Schaeffler Group financials: growth in 1H 2011

The Schaeffler Group says its first six months in 2011 have “set new records in sales and operating results”. The company has grown its net income to 641 million euros in the period, with EBIT rising 20 per cent to 883 million euros and margin at 16.4 per cent. The company expects sales to increase by “at least 10 per cent” and has an EBIT margin target of “more than 13 per cent” for the year. Schaeffler’s sales in the first six months rose by 18 per cent to approximately 5.4 billion euros.

“Our business has developed excellently in the first half of this year. Once again, we managed to significantly exceed the very good levels in sales and net income achieved in the previous half-year period,” said Dr Juergen M Geissinger, Schaeffler Group president & CEO. “Thanks to our innovative product portfolio we were able to benefit beyond proportion from our customers’ economic recovery in all sectors and regions.”

The European region excluding Germany recorded the highest increase in sales of 21 per cent, followed by Asia with 18 per cent and Germany with 17 per cent. The Automotive Division again clearly surpassed the high sales level of the last period, by 16 per cent to 3.6 billion euros. In the Industrial Division it was in particular the production machinery, power transmission and aftermarket sectors that were able to further expand their businesses. Overall sales in the division climbed 25 per cent to approximately 1.7 billion euros.

Compared with the 2010 period, the operating result (EBIT) in the first six months increased by 20 per cent to 883 million euros. Return on sales based on EBIT rose accordingly to 16.4 per cent, having reached 16.2 per cent in the previous year. Net income in the first half of 2011 improved by €901 million to €641 million.

Free cash flow amounted to €77 million in the first half of 2011 (HY1 2010: €336 million). This resulted primarily from the increase in working capital due to the strong volume of business as well as from the increase in capital expenditure to support the Group’s worldwide growth initiatives. Capital expenditure of the Schaeffler Group came to €312 million, which was clearly higher than in the previous year period (€132 million). “In spite of the need for higher investments we expect to generate positive free cash flow in the current fiscal year,” said the Schaeffler Group’s Chief Financial Officer, Klaus Rosenfeld.

Compared with the year-end 2010, net financial debt rose by 325 million to 6,069 million euros at the end of the half-year. The leverage ratio – calculated as net financial debt relative to the EBITDA of the last twelve months – remained unchanged at 2.7.

By the end of the first half of 2011, the Schaeffler Group employed over 70,000 staff. “Compared with the end of 2010 this is an increase of about 5 per cent. With this we are enjoying an excellent position worldwide,” said Geissinger. In Germany the workforce comprises approximately 29,000 employees, which is an increase of 3.2 per cent.

Based on the good business development in the first half of the year, the company remains optimistic for the whole of 2011. For the second half, the Schaeffler Group is expecting continued strong demand for its components and systems, although growth rates are likely to slow down compared with the first six months. The company foresees risks of a potential exacerbation of the debt crisis in Europe and the United States, as well as turbulence in financial markets that might have an unfavorable impact on economic growth. Moreover, rising raw material costs, in particular for steel, as well as higher personnel costs might have a negative influence on margins.

Geissinger stated: “We have slightly raised our sales expectations for 2011 as a whole, due to the excellent development in the first six months of the year. We are now expecting a sales increase of more than 10 per cent. Against the backdrop of our planned capacity building measures and the anticipated rise in material and personnel costs, we continue to expect an EBIT margin of over 13 per cent.”

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