Schaeffler Capital Market Presentation. September 2015

Transcription

1 Schaeffler Capital Market Presentation September 2015

2 Agenda Schaeffler at a glance Mobility for tomorrow Financial Results H

3 Disclaimer This presentation contains forward-looking statements. The words "anticipate", "assume", "believe", "estimate", "expect", "intend", "may", "plan", "project, "should" and similar expressions are used to identify forward-looking statements. Forwardlooking statements are statements that are not historical facts; they include statements about Schaeffler Group's beliefs and expectations and the assumptions underlying them. These statements are based on plans, estimates and projections as they are currently available to the management of Schaeffler AG. Forward-looking statements therefore speak only as of the date they are made, and Schaeffler Group undertakes no obligation to update any of them in light of new information or future events. By their very nature, forward-looking statements involve risks and uncertainties. These statements are based on Schaeffler AG management's current expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Actual results may differ from those set forth in the forward-looking statements as a result of various factors (including, but not limited to, future global economic conditions, changed market conditions affecting the automotive industry, intense competition in the markets in which we operate and costs of compliance with applicable laws, regulations and standards, diverse political, legal, economic and other conditions affecting our markets, and other factors beyond our control). This presentation is intended to provide a general overview of Schaeffler Group s business and does not purport to deal with all aspects and details regarding Schaeffler Group. Accordingly, neither Schaeffler Group nor any of its directors, officers, employees or advisers nor any other person makes any representation or warranty, express or implied, as to, and accordingly no reliance should be placed on, the accuracy or completeness of the information contained in the presentation or of the views given or implied. Neither Schaeffler Group nor any of its directors, officers, employees or advisors nor any other person shall have any liability whatsoever for any errors or omissions or any loss howsoever arising, directly or indirectly, from any use of this information or its contents or otherwise arising in connection therewith. The material contained in this presentation reflects current legislation and the business and financial affairs of Schaeffler Group which are subject to change. 3

4 1 Schaeffler at a glance Leading integrated automotive and industrial supplier Schaeffler at a glance Leading integrated automotive and industrial supplier of high-precision components and systems Global footprint with around 84,000 employees at about 170 locations in more than 50 countries Above industry average revenue growth and profitability Key financials ( unless otherwise indicated) 2014 H Sales 12,124 6,732 % growth (y-o-y) 8.2% 12.4% EBITDA 2,172 1,161 % margin 17.9% 17.2% EBIT 1, % margin 12.6% 12.2% EBIT margin (Automotive) 13.7% 12.8% EBIT margin (Industrial) 9.2% 10.3% Sales by division (2014) Industrial OEM 16% Sales by region (2014) Asia/Pacific 10% Industrial Aftermarket 10% Automotive Aftermarket 13% 23% 77% Automotive OEM 61% Greater China 13% 2) Americas 20% Europe 57% 1) 1) EMEA, Russia and India 2) China, Hong Kong and Taiwan 4

5 1 Schaeffler at a glance Strong track record of above-average growth and profitability Development of sales 2006 LTM ) in EUR bn Development of EBIT and EBIT margin 2006 LTM 2015 in EUR bn CAGR +5% ) LTM H1 15 Sales growth (y-o-y) 4.7% 8.4% -1.2% -17.6% 29.4% 12.6% 4.0% 0.7% 8.2% 11.1% LTM H1 15 EBIT margin 12.9% 12.6% 11.7% 6.1% 15.9% 16.2% 13.2% 12.4% 12.6% 12.0% 2) 1) relates to financials of a different entity (Schaeffler VZ GmbH) 2) Before provision for EU antitrust fine of EUR 380 mn 5

6 1 Schaeffler at a glance Leader for critical components and systems in automotive Engine systems Valve train components Rolling bearings Strut bearings Variable camshaft timer Torque converter Transmission systems Ball screw drives for steering systems Belt & Chain drive systems Thermomanagement Wheel bearings Balancer shaft Roll stabilizer Chassis systems 6

