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Strategy

Financial Ambitions 2020

We have set ourselves challenging targets for 2020. In the next four years we want our sales – adjusted for currency effects – to increase by an average of 4–6% p. a. and to achieve an EBIT margin of 12–13%. On this basis, we want to achieve a free cash flow of around € 900 million by 2020. Furthermore, we intend to increase our Earnings per share to around € 2.00 in 2020.

In addition to these operational indicators, it is critically important for the success of the Schaeffler Group to further improve our financial flexibility and the quality of our balance sheet. For this purpose we have set ourselves the task of managing the Net-debt-to-equity ratio – known as gearing ratio, the quotient of the two variables – to be less than 75% by 2020. Moreover, we are planning to pay out dividends amounting to 30–40% of the annual net-income to the shareholders. Summarizing the Financial Ambitions we want to maintain and secure in the long-term the Investment Grade Rating gained in 2016 as the basis for further growth strategies.

Sales growth1)
Ø 4 – 6% p. a. (FX-adjusted)
EBIT margin
12 – 13% p. a. (Before one-off effects)
Free cashflow1)
~ € 900 million in 2020
Earnings per share1)
~ € 2.00 per share in 2020
Gearing ratio2)
< 75% in 2020
Dividend3)
30 – 40 % of Net-income

1) Excluding external growth
2) Net-debt-to-equity ratio (excluding pensions)
3) Payout ratio based on net-income

Market assumptions
Automotive industry: Global growth in car production of 2%
Industry: Low single digit growth in global industrial production

All these ambitions can ultimately be merged into one key objective. We want to continue to grow profitably and create sustainable value. Following the successful realignment of our capital structure and our renewed financial flexibility resulting from the reduced level of debt, we will no longer rely only on purely organic growth. As part of our strategy, we want to consider making selected smaller acquisitions in the sectors, where we intend to expand and strengthen our core competencies. In order to appropriately manage the risks of such an acquisition strategy and to enable long-term active portfolio management, we will optimize our Group structure and establish a professional M&A process.