schaeffler capital market presentation mobility for tomorrow · page 12 · schaeffler group ·...
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Schaeffler Capital Market Presentation
"Mobility for tomorrow"
July 2014
Page 2 · Schaeffler Group · Capital Market Presentation · July 2014
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. Forward-lookingstatements are statements that are not historical facts; they include statements about Schaeffler Group's beliefs and expectationsand the assumptions underlying them. These statements are based on plans, estimates and projections as they are currentlyavailable to the management of Schaeffler AG. Forward-looking statements therefore speak only as of the date they are made, andSchaeffler 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 AGmanagement's current expectations and are subject to a number of factors and uncertainties that could cause actual results to differmaterially 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 marketconditions affecting the automotive industry, intense competition in the markets in which we operate and costs of compliance withapplicable laws, regulations and standards, diverse political, legal, economic and other conditions affecting our markets, and otherfactors beyond our control).
This presentation is intended to provide a general overview of Schaeffler Group’s business and does not purport to deal with allaspects and details regarding Schaeffler Group. Accordingly, neither Schaeffler Group nor any of its directors, officers, employees oradvisers nor any other person makes any representation or warranty, express or implied, as to, and accordingly no reliance shouldbe placed on, the accuracy or completeness of the information contained in the presentation or of the views given or implied. NeitherSchaeffler Group nor any of its directors, officers, employees or advisors nor any other person shall have any liability whatsoever forany errors or omissions or any loss howsoever arising, directly or indirectly, from any use of this information or its contents orotherwise arising in connection therewith.
The material contained in this presentation reflects current legislation and the business and financial affairs of Schaeffler Groupwhich are subject to change and audit.
Page 3 · Schaeffler Group · Capital Market Presentation · July 2014
Agenda
1 Schaeffler at a glance
2 Results FY 2013
Page 4 · Schaeffler Group · Capital Market Presentation · July 2014
in EUR mn
Number of patent registrations in Germany1)
1 Schaeffler at a glanceSchaeffler – A leading technology provider
1) Incl. Germany, Western, Southern and Eastern Europe, Middle East, Africa, Russia and India
Schaeffler Group at a glance
Sales by segment Sales by region
73% Automotive
27%Industrial
58% Europe¹)11%Greater China
Asia/Pacific10%
21%Americas
Number of patent registrations in Germany1)
2010
CAGR +11%
9.5
2011
7.3
2009
11.110.7
2013
11.2
2012
Strong sales growth from 2009 - 1013in EUR bn
4 Leading manufacturer of high-precision componentsand systems for automotive and industrialapplications
4 Global footprint with approx. 79,000 employees inmore than 50 countries
4 Above industry average profitability andrevenue growth
4 Strategic participation in Continental AG
Page 5 · Schaeffler Group · Capital Market Presentation · July 2014
Transmission Systems
Chassis Systems
Engine Systems
Aftermarket
Production Machinery
Energy and Raw Material
Aerospace
Mobility
Aftermarket
1 Schaeffler at a glanceTwo divisions with top three positions in core market sectors
Automotive Industrial
Page 6 · Schaeffler Group · Capital Market Presentation · July 2014
1 Schaeffler at a glanceAutomotive – broad mix of components and systems
Page 7 · Schaeffler Group · Capital Market Presentation · July 2014
Yoketype andstud typetrackrollers Axial/radial roller
bearingswith an outsidediameter of up to4250 mm(up to 12000 mmavailable onspecial request)
Smallest ball bearingwith a 1 mm inside diameter
Sphericalplainbearings
Cylindricalrollerbearingswithdisc cage
Radialinsertballbearings
Needlerollerbearings
Linearguidancesystems
MainspindlebearingsSpherical
rollerbearings
Taperedrollerbearings
Cage-guidedcylindricalcylindricalrollerbearings
