Schaeffler Reports Strong Third Quarter Despite Challenging Market Conditions
- Schaeffler Group increases revenue for the first nine months of 2023 by 6.6% at constant currency to 12.3 billion euros (prior year: 11.8 billion euros), revenue for the third quarter increases by 0.5% at constant currency
- EBIT margin before special items for the reporting period at 7.9% (prior year: 6.9%), third-quarter EBIT margin before special items at 8.4%
- Automotive Technologies and Automotive Aftermarket considerably improve earnings
- Improvement in free cash flow before cash in- and outflows for M&A activities to 211 million euros in the reporting period (prior year: 35 million euros)
- Overall Group guidance confirmed
Schaeffler AG published its results for the first nine months of 2023. The Schaeffler Group’s revenue for the reporting period amounted to 12,270 million euros (prior year: 11,790 million euros). The 6.6% constant-currency increase in revenue compared to the prior-year period was especially attributable to higher volumes at all divisions.
A favourable impact from sales prices in the three divisions further bolstered the revenue trend. Revenue for the third quarter of 2023 rose by 0.5% at constant currency to 4,062 million euros.
In the Automotive Technologies division, the 5.4% constant-currency revenue growth in the first nine months of the year resulted mainly from a market-driven increase in volumes at the Engine & Transmission Systems, Bearings, and Chassis Systems business divisions.
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The 14.5% constant-currency rise in revenue at the Automotive Aftermarket division was primarily driven by considerable volume growth in the Europe region. In the Industrial division, the constant-currency revenue growth of 5.7% in the reporting period was largely attributable to the contribution made by the Ewellix Group, which was acquired at the beginning of the year.
The Europe region saw the highest constant-currency rise in revenue of 11.1%. Asia/Pacific region revenue was up 8.7% at constant currency, while revenue in the Americas and Greater China regions was 3.7% and 0.2% above the prior-year level, respectively, at constant currency.
The Schaeffler Group generated 965 million euros (prior year: 813 million euros) in EBIT before special items in the first nine months, representing an EBIT margin before special items of 7.9% (prior year: 6.9%) and an improvement in EBIT before special items of approximately 19% year on year.
The increase in EBIT margin before special items was largely attributable to the favourable impact of volumes and sales prices. The EBIT margin before special items for the third quarter was 8.4%.
Key financials of the Schaeffler Group
| 01/01-09/30 | 3rd quarter | |||||||||||
| in € millions | 2023 | 2022 | Change in % | 2023 | 2022 | Change in % | ||||||
| Revenue | 12,270 | 11,790 | 4.1 | 4,062 | 4,242 | -4.2 | ||||||
| • at constant currency | 6.6 | 0.5 | ||||||||||
| EBIT before special items 1 | 965 | 813 | 18.7 | 340 | 355 | -4.1 | ||||||
| • in % of revenue | 7.9 | 6.9 | – | 8.4 | 8.4 | – | ||||||
| Free cash flow 2 | 211 | 35 | – | 182 | 240 | – | ||||||
| 09/30/2023 | 12/31/2022 | Change in % | ||||||||||
| Shareholders’ equity 3 | 4,263 | 4,141 | 2.9 | |||||||||
| Net financial debt | 3,072 | 2,235 | 37.4 | |||||||||
| Net financial debt to EBITDA ratio 4 before special items 1 | 1.4 | 1.1 | ||||||||||
| Employees | 83,600 | 82,773 | 1.0 | |||||||||
1 Please refer to the interim statement 9M 2023, pg. 9, for the definition of special items.
2 Before cash in- and outflows for M&A activities.
3 Including non-controlling interests.
4 Net financial debt to EBITDA ratio before special items (LTM).
Automotive Technologies – EBIT margin before special items for the first nine months of 4.8%
The Automotive Technologies division generated 7,280 million euros in revenue in the first nine months (prior year: 7,068 million euros). The constant-currency revenue growth of 5.4% in the reporting period resulted primarily from a market-driven increase in volumes.
Sales prices had an additional slightly favourable impact on revenue. Revenue growth at constant currency was less than the trend in global automobile production overall.
