- Schaeffler Group revenue increases by 3.8 percent at constant currency in the first half of 2017; EBIT margin before special items at 11.1 percent
- Weak performance of the Automotive division impacts group earnings in the second quarter
- Industrial business back on growth course, margin further stabilized
The Automotive division increased its revenue by 4.3 percent at constant currency in the first half of 2017 (Q1: +7.0 percent, Q2: +1.6 percent). The EBIT margin before special items in the Automotive division was 11.8 percent (Q1: 13.1 percent, Q2: 10.4 percent). The reduction of second quarter earnings of EUR 90 million was primarily due to the following factors: (1) temporary supply chain shortages in the automotive aftermarket business, (2) higher development cost and other expenses due to additional projects in the field of e-mobility, as well as (3) price pressure in the automotive OEM business, which could not be compensated by corresponding production cost optimization. In addition, (4) rising costs for new product launches impacted the result. Approximately two thirds of the earnings decline are of a temporary nature and are expected to be partially recovered in the next quarters.
Klaus Rosenfeld, CEO of Schaeffler AG, said: “The performance of our Automotive business in the second quarter was below our expectations. The reasons for the development are predominantly of a temporary nature. We expect that we will improve the profitability of the Automotive division in the second half of the year”.
The Industrial division experienced an encouraging second quarter, reporting revenue growth of 2.3 percent at constant currency for the first half year (Q1: +0.2 percent, Q2: +4.5 percent). The Power Transmission and Industrial Automation sectors as well as the Americas and Greater China regions experienced a particularly positive trend. The EBIT margin before special items in the Industrial division was 8.5 percent (Q1: 8.7 percent, Q2: 8.4 percent). The cost end efficiency measures of program “CORE” are consistently executed and are proving sustainably effective.
Free cash flow of minus EUR 89 million (prior year: EUR 216 million) in the first half year was affected by non-recurring one-time effects. Excluding these one-time effects, Free cash flow would have been EUR 47 million in the first half of 2017 (prior year: EUR 202 million).
For 2017, the Schaeffler Group continues to anticipate after the ad-hoc notice from June 26, 2017 revenue growth of 4 to 5 percent at constant currency. Based on this revenue growth, the company expects to generate an EBIT margin before special items of between 11 and 12 percent (before: 12-13 percent). The Schaeffler Group is anticipating approximately EUR 500 million in free cash flow for 2017 (before: approximately EUR 600 million).
The company will issue its interim report as at June 30, 2017 on August 8, 2017.
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.