler AG expects to increase sales by more than 10 percent and its EBIT margin by more than 13 percent in 2011.
Sales increase across all regions and business divisions
"Our business is continuing to develop positively. We were again able to clearly top prior year levels of sales and net income," commented Dr. Juergen M. Geissinger, CEO of Schaeffler AG. "As in the previous quarters of this year, all regions and business divisions contributed to this development. The sales growth in our two divisions Automotive and Industrial was significantly higher than the corresponding market growth rates for the third quarter."
Schaeffler AG sales increased by 15 percent to approximately €8.1 billion for the first nine months. At 18 percent, Europe excluding Germany saw the highest regional sales growth, followed by Asia with 16 percent and Germany with 14 percent. The Automotive Division increased its sales by 15 percent to €5.4 billion. Growing by 19 percent to approximately €2.6 billion, Industrial Division sales again clearly topped the high level generated in the comparable prior year period. Particularly the market production machinery and power transmission as well as the aftermarket business were able to expand further.
EBIT for the first nine months of 2011 grew by 19 percent to €1.3 billion from the prior year, increasing the EBIT margin to 16.7 percent from its prior year level of 16.2 percent. Net income improved by €856 million to €743 million during the first nine months of 2011 and includes the company's share of the net income of Continental AG of €229 million.
Free cash flow for the first nine months of 2011 was €229 million, following €526 million during the same prior year period. The reduction was primarily due to the increase in working capital resulting from the growth in business volume and to increased capital expenditures. Capital expenditures amounted to €524 million, significantly more than the €202 million spent during the prior year period. "Our capital expenditures are within the target range of six to eight percent of sales as planned. We were able to continually improve free cash flow during the first nine months despite the higher capital expenditure requirements. This highlights the Schaeffler Group's sustained strong profitability," said Klaus Rosenfeld, CFO of Schaeffler AG.
The March 2011 refinancing arrangement, which has now been fully implemented, has increased net financial debt to approximately €7.1 billion at the end of the third quarter. The leverage ratio, calculated as net financial debt over EBITDA for the past twelve months, amounted to 3.1.
Schaeffler Group employed approximately 73,000 staff worldwide at the end of the first nine months, up 8.1 percent from year-end 2010. Germany had more than 29,000 employees, an increase of 4.6 percent.
Forecast for 2011 confirmed
"Following the encouraging performance of our business during the first nine months of 2011 we continue to expect demand for our components, modules and systems to be stable for the rest of the year. We are currently seeing first indications of a slowdown in demand in the European markets. However, on a global basis, our orders in hand remain solid. We currently anticipate sales for the fourth quarter to increase slightly from prior year levels," stated Dr. Juergen M. Geissinger. "On this basis, we are confident that we will achieve our forecast of generating sales growth of more than 10 percent and an EBIT margin of more than 13 percent for 2011 as a whole."
Nevertheless, Schaeffler Group is monitoring the current financial and debt crisis very closely. Continuing turmoil in the financial markets and a further deepening of the debt crisis in Europe and the US may have a sustained negative impact on economic growth. In addition, increasing commodity prices, particularly for steel, and higher labor costs may have a negative effect on margins.
Schaeffler Group is well prepared for possible negative economic changes, thanks to the strong growth in earnings, the successful refinancing arrangement concluded in March of this year and the continued increase in its structural flexibility in recent years. "As a leading global automotive and industrial supplier, we benefit particularly from our technological leadership, innovative products, excellent quality, as well as our strong regional presence in the growth markets," said Dr. Juergen M. Geissinger. "We expect our growth to continue to exceed that of our core markets, despite an increasingly difficult market environment."
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Schaeffler Group with its brands INA, FAG, and LuK is a leading global manufacturer of rolling bearings and linear products as well as a renowned supplier of high-precision components and systems for engines, transmissions and chassis applications to the automotive industry. The Schaeffler Group stands for exceptional customer focus, strong innovative ability and maximum quality. In its 180 locations in more than 50 countries, Schaeffler Group generated sales of approximately €9.5 billion in 2010. With over 70,000 employees worldwide, Schaeffler Group is one of the largest family-owned industrial companies in Germany and Europe.