At 11.3%, the Europe region reported the highest constant-currency growth in the reporting period. In the Asia/Pacific region, revenue rose by 9.7% at constant currency, while the Greater China and Americas regions recorded year-on-year declines in revenue of 0.1% and 0.5%, respectively, at constant currency.
E-Mobility order intake for the first nine months was 2.9 billion euros, already at the upper end of the 2 to 3 billion euro range targeted for the full year.
The division generated 349 million euros (prior year: 214 million euros) in EBIT before special items in the first nine months. The EBIT margin before special items for the same period was 4.8%, ahead of the 3.0% reported in the prior year.
The EBIT margin before special items for the third quarter was 5.8%. The increase in EBIT margin before special items in the first nine months of 2023 was mainly attributable to the impact of volumes and sales prices.
Automotive Aftermarket – constant currency revenue growth at 14.5% and continued strong EBIT margin
The Automotive Aftermarket division generated revenue of 1,716 million euros (prior year: 1,518 million euros) in the reporting period, representing constant-currency revenue growth of 14.5% year on year.
The constant-currency increase in revenue was largely the result of considerably higher volumes. The impact of sales prices contributed to growth as well. Rises in procurement costs were passed on to the market.
The constant-currency revenue growth was driven by all regions. The Europe region, which generates the highest revenue, saw a 13.9% rise in revenue at constant currency.
In the Greater China region, revenue was up 24.7% year on year at constant currency. In the Asia/Pacific region, revenue increased by 14.2% at constant currency, while the Americas region reported constant-currency revenue growth of 13.3%.
EBIT before special items amounted to 290 million euros (prior year: 202 million euros), which represents an EBIT margin before special items of 16.9% (prior year: 13.3%). The EBIT margin before special items for the third quarter was 16.7%.
The increase in EBIT margin before special items was predominantly the result of a higher gross profit margin due to a favourable revenue mix during the reporting period as well as adjustments to sales prices.
Industrial – market-driven decline in EBIT margin before special items
The Industrial division generated total revenue of 3,274 million euros in the first nine months of the year (prior year: 3,205 million euros). The constant-currency revenue growth of 5.7% was primarily attributable to the contribution made by the Ewellix Group, which was acquired at the beginning of the year. Especially a favourable impact of sales prices contributed to growth as well.
At 11.5%, the Americas region generated the largest constant-currency increase in revenue in the first nine months. Revenue in the Europe region was up 8.6% at constant currency, while the Asia/Pacific region reported a constant-currency rise in revenue of 5.5%. In the Greater China region, revenue decreased by 1.9% year on year at constant currency, as the revenue trend was adversely affected by the increasingly weaker market environment.
The Industrial division generated 326 million euros (prior year: 397 million euros) in EBIT before special items in the first nine months, representing an EBIT margin before special items of 9.9% (prior year: 12.4%).
The EBIT margin before special items for the third quarter was 9.7%. The EBIT margin was primarily adversely affected by the impact of the market trend in the Greater China region.
| Key financials by division | ||||||||||||
| 01/01-09/30 | 3rd quarter | |||||||||||
| in € millions | 2023 | 2022 1 | Change in % | 2023 | 2022 | Change in % | ||||||
