DGAP-News: Schaeffler AG: Schaeffler Group in challenging environment with strong cash flow in 2019
DGAP-News: Schaeffler AG
/ Key word(s): Annual Results
- Revenue 2019 at prior year level despite demanding environment, EBIT margin before special items of 8.1 percent below prior year (9.7 percent) - Schaeffler Group and divisions meet adjusted guidance - Free cash flow before cash in- and outflows for M&A activities of 473 million euros increased considerably (prior year 384 million euros) - Proposed dividend of 45 cents per common non-voting share - Guidance for 2020 reflects conservative market assessment
The Schaeffler Group generated earnings before financial result, income (loss) from equity-method investees, and income taxes (EBIT) of 790 million euros (prior year: 1,354 million euros) in 2019. These earnings were affected by special items for the reporting period of 372 million euros, largely consisting of 356 million euros in expenses related to the transformation and efficiency programs established in 2019 - RACE (Automotive OEM), GRIP (Automotive Aftermarket), and FIT (Industrial). The corresponding EBIT before special items amounted to 1,161 million euros (prior year: 1,381 million euros), representing an EBIT margin before special items of 8.1 percent (prior year: 9.7 percent). Along with the persistently challenging environment, the decline in EBIT margin before special items was largely attributable to an adverse impact of selling prices and a change in product mix in the Automotive OEM division. The margin trend was also held back by expenses for IT and digitalization projects. Net income attributable to shareholders of the parent company for the reporting period amounted to 428 million euros, falling considerably short of the prior year level (881 million euros). Earnings per common non-voting share were 0.65 euros (prior year: 1.33 euros). On that basis, Schaeffler AG's Board of Managing Directors will propose a dividend of 45 cents to the annual general meeting. This represents a dividend payout ratio of approximately 43 percent (prior year: approximately 40 percent) of net income attributable to shareholders before special items. Klaus Rosenfeld, CEO of Schaeffler AG, commented on the performance of the business in 2019: "In a challenging environment, we were able to meet our guidance for revenue growth as adjusted in July and slightly surpass the EBIT margin target. Even more encouraging is our strong free cash flow of 478 million euros, which was considerably higher than expected. Our earnings for 2019 prove that our positioning as a global automotive and industrial supplier is invaluable. In addition, we are seeing that the measures we have taken to strengthen our cost and capital efficiency as well as the three divisional programs RACE, GRIP, and FIT are paying off."
The Automotive OEM division generated the largest increase in revenue at constant currency in the Americas region with 7.4 percent, followed by Greater China with 1.8 percent, while revenue experienced a significant decline of 6.0 percent in the Europe region and decreased by 0.7 percent in Asia/Pacific as well. Of the four Automotive OEM division business divisions, the E-Mobility business division was the only one to considerably increase its revenue, raising it by 36.7 percent at constant currency. The division earned 491 million euros (prior year: 673 million euros) in EBIT before special items in 2019. This resulted in an EBIT margin before special items of 5.4 percent for the period, significantly less than the 7.5 percent EBIT margin reported in the prior year. Special items amounted to 209 million euros and included 204 million euros related to the program RACE. The decline in the EBIT margin before special items was primarily attributable to gross margin decreasing to 20.6 percent (prior year: 22.3 percent), mainly due to a price-driven drop in revenue and a change in product mix. In addition, gross margin was adversely affected by higher fixed costs. The division met the adjusted full-year guidance for 2019 issued July 29, 2019, which called for it to generate constant currency revenue growth of minus 2 to 0 percent and an EBIT margin before special items of 5 to 6 percent.
These developments resulted in EBIT before special items of 298 million euros (prior year: 339 million euros). This represents an EBIT margin before special items of 16.1 percent (prior year: 18.2 percent). Special items amounted to 15 million euros and were related to the program GRIP. The decrease in EBIT margin compared to the prior year is primarily attributable to the lower gross margin and higher administrative expenses. The decline in the division's gross margin was due to lower sales volumes combined with increased product costs. The division met the adjusted full-year guidance for 2019 issued July 29, 2019, which called for the Automotive Aftermarket division to generate constant currency revenue growth of minus 2 to 0 percent. The target of achieving an EBIT margin before special items of 15 to 16 percent was slightly exceeded.
The Industrial division generated 373 million euros in EBIT before special items in 2019 (prior year: 370 million euros), representing an EBIT margin before special items of 10.5 percent (prior year: 10.9 percent). Special items amounted to 147 million euros and included 137 million euros related to the program FIT. The targets set in the adjusted guidance issued on July 29, 2019, of increasing revenue by between 2 and 4 percent and generating an EBIT margin before special items of 10 to 11 percent were met.
The group's net financial debt amounted to 2,526 million euros as at December 31, 2019 (December 31, 2018: 2,547 million euros). The related gearing ratio, i.e. the ratio of net financial debt to shareholders' equity, rose to 86.6 percent (December 31, 2018: 83.2 percent). As at December 31, 2019, the Schaeffler Group had total assets of approximately 12.9 billion euros (prior year: approximately 12.4 billion euros) and employed a workforce of 87,748 (prior year: 92,478), a reduction of approximately 5.1 percent. Dietmar Heinrich, CFO of Schaeffler AG, said: "As announced at the presentation of the results for the third quarter of 2019, our efforts through to the end of 2019 concentrated on generating free cash flow. By further reducing the capex ratio and efficiently managing inventories in the final quarter, we were quite successful in doing so".
The Schaeffler Group expects its revenue to grow by minus 2 to 0 percent at constant currency in 2020. In addition, the company expects to generate an EBIT margin before special items of 6.5 to 7.5 percent in 2020. The Schaeffler Group also anticipates between 300 and 400 million in free cash flow before cash in- and outflows for M&A activities for 2020. The targets for the three divisions are as follows:
1) at constant currency; 2) before special items "Our guidance for 2020 is intentionally conservative. It reflects what we know, at the beginning of March, about current environment- and market-related trends. No-one can say at this point how the corona crisis will develop. Nevertheless, we will do everything we can to meet our targets," Klaus Rosenfeld stated. On March 24, 2020, the Schaeffler Group will communicate its Roadmap 2024 comprising the updated strategy for the years 2020-2024, a new transformation program to implement that strategy, and the medium-term targets for this period at a press conference and capital markets day in Herzogenaurach.
About Schaeffler Contacts
10.03.2020 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: | 993287 |
End of News | DGAP News Service |
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993287 10.03.2020
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