7 1 Schaeffler at a glance Leading bearing supplier to over 60 industrial sectors Cylindrical roller bearings with disc cage Spherical plain bearings Active magnetic bearings Rotary table bearings with measuring system Linear guidance systems Radial insert ball bearings Yoke type and stud type track rollers Cage-guided cylindrical roller bearings Tapered roller bearings Needle roller bearings Spherical roller bearings Housings Main spindle bearings Direct drives Engine bearings Axial/radial roller bearings with an outside diameter of up to 4,250 mm (up to 12,000 mm available on special request) Smallest ball bearing with a 1 mm inside diameter 7

8 1 Schaeffler at a glance Integrated global manufacturing and R&D footprint Global footprint US w Cheraw (2) w Danbury w Fort Mill (2) w Joplin w Spartanburg Troy w Wooster Europe China w Anting w Nanjing w Suzhou w Taicang (3) w Yinchuan (2) Europe Germany w Bühl w Herzogenaurach w Homburg (3) w Schweinfurt (2) w + 17 other German sites Italy w Momo Portugal w Caldas da Rainha Mexico w Irapuato w Puebla Canada w Stratford (2) Brazil w Sorocaba (2) South Africa India w Port Elizabeth w Hosur w Pune w Vadodara (2) Vietnam w Bien Hoa City South Korea w Ansan w Changwon w Jeonju Japan w Yokohama Thailand w Rayong Austria w Berndorf-St. Veit Czech Republic w Lanskroun France w Calais w Chevilly w Haguenau (2) Great Britain w Llanelli w Plymouth w Sheffield Romania w Braşov Russia w Uljanowsk Slovakia w Kysucké Nové Mesto w Skalica Spain w Elgoibar Europe Americas Greater China Asia/Pacific Total Manufacturing sites R&D Centers Hungary w Debrecen w Szombathely Switzerland w Romanshorn 8

9 1 Schaeffler at a glance Quality, Technology and Innovation More than 2,500 new patents in 2014 Quality Innovation 4 More than 50 quality awards received in General Motors recognized 24 Schaeffler plants with "Supplier Quality Excellence Award Murakami Seiki recognized Schaeffler China with "Excellent Quality Award for outstanding product quality and service Number of new patent registrations in Germany 1) 2,100 1,832 1,854 1,641 2, Rank in Germany # 4 # 4 # 4 # 2 # 2 GM Supplier Excellence Award Murakami Seiki Quality Award 9

10 2 Mobility for tomorrow Long-term growth from Mobility for tomorrow Key mega trends 4 focus areas Society trends u u Urbanization Population growth 1 Eco-friendly drives Urban mobility 2 Technology trends u u Increasing complexity Digitalization Environmental trends u u Renewable energies Availability of resources 3 Interurban mobility Energy chain 4 Economic trends u u Globalization Affordability Offering solutions in Automotive and in Industrial 10

11 2 Mobility for tomorrow 1 Eco-friendly drives to increase energy efficiency and reduce CO 2 emissions Combustion engine dominant but will be further electrified... 2% 98% Source: University of Duisburg-Essen, 2012 Powertrain concepts 1% 19% 80% Meeting stringent US 2025 emission targets already today 9% 35% 56% Combustion engine Hybrids Electric Locally developed technologies to meet specific NA fuel economy demands and customer requirements Economical solutions achieve 44% improvement in fuel economy and meet 2025 CAFE standards to meet CO 2 reduction targets g CO 2 /km CO 2 legislation enacted worldwide Japan: 122g in 2020 China: 117g in ) US: 97g in 2025 EU: 95g in ) Proposed 2020 targets Source: icct (November 2014) through comprehensive offering of fuel reduction technologies Technology Improvement (in %) 2) Valve train friction optimization 0.5 Balance shaft bearings 0.5 Thermal management module 1.0 Engine start-stop 3.5 AWD disconnect 5 TC with optimized damper 1.0 Low rolling resistance tires 3.5 Ride height adjustment 2.6 Transmission Driven Accessories 48V hybrid system 26 Total ~44 2) Denotes fuel reduction potential in % 11