Directdrives
INA/FAG catalog with 40,000 itemsRotary tablebearings withmeasuringsystem
Enginebearings
Ballrollerbearings
Housings
The Industrial division delivers solutions and services with around 225,000 products for more than 40,000 customersin over 60 sectors worldwide
1 Schaeffler at a glanceIndustrial – competence in bearings
Page 8 · Schaeffler Group · Capital Market Presentation · July 2014
1 Schaeffler at a glanceOur key success factors – Quality, Innovation and Technology
826
1,832
20122010
1,854
2,100
2011 2013
1,146
2008 2009
1,641
#5 #5 #4 #4 #4 #2
1) Source: Deutsches Patent- und Markenamt (DPMA)
§ 2,100 new patents in 2013
§ Schaeffler is ranked as the No. 2 most innovativecompany in Germany (Ranking in 2012: No. 4)
§ Share of new inventions outside Germany isincreasing
Schaeffler Group –An integrated technology group
with first class quality, innovationstrength and global reachRank in Germany
Number of patent registrations in Germany1) Key aspects
Page 9 · Schaeffler Group · Capital Market Presentation · July 2014
1 Schaeffler at a glanceStrategy refocused – "Mobility for tomorrow"
"Mobility for tomorrow"
Societytrends
§ Urbanization§ Population growth
Technologytrends
§ Increasing complexity§ Digitalization
Environmentaltrends
§ Renewable energies§ Availability of resources
Economictrends
§ Globalization§ Affordability
Key mega trends 4 focus areas
1
3
2
4Energy chain
Environmentallyfriendly drives
Interurbanmobility
Urban mobility
Page 10 · Schaeffler Group · Capital Market Presentation · July 2014
B
Optimization of theconventional drivetrain
Micro-Hybrid /48V-Technology
Full Hybrid / Plug-inHybrid / Electric
Degree ofelectrification
C
A
UniAir Hybrid module Electric Axle Drive
B
Optimization of theconventional drivetrain
Hybrid module /48V technology
Electric Axle
Degree ofelectrification
C
A
Micro Hybrid Hybrid / Electric driveCombustion Engine
1 Schaeffler at a glanceMobility for tomorrow – Environmentally friendly drives1
Page 11 · Schaeffler Group · Capital Market Presentation · July 2014
Schaeffler employees in Chinausing e-bikes and e-scooters
§ NEVs are defined as fully electric or hybridvehicles on four wheels
§ Subsidies for Battery Electric Vehicles (150 kmrange) and Hybrid Electric Vehicles (50 km range)
§ Minimum speed requirement: 100 km/h
§ Openness towards newtechnologies
§ Increasing income§ Pursuit of individual mobility§ Around 20-30 million
e-bikes and e-scooters aresold each year in China
E-bikes and e-scooters
New Energy Vehicles (NEVs)
Schaeffler innovationElectric motor, power electronics, brake, and coolingsystem are installed inside the wheel rim
Driving systems especially forurban use§ Space-saving vehicle concept§ Increased maneuverability
and safety
Concept vehicle Ford Fiesta eWheelDrive
Strong focus on electric mobility in China E-wheel drive
1 Schaeffler at a glanceMobility for tomorrow – Urban mobility2
Page 12 · Schaeffler Group · Capital Market Presentation · July 2014
Mechatronic functions inaxlebox bearings:Integrated wheelset generatorallows energy for freighttransport to be supplied andincludes a monitoring systemfor freight trains
Schaeffler test rig for railway axlebox bearings, Schweinfurt (Germany)
Schaeffler solutions
Main shaft andgearbox bearings,
e.g. for Airbus A380
Assembly of aerospace bearings in Schweinfurt, Germany
Schaeffler solutions
1 Schaeffler at a glanceMobility for tomorrow – Interurban mobility3
Page 13 · Schaeffler Group · Capital Market Presentation · July 2014
For ocean currentpower plants,Schaeffler developsbearing supports thatcan be directlyinstalled in water. Thewater is the mediumthat provides thelubrication.
Schaeffler uses aspecial steel that isresistant to corrosionfor the rolling bearingrings.
Large-size bearing test rig in Schweinfurt, Germany
Schaeffler's spherical roller bearing "X-life" is the classicbearing variant for the rotor main shaft in wind turbines.
Wave power Wind power
1 Schaeffler at a glanceMobility for tomorrow – Energy chain4
Page 14 · Schaeffler Group · Capital Market Presentation · July 2014
Q1 2013 Q1 2014 ∆
Sales 2,756 2,976 +8.0%
EBITDA 512 569 +11.1%
EBITDA margin 18.6% 19.1% +0.5%-pts.
EBIT 355 414 +16.6%
EBIT margin 12.9% 13.9% +1.0%-pts.
