Schaeffler business maintains high-level performance
2012-11-20 | Herzogenaurach
- Revenue increases 4.2 percent to around €8.4 billion during first nine months
- Earnings quality remains high: EBIT margin at 13.6 percent
- Free cash flow for third quarter at €92 million
- S&P and Moody’s upgrade company rating
- 2012 growth expectation updated, earnings target unchanged
Schaeffler, international supplier to the automotive and industrial sector, continued to perform well during the first nine months of the year despite difficult economic conditions. “The situation in our markets deteriorated further during the third quarter. Our Industrial business in particular felt the impact of the difficult economic conditions in Europe and the slowdown in the economic development of the emerging countries over the course of the third quarter. However, we were able to again grow profitably within this challenging environment during the third quarter,” stated Schaeffler AG CEO Dr. Juergen M. Geissinger.
The Schaeffler Group’s revenue increased by four percent to approximately €8.4 billion during the first nine months of 2012. The Automotive division expanded by seven percent to approximately €5.8 billion, while Industrial division revenue remained stable at approximately €2.6 billion. Regional revenues for the first three quarters still varied. While revenue growth in North America accelerated slightly to 20 percent, revenue for the Asia/Pacific region rose by ten percent, less than during the first six months. Growth in Europe amounted to one percent. South American revenue fell by twelve percent.
As expected, the company’s EBIT of €1,144 million fell short of the exceptionally high prior year level of €1,349 million. The EBIT margin for the first nine months was 13.6 percent (prior year: 16.7 percent). Net income for the period excluding non-controlling interests amounted to €731 million (prior year: €743 million).
Operating cash flow rose by 8.1 percent to €783 million (prior year: €724 million) during the first nine months. Capital expenditures amounted to €672 million (prior year: €514 million). Thus, Schaeffler generated free cash flow of €122 million (prior year: €229 million) during the first three quarters. “The proactive management of our cash flow is a key challenge for the Schaeffler Group. During the third quarter, we could improve free cash flow to €92 million. We expect free cash flow to be positive again in the fourth quarter,” said Klaus Rosenfeld, CFO of Schaeffler AG.
Schaeffler reduced its net financial debt slightly from the previous quarter to approximately €6.7 billion (end of June 2012: €6.8 billion). The leverage ratio was 3.2. On the basis of the refinancing arrangement completed during the first six months, the rating agencies Standard & Poor’s and Moody’s have upgraded Schaeffler AG’s company rating. Standard & Poor’s has assigned a “B+” rating to Schaeffler with a stable outlook, while Moody’s rates Schaeffler AG at “B1” with a positive outlook.
Outlook for 2012
The company does not expect global economic growth to revive during the fourth quarter of 2012. The current uncertainties particularly in the euro area and lower growth in Asia are dampening prospects. Looking to the final quarter, Dr. Geissinger stated: “We currently expect the volatile and challenging environment in key market sectors to continue. We are forecasting a further decline in demand in the fourth quarter, which will result in a temporary adjustment to our capacities. Given the current conditions in the market, it is more important than ever that we continue to improve our business processes, keep focusing on costs, and position our company towards the future.”
In light of this, although the Schaeffler Group expects to continue growing faster than the market, it no longer expects to meet the previous annual revenue growth target of more than 5 percent. Instead, the company now anticipates revenue growth of approximately 4 percent for 2012 as a whole. Schaeffler is maintaining its ambitious profitability target. “Our expectation of generating an EBIT margin in excess of 13 percent for 2012, thus meeting the target for the year as a whole, remains unchanged,” emphasized Dr. Geissinger.
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.
Publisher: Schaeffler AG
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