DGAP-News: Schaeffler AG: Earnings quality improved in third quarter, measures taken making an impact
DGAP-News: Schaeffler AG
/ Key word(s): Quarterly / Interim Statement/9 Month figures
Earnings quality improved in third quarter, measures taken making an impact - Revenue of 10.8 billion euros for the first nine months at prior year level - EBIT margin before special items improved to 8.1 percent in Q3 - Strong free cash flow before cash in- and outflows for M&A activities generated in Q3 (362 million euros) - Automotive OEM division also reports outperformance in Q3, Industrial division reports weaker growth in Q3 than in H1 - Efficiency measures are making an impact and are being consistently pushed ahead - Current year outlook confirmed for the group and the divisions
The Schaeffler Group generated earnings before financial result, income (loss) from equity-method investees, and income taxes (EBIT) of 795 million euros (prior year: 1,149 million euros) in the first nine months. These earnings were affected by special items for the reporting period of 88 million euros, largely consisting of expenses related to the efficiency program RACE in the Automotive OEM division. The resulting EBIT before special items amounted to 883 million euros (prior year: 1,150 million euros), representing an EBIT margin before special items of 8.1 percent (prior year: 10.7 percent). The decline from the prior year was primarily attributable to the decrease in gross margin. The lower margin is largely due to an adverse impact of selling prices and increased production costs. The margin trend was also hampered by higher administrative expenses. The EBIT margin before special items improved from 7.9 percent in the second quarter to 9.1 percent in the third quarter.
The Americas region reported constant currency revenue growth of 8.6 percent in the reporting period, the highest constant currency growth rate of the Automotive OEM division's four regions, primarily as a result of a few major customers' increased requirements resulting from product ramp-ups. The Asia/Pacific region generated revenue growth of 2.1 percent. Revenue fell considerably in the Greater China and Europe regions, declining by 6.0 percent and 5.2 percent, respectively. The decreases in the Greater China and Europe regions were driven by the considerable decline in automobile production in both these regions. The Greater China region generated 7.1 percent in additional revenue at constant currency in the third quarter, partly due to the low growth rate in the prior year period. The E-Mobility business division reported the largest growth of the four Automotive OEM business divisions, increasing its revenue by 38.8 percent at constant currency. The growth in the E-Mobility business division was mainly attributable to product ramp-ups of primary components for continuously variable transmissions (CVTs) and in the actuators field. Revenue of the Chassis Systems BD increased by 0.5 percent, partly due to a favorable trend in revenue from chassis actuators. The Transmission Systems business division reported a decline in revenue by 6.1 percent, due especially to lower demand for components for manual transmissions. Revenue in the Engine Systems business division was down 2.6 percent, although the thermal management module generated extensive additional revenue for this business division during the reporting period. The division earned 371 million euros (prior year: 592 million euros) in EBIT before special items in the first nine months. This resulted in an EBIT margin before special items for the period of 5.5 percent, significantly less than the 8.7 percent EBIT margin reported in the prior year. The decline was primarily due to the lower gross margin resulting from lower volumes and the impact of pricing and the revenue mix, as well as to high fixed costs and the increase in administrative expenses. According to the current guidance for the Automotive OEM division for the full year 2019 dated July 29, 2019, the division is expected to generate constant currency revenue growth of minus 2 to 0 percent and an EBIT margin before special items of between 5 and 6 percent.
These developments resulted in EBIT before special items of 219 million euros (prior year: 266 million euros). This represents an EBIT margin before special items of 15.8 percent (prior year: 18.9 percent). The decrease compared to the prior year is primarily attributable to the reduced gross margin and higher administrative expenses. The division's gross margin declined due to lower sales volumes combined with increased product costs. Based on the guidance dated July 29, 2019, the group expects the Automotive Aftermarket division to generate revenue growth of minus 2 to 0 percent at constant currency and an EBIT margin before special items of 15 to 16 percent for the full year 2019.
The Industrial division generated approximately 292 million euros (prior year: 292 million euros) in EBIT before special items for the first nine months, representing an EBIT margin before special items of 10.9 percent (prior year: 11.5 percent). The guidance for the Industrial division's constant currency revenue growth for the full year 2019 is 2 to 4 percent. The division is expected to generate an EBIT margin before special items of 10 to 11 percent.
"Strong discipline regarding cost and capital will remain our focus in the final quarter as well. We will further reduce the capex ratio compared to the third quarter and continue to concentrate on generating cash flow," said Dietmar Heinrich, CFO of Schaeffler AG. Net financial debt as at September 30, 2019, declined to 2,842 million euros, decreasing the gearing ratio, i.e. the ratio of net financial debt to shareholders' equity, to approximately 103.1 percent (December 31, 2018: approximately 83 percent). Total assets amounted to 13,127 million euros as at September 30, 2019 (December 31, 2018: 12,362 million euros). The group employed a workforce of 89,036 at the reporting date (December 31, 2018: 92,478), a decline of 3.7 percent. Based on the adjusted full-year guidance dated July 29, 2019, the Schaeffler Group anticipates revenue growth of minus 1 to 1 percent at constant currency, an EBIT margin before special items of 7 to 8 percent, and free cash flow before cash in- and outflows for M&A activities of 350 to 400 million euros. "We did well in the third quarter in a persistently challenging market environment. The measures we have taken to become more flexible are making an impact, the transformation is gathering speed and our three divisions' efficiency programs are being implemented consistently. My fellow Managing Directors and I are confident that we will meet our full-year guidance for 2019," stated Klaus Rosenfeld, CEO of Schaeffler AG.
About Schaeffler Contact:
05.11.2019 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. |
Language: | English |
Company: | Schaeffler AG |
Industriestr. 1-3 | |
91074 Herzogenaurach | |
Germany | |
Phone: | 09132 - 82 0 |
E-mail: | [email protected] |
Internet: | www.schaeffler.com |
ISIN: | DE000SHA0159 |
WKN: | SHA015 |
Indices: | SDAX |
Listed: | Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart, Tradegate Exchange; Luxembourg Stock Exchange |
EQS News ID: | 904389 |
End of News | DGAP News Service |
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904389 05.11.2019
Schaeffler AG Stock
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