Net income1) 233 382 +149 mn
Free cash flow 52 -19 -71 mn
Net debt 6,834 6,172 -662 mn
Leverage ratio2) 2.6 2.6 -
2 Results Q1 2014Overview
1) Attributable to shareholders of the parent company 2) Net financial debt to adjusted EBITDA ratio; prior year figure as per December 31, 2013
in EUR mn
Page 15 · Schaeffler Group · Capital Market Presentation · July 2014
2 Results Q1 2014Revenue up 8.0% (at constant currency 11.2%)
9.9%
10.9%
19.9% 59.3%Americas592 / +2.2%
Greater China324 / +26.2%
Europe1,765 / +6.8%
Asia/Pacific295 / +10.4%
1) Market view (= location of customers)
2,780
Q3
2,811
Q2
2,858
Q1
2,756
+8.0%
Q1
2,976
Q4
11,205
2013 2014
Gross profit margin in %
28.7 28.8 27.2 28.7
28.3
29.1
Salesin EUR mn
Q1 2014 sales by region1)
in EUR mn / Y-o-y growth
Q12013
Q12014 D D excl.
FX effects
Automotive 1,987 2,212 +11.3% +14.4%Industrial 769 764 -0.7% +3.1%
Total 2,756 2,976 +8.0% +11.2%
Sales by divisionin EUR mn
Page 16 · Schaeffler Group · Capital Market Presentation · July 2014
Europe
+11%
Asia/Pacific
+20%
3%
Greater China+30%
+9%
Production of light vehiclesQ1 2014 vs Q1 2013(IHS Automotive)
Operational sales growthSchaeffler Automotive (OEM)Q1 2014 vs Q1 2013(by location of customer)
19%
4%
Americas
+2%
2 Results Q1 2014Sales Automotive – Strong above market growth
World production: +5%Schaeffler Automotive OEM: +16%
(operational sales growth)
1) Schaeffler Automotive sales growth by region is not necessarily an indication of actual end-customer demand by region (e.g. European sales include components and systems sold to customers inEurope who ultimately export the final product to customer locations in North and South America as well as in Asia/Pacific).
§ Schaeffler Automotive again strongly outgrew globalautomotive production in the first quarter 2014
§ All business divisions and all regions contributed tooverall growth
§ Engine Systems: Growth driven a.o. by the top-selling product groups camshaft phasing units andvalve train components
§ Transmission Systems: Growth driven a.o. by drydouble clutches and variable transmission systems
§ Chassis Systems: Growth driven a.o. by ball screwdrives
Regional development Automotive1) Key aspects
in EUR mn Q1 2014 D
Engine Systems 551 +11,3%
Chassis Systems 345 +6,2%
Transmission Systems 936 +16,3%
Aftermarket 382 +6,7%
Total 2.212 +11,3%
Page 17 · Schaeffler Group · Capital Market Presentation · July 2014
Q1 13 Q2 13 Q3 13 Q4 13 FY 14 Q1 14
ReportedEBIT 355 369 314 -56 982 414
ReportedEBIT margin(%)
12.9 12.9 11.2 -2.0 8.8 13.9
Restructuringprovision - - 48 - 48 -
EUinvestigationprovision
- - - 380 380 -
EUinvestigationprovisionrelease
- - - - - -9
AdjustedEBIT 355 369 362 324 1,410 405
AdjustedEBIT margin(%)
12.9 12.9 12.9 11.7 12.6 13.6
2 Results Q1 2014Adjusted EBIT margin at 13.6%
Adjusted EBITin EUR mn
One-off effectsin EUR mn
1) Excl. one-off effects of EUR - 48 mn2) Excl. one-off effects of EUR - 380 mn3) Excl. one-off effects of EUR + 9.5 mn
3693554053)
+EUR 50 mn
Q1Q4
3242)
Q3
3621)
Q2Q1
1,410
Adjusted EBIT margin in %
12.9 12.9 12.9 11.7
12.6
13.6
2013 2014
Page 18 · Schaeffler Group · Capital Market Presentation · July 2014
2 Results Q1 2014Net income EUR 382 mn
Net income Q1 20141)
in EUR mn
Net income1)
in EUR mn
382
-155
459
328
233
Q3Q2Q1
+ EUR 149 mn
Q1Q4
865
2013 2014
1) Net income attributable to the shareholders of the parent company
EBITCostsSales
2,976
382414
Netincome
Taxes/Minorities
Investmentresult
Financialresult