12 2 Mobility for tomorrow Mobility and energy chain 2 Urban mobility 3 Interurban mobility 4 Energy chain Population growth and urbanization bn people 10 megacities (> 10 mn people) bn people 37 megacities Schaeffler solution Chinese cities connected by highspeed trains Schaeffler solution Global investments in new power plants and infrastructure Other Regenerative 4% Solar PV 7% Water 8% Wind 12% Nuclear 6% Oil 1% Gas 6% Coal 12% Schaeffler solution Power grids 44% (Infrastructure) E-bikes / E-scooters New Energy Vehicles (NEVs) Mechatronic functions in axlebox bearings Wave power Wind power Source: United Nations, The 2011 Revision Source: Morgan Stanley Research (15-May-11): China High- Speed Rail; On the Economist Fast Track Source: International Energy Agency (2011): World Energy Outlook. 12

13 3 Financial Results H Overview key financials H H1 14 H1 15 H1 15 vs. H1 14 Q2 14 Q2 15 Q2 15 vs. Q2 14 Sales 5,990 6, % 3,014 3, % EBITDA 1,113 1, % % EBITDA margin %-pts %-pts. EBIT % % EBIT margin %-pts %-pts. Net income mn mn Capex mn mn Capex ratio %-pts %-pts. Free cash flow ) mn ) mn Net debt 1) 5,778 6, mn 5,778 6, mn Leverage ratio 1) 3) ) Prior year figure as per December 31, ) Includes EU-antitrust fine of EUR 371 mn paid in June ) Net financial debt excl. shareholder loans to LTM EBITDA ratio 13

14 3 Financial Results H Sales H up 12.4% Sales H sales by region +12.4% 1) vs H Y-o-y growth (w/o FX effects) Asia/Pacific +12% (-1%) 2,976 3,014 3,034 3,100 3,345 3,387 Greater China +35% (+12%) 14% 10% 54% 5,990 6,134 6,732 Americas +26% (+12%) 22% Europe +3% (+2%) Q2 Q3 Q4 Q H sales by division Y-o-y growth Gross profit margin in % H1 14 H1 15 y-o-y growth excl. FX effects Automotive 4,439 5, % 6.9% Industrial 1,551 1, % -0.8% 1) Includes positive FX effects of 7.5% Total 5,990 6, % 4.9% 14

15 3 Financial Results H Automotive division again strongly outperforms market Sales development Automotive (w/o FX effects) Sales split Y-o-y growth (w/o FX effects) Europe Americas +17% 17% Automotive Aftermarket +13% (+10%) +3% Asia/Pacific -6% +3% +2% Production of light vehicles H1/2015 vs H1/2014 (IHS Automotive) -1% World production : +0.8% Schaeffler Automotive: +6.9% (w/o FX effects) +5% Greater China +13% Sales growth (w/o FX effects) Schaeffler Automotive H1/2015 vs H1/2014 Chassis Systems +9% (+3%) Engine Systems +18% (+8%) 15% 26% 42% Transmission Systems +15% (+7%) Key aspects 4 Engine Systems: Ramp-up of new Thermal Management Module; Strong demand for valve train components (e.g. for UniAir engine) 4 Transmission Systems: Significant growth with Torque Converters (automatic transmission) and Dual Mass Fly Wheels 4 Chassis Systems: Strong demand for 3rd generation of wheel bearings compensates weakness in South America and Asia/Pacific 4 Automotive Aftermarket: Strong demand for service kits in Europe and Americas in second quarter 15

16 3 Financial Results H Industrial division with mixed development across sectors Sales development Industrial Key aspects Industrial Applications Industrial Aftermarket Total Sales split Industrial Aftermarket ~36% H1 14 H1 15 D D excl. FX effects 994 1, % -1.4% % 0.2% 1,551 1, % -0.8% Industrial Applications ~64% Mobility Energy and Raw Material Production Machinery Aerospace 4 Industrial OEM business with mixed development across sectors 4 Mobility: FX-adjusted sales down Organic growth in Railway and Motorcycle sector Off-highway equipment (esp. agriculture) remains under pressure 4 Production Machinery: FX-adjusted sales down Slight decrease in tooling machinery Textile and printing machinery remain weak 4 Energy and Raw Materials: FX-adjusted sales up Positive development in renewable energy sector (especially Wind) in Europe and Greater China Stabilization in Heavy Industries on a low level but no quick recovery expected 4 Aerospace: FX-adjusted sales slightly down 4 Industrial Aftermarket: FX-adjusted sales slightly up 16