| Automotive Technologies | ||||||||||||
| Revenue | 7,280 | 7,068 | 3.0 | 2,440 | 2,554 | -4.5 | ||||||
| • at constant currency | 5.4 | 0.2 | ||||||||||
| EBIT before special items 2 | 349 | 214 | 62.8 | 142 | 122 | 16.0 | ||||||
| • in % of revenue | 4.8 | 3.0 | – | 5.8 | 4.8 | – | ||||||
| Automotive Aftermarket | ||||||||||||
| Revenue | 1,716 | 1,518 | 13.0 | 584 | 548 | 6.7 | ||||||
| • at constant currency | 14.5 | 8.8 | ||||||||||
| EBIT before special items 2 | 290 | 202 | 44.0 | 98 | 73 | 33.4 | ||||||
| • in % of revenue | 16.9 | 13.3 | – | 16.7 | 13.4 | – | ||||||
| Industrial | ||||||||||||
| Revenue | 3,274 | 3,205 | 2.2 | 1,038 | 1,140 | -9.0 | ||||||
| • at constant currency | 5.7 | -3.0 | ||||||||||
| EBIT before special items 2 | 326 | 397 | -17.9 | 100 | 159 | -36.9 | ||||||
| • in % of revenue | 9.9 | 12.4 | – | 9.7 | 13.9 | – | ||||||
1 Prior-year information presented based on 2023 segment structure.
2 Please refer to the interim statement 9M 2023, pg. 9, for the definition of special items.
Free cash flow – significant improvement year on year
Free cash flow before cash in- and outflows for M&A activities was a strong 182 million euros in the third quarter of 2023. As a result, the Schaeffler Group had a strong increase in free cash flow before cash in- and outflows for M&A activities of 211 million euros in the reporting period (prior year: 35 million euros). The increase resulted especially from working capital expanding less extensively than in the prior year. At the same time, investing activities were above the prior-year period.
“With increases in profitability and free cash flow, the third quarter once again underscores our financial strength enabling us to rapidly and successfully focus our business areas on the future,” says Claus Bauer, CFO of Schaeffler AG.
Net income attributable to shareholders of the parent company amounted to 417 million euros in the reporting period (prior year: 475 million euros). Net income before special items rose to 501 million euros in the first nine months of 2023 (prior year: 464 million euros). Earnings per common non-voting share were 0.63 euros (prior year: 0.72 euros). The group employed a workforce of 83,600 as at September 30, 2023.
Overall Group guidance confirmed
At its meeting on October 23, 2023, the Board of Managing Directors of Schaeffler AG confirmed the outlook for the Group as a whole and for the Automotive Technologies and Automotive Aftermarket divisions unchanged as issued on July 25, 2023.
The company now expects the Industrial division to generate constant-currency revenue growth of 4.5 to 5.5% and continues to anticipate an unchanged EBIT margin before special items of between 9 and 11% in 2023.
| Guidance | Schaeffler Group | Autom. Technologies | Autom. Aftermarket | Industrial |
|---|---|---|---|---|
| Revenue growth[1] | 5 to 8% (unchanged) | moderate revenue growth; 0 to 3 %-age points above LVP growth[2] (unchanged) | 10 to 12% (unchanged) | 4.5 to 5.5% (previously 6 to 8%) |
| EBIT margin[3] | 6 to 8% (unchanged) | 3 to 5% (unchanged) | 14 to 16% (unchanged) | 9 to 11% (unchanged) |
| Free cash flow[4] | EUR 300 to 400 million (unchanged) | |||
Current market assumptions for 2023
- Automotive Technologies: LVP growth² of 5 to 7% to up to 88.1 million units[5]
- Automotive Aftermarket: Growth in global vehicle population slightly less than in the prior year, with a slight rise in average age (2022: growth of 2.3%, average age: 10.7 years)[6]
- Industrial: Slight increase in relevant industrial production
“The Schaeffler Group has demonstrated its competitiveness in the current fiscal year and presented encouraging figures,” says Klaus Rosenfeld, CEO of Schaeffler AG. “We are continuing our successful trajectory by consistently implementing our Roadmap 2025. All divisions achieved good results in their markets. Our diversified position has once again ensured our growth, profitability, and value creation.”
Schaeffler (UK) Ltd
- info.uk@schaeffler.com
- http://www.schaeffler.co.uk
- Unit 308 Fort Dunlop Fort Parkway Birmingham B24 9FD GB
About us
Schaeffler Group – We pioneer motion
Schaeffler (UK) Ltd holds a total of 180 years of bearing experience and know-how. As a leading rolling bearing specialist we provide customers with innovative bearing solutions from a single source for a variety of industries, as well as condition based maintenance solutions. Our technical knowledge is second to none. Whatever the application we have the solution for you.
Where we supply to
UK Ireland, Europe, Africa, Asia, Australia, South America, North America
Industries we supply to
Automation, Chemicals, Consultants, Components Electronics, Energy and Power, Food and Beverage, Glass Ceramics Cement, Metals and Minerals, OEM, Paper and Pulp, Pharmaceutical Cosmetics Toiletries, Plastics and Rubber, Recycling, Textiles, Tobacco, Water and Wastewater