21
-2,562
-115
180
-97
Page 19 · Schaeffler Group · Capital Market Presentation · July 2014
Free cash flowin EUR mn
2 Results Q1 2014Free cash flow minus EUR 19 million
Free cash flow Q1 2014in EUR mn
-19
40
203
52
Q1Q4Q3Q2
334
1631)
Q1
1) Dividend from Continental AG
629
2013 2014
321
155
-19
569
110
CapexΔ Networkingcapital
EBITDA Other
58
Freecash flow
Taxes
60
Interestpayments
Q1 2013 512 -114 -121 -188 52-58 21
Page 20 · Schaeffler Group · Capital Market Presentation · July 2014
2 Results Q1 2014Leverage ratio stable at 2.6
Net financial debtin EUR mn
12/31/13 03/31/14
Gross debt 6,190 6,395
- Cash 300 223
= Net debt 5,890 6,172
- Shareholder loans 443 645
= Net debt w/o shareholder loans 5,447 5,527
÷ LTM EBITDA 1,634 1,691
= Leverage ratio 3.3 3.3
÷ LTM EBITDA adjusted 2,062 2,110
= Leverage ratio adjusted 2.6 2.6
645443
Q1
6,172
Q4
5,890
Q3
5,729
284
Q2
6,475
343
Q1
6,834
301
2.6x2.6x2.7x3.1x3.3x
Gross debt
7,292 7,037 6,089 6,190 6,395
Cash position
458 562 360 300 223
Shareholder Loans
Leverage ratio (Net financial debt w/o shareholder loans / LTM Adjusted EBITDA)
2013 2014
Leverage ratioin EUR mn
Page 21 · Schaeffler Group · Capital Market Presentation · July 2014
3 Financing and capital structureOverview corporate and capital structure
Capital structure (Pro Forma as of May 15, 2014)Corporate structure
Schaeffler Holding
11.8%
Continental AG
SchaefflerTechnologies
GmbH & Co. KG
100%
SchaefflerFinance B.V.
100%
Schaeffler Group
INA BeteiligungsGmbH
100%Schaeffler AG
INA-HoldingSchaeffler
GmbH & Co. KG
100%
SchaefflerVerwaltungs
GmbH
100%
54.0%
Freefloat34.2%
S HoldingFinance B.V.
100%
Debt instrument Nominal inEUR mn Interest Maturity Rating
Scha
effle
rH
oldi
ng
6.875% SSNs 2018 (EUR)1) 800 6.875% Aug-18 B1 / B6.875% SSNs 2018 (USD)1) 3) ~730 6.875% Aug-18 B1 / BJunior Term Loan B1 905 E+5.25% Jun-17 Not ratedJunior Term Loan B2 354 8.50% PIK Jun-17 Not ratedJunior Term Loan B3 110 E+1.25% + 5.25% PIK Jun-17 Not ratedJunior Term Loan B4 286 E+5.25% Jun-17 Not rated
Junior RCF (EUR 200 mn) - E+5.25% Jun-17 Not rated
Schaeffler Holding Debt 3,185
Scha
effle
rG
roup
Senior Term Loan D 250 E+2.875% Jul-16 Not ratedSenior Term Loan E (EUR) 375 E+3.00%2) May-20 Ba2 /BB-Senior Term Loan E (USD)3) 1,168 L+3.00%2) May-20 Ba2 /BB-Senior RCF (EUR 1,000 mn) - E+2.875% Jul-16 Not rated
Total Senior Facilities 1,7937.75% SSNs 2017 (EUR) 800 7.75% Feb-17 Ba2 / BB-7.75% SSNs 2017 (USD)3) ~438 7.75% Feb-17 Ba2 / BB-4.25% SSNs 2018 (EUR) 600 4.25% May-18 Ba2 / BB-
2.75% SSNs 2019 (EUR) 500 2.75% May-19 Ba2 / BB-3.25% Unsec.Ns 2019 (EUR) 500 3.25% May-19 B1 / B4.75% SSNs 2021 (USD) 3) ~620 4.75% May-21 Ba2 / BB-4.25% SSNs 2021 (USD) 3) ~511 4.25% May-21 Ba2 / BB-3.50% SSNs 2022 (EUR) 500 3.50% May-22 Ba2 / BB-
Total Outstanding Bonds 4,469Schaeffler Group Debt 6,262
Total Total Debt 9,447
1) Senior Secured PIK Toggle Notes 2) Floor of 0.75 % 3) Assuming EUR/USD = 1.37
SchaefflerHolding GmbH &
Co.KG
100%
Page 22 · Schaeffler Group · Capital Market Presentation · July 2014
4 OutlookRaised forecast due to strong growth in the Automotive division
ProfitabilityGrowth
Quality Innovation
Sales growth
Capex
Quality policy
Employees
EBIT margin
Free cash flow
R&D expenses
Innovation
>7%1)
(previously 5-7%)
6-8% of sales
12-13%
Positive
Further improve
~ 3,000 new jobs
5% of sales
Maintain leadingposition in patentapplications
1) Excl. FX effects
Page 23 · Schaeffler Group · Capital Market Presentation · July 2014
