The Schaeffler Group has published its results for the 2019 financial year. Revenue amounted to approximately 14.4 billion euros (prior year: approximately 14.2 billion euros). At constant currency, revenue increased by 0.1%. Sales growth in the two Automotive divisions declined slightly on a currency-adjusted basis, but showed a positive trend in the second half of the year. Sales growth in the Industrial division increased over the reporting year as a whole, but leveled off in the second half of the year. Of the four regions, the Greater China and Americas regions contributed to currency-adjusted sales growth, while sales growth in the Europe and Asia/Pacific regions declined.

Commenting on the course of business in 2019, Klaus Rosenfeld, CEO of Schaeffler AG, said: "In a difficult environment, we were able to meet our revenue growth forecast adjusted in July and slightly exceed our EBIT margin target. Even more pleasing is the strong free cash flow, which significantly exceeded expectations at 478 million euros. The 2019 result shows that our positioning as a global automotive and industrial supplier is proving its worth. Secondly, we can see that the measures we have taken to strengthen capital and cost efficiency as well as the three divisional programs RACE, GRIP and FIT are paying off."

Special effects burden result

The automotive and industrial supplier generated EBIT of EUR 790 million in 2019 (previous year: EUR 1,354 million), which was impacted by special effects of EUR 372 million in the reporting period. The special items are mainly attributable to expenses of EUR 356 million in connection with the RACE (Automotive OEM), GRIP (Automotive Aftermarket) and FIT (Industry) transformation and efficiency programs established in 2019. EBIT before special items thus amounted to EUR 1,161 million (previous year: EUR 1,381 million). This corresponds to an EBIT margin before special items of 8.1% (previous year: 9.7%). In addition to the persistently difficult environment, negative sales price effects and a change in the product mix in the Automotive OEM division were the main reasons for the decline in the EBIT margin before special items. Expenses for IT and digitalization projects also had a negative impact on the margin trend.

Dividend is significantly lower

Consolidated net profit attributable to the shareholders of the parent company amounted to 428 million euros in the reporting period and was therefore significantly below the previous year's level (881 million euros). Earnings per common non-voting share amounted to 0.65 euros (prior year: 1.33 euros). On this basis, the Board of Managing Directors of Schaeffler AG will propose to the annual general meeting the payment of a dividend of 45 cents per common non-voting share. This corresponds to a payout ratio of approximately 43 % (prior year: approximately 40 %) of net income attributable to shareholders before special items.

Commenting on the course of business in 2019, Klaus Rosenfeld, CEO of Schaeffler AG, said: "In a difficult environment, we were able to meet our revenue growth forecast adjusted in July and slightly exceed our EBIT margin target. Even more pleasing is the strong free cash flow, which significantly exceeded expectations at 478 million euros. The 2019 result shows that our positioning as a global automotive and industrial supplier is proving its worth. Secondly, we can see that the measures we have taken to strengthen capital and cost efficiency as well as the three divisional programs RACE, GRIP and FIT are paying off."

Industrial division grows, expectations for 2020 dampened

Industrial business grows, but loses momentum

The Industrial division increased its sales to 3.541 billion euros (previous year: 3.383 billion euros) despite weaker momentum in global industrial production. Adjusted for currency effects, sales growth amounted to 3.1%, with sales in the second half of the year remaining at the previous year's level. Sales growth was driven primarily by the Wind sector cluster in the Greater China region and the Railway sector cluster in the Europe region. The Raw Materials, Aerospace and Industrial Distribution sector clusters also made a positive contribution to growth. The cyclically sensitive Industrial Automation, Offroad and Power Transmission sector clusters recorded a decline in demand. Two of the Schaeffler Group's four regions contributed to revenue growth excluding the impact of currency translation during the reporting period. The Greater China region again generated the largest increase at 23.4 %, ahead of the Americas at 2.9 %, while revenue in Europe declined by 2.4 % and in Asia/Pacific fell slightly by 0.1 %.

In the past financial year, the Industrial division achieved EBIT before special items of 373 million euros (previous year: 370 million euros), which corresponds to an EBIT margin before special items of 10.5% (previous year: 10.9%). The FIT program accounted for 137 million of the special effects totalling 147 million euros.

On July 29, 2019, the Group adjusted its forecast and expected sales growth of between 2% and 4% and an EBIT margin before special items of 10% to 11%. These targets were achieved.

For the 2020 financial year, the industrial and automotive supplier anticipates a currency-adjusted decline in sales of between 2% and 0%. At the same time, the company expects to achieve an EBIT margin before special items of 6.5% to 7.5% for the 2020 financial year. For 2020, the Group also expects a free cash flow before cash inflows and outflows for M&A activities of between EUR 300 and 400 million.

The following targets for sales (adjusted for currency effects) and EBIT margin (before special items) apply to the three divisions

• Automotive OEM:
  Turnover: -2 to 0%
  EBIT margin: 4.5 to 5.5%
• Automotive Aftermarket:
  Turnover 0 to 2 %
  EBIT margin: 13 to 14
• Industry
  Turnover: -2 to 0
  EBIT margin: 9.5 to 10.5%

"Our forecast for 2020 is deliberately cautious. It takes into account what we know about the current environment and market developments at the beginning of March. Nobody can say exactly how the corona crisis will develop at this point in time. Nevertheless, we will do everything we can to achieve our goals," explained Rosenfeld.

On March 24, 2020, the Schaeffler Group will communicate its updated strategy for the years 2020-2024, a new transformation program to implement the strategy and the medium-term targets for this period as part of the Roadmap 2024 at a press conference and a Capital Markets Day in Herzogenaurach.