17 3 Financial Results H EBIT margin H % EBIT Key aspects % vs H H1 15 EBIT margin down by 1.2%-points mainly due to: 4 Reduced gross profit margin in Industrial business (-0.5%-pts), mainly due to sales mix effects 4 Increase in R&D and selling expenses on group level (-0.4%-pts) 4 One-off items from antitrust cases (-0.4 %-pts) EBIT by division Q2 Q3 Q4 Q EBIT margin in % Automotive Industrial Total H1 14 H1 15 D H1 14 margin H1 15 margin D in %-pts % 14.1% 12.8% % 11.2% 10.3% % 13.4% 12.2%

18 3 Financial Results H Financial Result H EUR -337 mn Financial result 1) Reconciliation Financial Result EUR -138 mn vs H H as reported Non-cash valuation effects loans / bonds One-off effects refinancing Q H excl. one-offs and valuation effects H1 14 H1 15 D Q2 Q3 Q4 Q Cash interest Accrued interest Financial Result excl. one-offs and valuation effects Other Non-cash valuation effects One-off effects refinancing 235 2) ) For presentation purposes negative results are shown as positive figures 2) Including non-cash valuation effects of EUR 106 mn from refinancing transaction in Q Reported Financial Result

19 3 Financial Results H Net income H EUR 309 mn Net income 1) Reconciliation of net income H Δ EBIT Δ Financial Result Δ Taxes Δ Minorities H Key aspects -10 Q2 Q3 Q4 Q2 4 Net income increased by EUR 99 mn vs H Improved financial result leads to higher net income ) Attributable to the shareholders of the parent company 19

20 3 Financial Results H Free cash flow EUR -72 mn Free cash flow H Operating cash flow , ) 501 Q2 Q3 Q Q2 166 Free cash flow ) 135 EBITDA Δ Working Capital Capex Interest 158 Tax 2 Other -72 Free cash flow ) Q2 Q3 Q4 Q ) One-off effect from refinancing transaction in Q ) Includes EU-antitrust fine of EUR 371 mn paid in June

21 3 Financial Results H Working Capital improved Capex on track Working capital Capex 1) 2,696 2,778 2,900 2,548 3,022 2, Q2 Q3 Q4 Q2 Q2 Q3 Q4 Q In % of sales In % of sales ) Cash view 21

22 3 Financial Results H Leverage ratio as of June 30, x Net financial debt 5,529 5,755 5,768 5,778 6,190 6,245 Change in net financial debt , , Q FX effect Δ Cash Position Repayment Term Loan 1) Bond refinancing 2) Other H Q2 Q3 Q4 Q2 Key aspects Leverage ratio (Net financial debt w/o shareholder loans / LTM EBITDA) Gross debt 5,751 6,226 6,443 6,414 6,799 6,665 Cash & cash equivalents Net financial debt significantly impacted by FX effects (high portion of US denominated debt) 4 Partial repayment of institutional loans (USD and EUR tranche) on June 30, Leverage ratio stable 1) EUR 210 m voluntary prepayment of institutional term loans (EUR 125 m for OpCo and EUR 85 m for Intercompany loan to HoldCo) 2) The value of the bonds issued in April exceeds the value of the redeemed bonds. 22

23 3 Financial Results H Guidance 2015 Growth Profitability Sales growth 4-5% 1) EBIT margin 12-13% 2) Capex 6-8% of sales Free cash flow Sustainably positive 1) At constant currency 2) Does not include restructuring provisions for CORE Quality Innovation Quality policy Further improve R&D expenses 5% of sales Employees ~3,000 new jobs Innovation Maintain leading position in patent applications 23

24 IR contact Investor Relations phone: fax: ir@schaeffler.com Web: Financial calendar 2015 Results 9M 2015 November 19, 2015 Results FY 2015 March 15,