Schaeffler IR contact
Financial calendar 2014
phone: + 49 9132 82 4440fax: + 49 9132 82 [email protected]/ir
Results Q1 2014: May 21, 2014Results Q2 2014: August 27, 2014Results Q3 2014: November 20, 2014
Investor Relations
Page 24 · Schaeffler Group · Capital Market Presentation · July 2014
BackupCombustion engine remains dominant but will be further electrified
● Trends
Powertrain concepts CO2 legislation worldwide
98%
80%
56%
2%
19%
35%
1%9%
Hybrids Electric
2013 2020 2030
Light vehicle production
Source: University of Duisburg-Essen, 2012
Combustion engine 80
100
120
140
160
180
200
220
240
260
2000 2005 2010 2015 2020 2025
China: 117 gin 2020
EU: 95 gin 2020
Japan: 105 gin 2020
USA: 109 gin 2025
Source: icct, 2013
Light vehiclesin g CO2
Proposed targetEnacted target
USA: incl. light duty vehicles
Page 25 · Schaeffler Group · Capital Market Presentation · July 2014
BackupMeeting stringent US emission targets of 2020 already today
Fuel reduction in %
Technology City HighwayBelt Drive FrictionOptimization 1.0 1.0
Valve Train FrictionOptimization 0.5 0.5
Balance ShaftBearings 0.6 1.0
ThermalManagementModule
1.0 1.0
Adaptive GrillShutters 0.2 0.8
Engine Start-Stop 6.0 2.0AWD Disconnect 2.0 6.0
Wheel BearingsOptimization 0.5 1.0
TC with CentrifugalPendulum-typeAbsorber
3.0 1.0
Total: ~15 ~14
§ Developed in North America for market-specificdemands and customer requirements
§ Schaeffler shows solutions for optimizing NorthAmerican combustion engines and drive trains
§ Additional fuel savings potential up to 15%
Efficient Future Mobility –Schaeffler North America Demonstration Vehicle
Page 26 · Schaeffler Group · Capital Market Presentation · July 2014
§ Ford Focus, 1.0l 3-Zylinder, turbo charger, 92 kW, 114 g/kmCO2, Start/Stop, EU5
§ Mild Hybridization 48V BSA, thermal management module,coated tappets, decoupling belt tensioner, optimized turbocharger, engine control unit, injection system, heatedcatalyst, low-pressure EGR, hydr. clutch actuator, DMF withcentrifugal pendulum absorber
§ Fuel savings potential ~15% (aim ~17%: 95 g/km) andemission reduction EU6c
Gasoline Technology Car Fuel reduction in % (simulation according to NEDC)
Measure ReductionStart/stop 20 km/h 1.1Recuperation 2.6
Torque repartition 0.8
Dedicated braking pedal 0.5Free gear selection 5.4
External exhaust gas recirculation (EGR) 2.0
Electric heatable catalyst 2.0Thermal management module (real simulation) 1.0
Total ~15
Emission reduction
In addition to fuel savings, emission reduction(NMHC, NOx, CO, PM) was achieved to comply withthe guideline EU6c.
BackupNewest concept car Conti/Schaeffler shows further fuel saving potential
Page 27 · Schaeffler Group · Capital Market Presentation · July 2014
BackupSuccessful cooperation with Continental adding value for our customers
ProductDevelopment
AdvancedDevelopment
Research
Transmission Systems§ Hybrid Double Clutch Transmission§ Mechatronics for Drivetrain Actuation
Engine Systems§ Electric Cam Phasing Systems§ Turbo Charger
Chassis Systems§ Anti Roll Stabilizer
Hybridization§ Electric Axle Drives
Automotive Concepts§ Gasoline Technology Car
§ Diesel Eco Drive
§ 48V Democar
Industrial Concepts§ Initiative "Farming 2025"
eMobility§ Wheel Hub Drive
Mechanics/Mechatronics
Expertise
System-orientatedapproach creating
customer value
Electrics/ElectronicsExpertise
Page 28 · Schaeffler Group · Capital Market Presentation · July 2014
"Mobility for tomorrow" by Schaeffler