Schffler is driving Mobility for tomorrow - positive grow prospects for 04

2014-03-20 | 000-004-913 DE-EN

SCHAEFFLER AG, HERZOGENAURACH

Schaeffler is driving Mobility for tomorrow - positive growth prospects for 2014

Growth strategy continued - 2013 revenue at constant currency increases 2.9%, Automotive grows by 8.6%

Earnings quality maintained - adjusted EBIT margin at 12.6% (prior year: 12.7%)

Organizational and leadership structure realigned - One Schaeffler program started

Positive outlook - revenue growth of 5 to 7% expected for 2014

International automotive and industrial supplier Schaeffler has successfully continued its growth strategy in 2013. The company generated growth of 2.9 percent at constant currency. Its Automotive division grew by 8.6 percent at constant currency, while Industrial division revenue, which makes up approximately 27 percent of the Schaeffler Group's total revenue, declined by 8.1 percent at constant currency. Our two divisions, Automotive and Industrial, experienced very different trends in 2013. While our Automotive business grew considerably faster than the market, Industrial division revenue was below the prior year level due to market factors, said Klaus Rosenfeld, CEO of Schaeffler AG. Including the adverse impact of currency translation, the Schaeffler Group's revenue for 2013 grew by 11.2 billion, a 0.7 percent increase.

Earnings quality maintained - strong free cash flow

Adjusted for special items, earnings before financial result, share of net income of equity-accounted investees, and income taxes (EBIT) of 1,410 million were in line with prior year. Schaeffler's adjusted EBIT margin of 12.6 percent remained high (prior year: 12.7 percent). Special items consist of personnel-related structural measures of 48 million and the provision for the EU antitrust proceedings of 380 million. Including special items, EBIT amounted to 982 million (prior year: 1,413 million) and the EBIT margin was 8.8 percent.

Net income after non-controlling interests was 865 million (prior year: 870 million). The amount includes Schaeffler's 801 million (prior year: 554 million) share of net income of Continental AG, including a 187 million gain on the disposal of a 1.95 percent interest in Continental AG held by Schaeffler Group in the third quarter of 2013.

Free cash flow amounted to 629 million, an improvement of 248 million over the prior year (prior year: 381 million), and includes a dividend of 162 million related to the investment in Continental AG. Capital expenditures on property, plant and equipment and intangible assets were 572 million or approximately 5 percent of revenue as planned.

Schaeffler Group has taken additional measures to optimize its capital structure in 2013. These measures have further lowered Schaeffler's borrowing cost. The company also prepaid 1.1 billion of its financial debt, reducing it to 6.3 billion using excess free cash flow and the proceeds of the sale of an approximately 2 percent interest in Continental AG. As a result, net financial debt (financial debt less cash and cash equivalents) decreased to approximately 5.9 billion (prior year: 6.8 billion). The decrease brought the company's debt to EBITDA ratio, defined as the ratio of net financial debt to adjusted EBITDA, down to 2.6 at December 31, 2013 (prior year: 3.2).

The Group's headcount increased by 2,460 employees or 3.2 percent to 78,559 at December 31, 2013. Schaeffler recruited new personnel primarily in production and production-related areas - mainly in the regions Asia/Pacific, North America, and Europe, primarily in Central Europe.

Organizational and leadership structure realigned - One Schaeffler program established

In order to better utilize its growth potential, Schaeffler Group has realigned its organizational and leadership structure. The target operating model developed in 2013 is based on a consistent matrix organization with three dimensions: divisions, functions, and regions. Schaeffler Group has redrawn its regions effective January 1, 2014: In light of its growing global economic importance, Greater China was designated a separate region, while Korea, Japan and the countries in Southeast Asia were combined to form the new region Asia/Pacific . India has become part of the newly created region Europe , which includes not only Germany, but also the EU-countries, the Middle East, Africa, and Russia. In addition, the former regions North and South America have been combined into one region Americas . The regions will be headed up by regional CEOs who are part of Schaeffer Group's extended executive board. Thus, the composition of the extended executive board reflects all three of the matrix organization's dimensions.

In addition, the company started the One Schaeffler program in November 2013, which - based on the continuous improvement process that has been in place for years - comprises the 20 most important improvement initiatives of the Schaeffler Group worldwide. One of the key common objectives of the initiatives is to harmonize the structures and processes within the company and to integrate them to a greater extent than has been the case in the past in order to utilize internal synergies and make the company more efficient.

Schaeffler is shaping Mobility for tomorrow

Schaeffler Group also honed the strategic focus of its growth strategy in 2013. Based on the megatrends and changing market conditions driving the Group's business, Schaeffler is focusing on the themes environmentally friendly drives , urban and interurban mobility , and energy chain . Prof. Dr Peter Gutzmer, Chief Technology Officer of Schaeffler Group, commented: We are a development partner with comprehensive systems expertise for the drive train, both for vehicles with internal combustion engines and for hybrid and electric mobility solutions. Our strength lies in a

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