25 Backup Overview of current corporate and financing structure Current structure Financing structure (as of June 2015) TopCo HoldCo HoldCo Bonds OpCo OpCo Bonds Schaeffler Holding Finance B.V. IC Loan EUR 986m + EUR 270m 2)4) OpCo Loans Schaeffler Finance B.V. HoldCo Loans Guarantee 1) 83.3% Schaeffler AG INA-Holding Schaeffler GmbH & Co. KG 16.7% Schaeffler Verwaltungs GmbH 100% Schaeffler Verwaltung Zwei GmbH Schaeffler Technologies AG & Co. KG 100% Schaeffler Holding GmbH & Co. KG 100% 100% 100% IC Loan EUR 629m 3)4) Schaeffler Beteiligungsholding 36.0% 10.0% Continental AG Free float 1) Schaeffler Beteiligungsholding guarantee and Schaeffler Verwaltung Zwei GmbH guarantee remains in place until Schaeffler requests a guarantee fall-away event. Since the redemption of the 2017 bonds, this guarantee fall-away is at the sole discretion of Schaeffler. 54.0% Schaeffler Holding Schaeffler Group Debt instrument Nominal Interest Maturity Rating Loans: HoldCo Term Loan (EUR) 500 E+4.50% Oct-19 Not rated HoldCo RCF (EUR 200 mn) - E+4.50% Oct-19 Not rated Bonds: 6.875% SSNs 2018 (EUR) 5) % Aug-18 B1 / B 6.875% SSNs 2018 (USD) 5) % Aug-18 B1 / B 6.25% SSNs 2019 (USD) 5) % Nov-19 B1 / B 5.75% SSNs 2021 (EUR) 5) % Nov-21 B1 / B 6.75% SSNs 2022 (USD) 5) % Nov-22 B1 / B Loans: Senior Term Loan B (EUR) 675 E 6) +3.50% May-20 Ba2 /BB- Senior Term Loan B (USD) L 6) +3.50% May-20 Ba2 /BB- Senior RCF (EUR 1,000 mn) - E+2.75% Oct-19 Not rated Bonds: 4.25% SSNs 2018 (EUR) % May-18 Ba2 / BB- 2.75% SSNs 2019 (EUR) % May-19 Ba2 / BB- 3.25% Unsec.Ns 2019 (EUR) % May-19 B1 / B 2.50% SSNs 2020 (EUR) % May-20 Ba2 / BB- 4.75% SSNs 2021 (USD) % May-21 Ba2 / BB- 4.25% SSNs 2021 (USD) % May-21 Ba2 / BB- 3.50% SSNs 2022 (EUR) % May-22 Ba2 / BB- 4.75% SSNs 2023 (USD) % May-23 Ba2 / BB- 3.25% SSNs 2025 (EUR) % May-25 Ba2 / BB- 2) Loan receivables resulting from capital increase in Dec. '14 (EUR 986m) and residual from previous cash management between Schaeffler AG and Schaeffler Verwaltung Zwei GmbH (EUR270m) 3) Loan receivable resulting from capital increase in Dec. '14 4) Secured by share pledges of 20.4m shares of Continental AG 5) Senior Secured PIK Toggle Notes 6) Floor of 0.75 % 25

26 Backup Overview permitted upstream payments Current structure Financing structure (as of June 2015) 1) HoldCo OpCo Bond Permitted Upstream Payments OpCo Loan Permitted Upstream Payments OpCo B A INA Holding Schaeffler GmbH & Co. KG Schaeffler Verwaltungs GmbH Bond OpCo Upstream Cash Payment Schaeffler Verwaltung Zwei GmbH Loan OpCo Upstream Cash Payment Chart simplified for illustration purposes 10% Conti dividend 36% Conti dividend 4 Permitted Upstream Payments in OpCo loan and bond documents allow OpCo cash to be upstreamed each year, providing material cash interest coverage on HoldCo level 4 Different restricted groups for OpCo loans and OpCo bonds define different permitted upstream payments 4 HoldCo has access to dividends from 46.0% of all Continental shares 4 As per 30 June 2015, the cash balance at Schaeffler Verwaltungs GmbH was EUR 3.1 mn OpCo upstream cash payments Q2 H Free Cash Flow OpCo Schaeffler AG A Cash upstream payments Schaeffler AG Permitted upstream payments ) 325 1) Annual Floor Amount for the financial year 2015 pursuant to Schaeffler AG loan agreement dated 27 October 2014 without carry forward amount. 2) Permitted Upstream Payments for the financial year 2015 pursuant to the bond indentures of Schaeffler AG. B Cash upstream payments Schaeffler Verwaltung Zwei GmbH Permitted upstream payments )