Schaeffler Group improves profitability in 2023
Schaeffler published its results for 2023 today. The Schaeffler Group’s revenue for the year amounted to 16.3 billion euros (prior year: 15.8 billion euros). Revenue grew by 5.8 percent at constant currency, in line with the guidance for 2023 [revenue growth of 5 to 8 percent]. The constant-currency increase in revenue in 2023 is mainly attributable to increased volumes. Sales prices had an additional favorable impact on revenue.
In 2023 the Schaeffler Group generated earnings before financial result and income taxes (EBIT) of 834 million euros (prior year 974 million euros), a figure that was influenced by 353 million euros in special items. EBIT before special items amounted to 1,187 million euros (prior year: 1,046 million euros). The group’s EBIT margin before special items of 7.3 percent (prior year: 6.6 percent) solidly met the guidance for 2023 [EBIT margin before special items of 6 to 8 percent], despite the challenging market environment. The increase in EBIT margin before special items was mainly due to the favorable impact of volumes and sales prices.
The Schaeffler Group’s free cash flow before cash in- and outflows for M&A activities totaled 421 million euros in 2023 (prior year: 280 million euros), exceeding the full-year guidance [free cash flow before cash in- and outflows for M&A activities of 300 to 400 million euros]. Net income attributable to shareholders of the parent company amounted to 310 million euros in 2023 (prior year: 557 million euros). The decline in net income was mainly influenced by 313 million euros in special items, which were primarily attributable to the transaction with Vitesco Technologies Group AG announced on October 9, 2023. Net income before special items amounted to 623 million euros (prior year: 610 million euros). Based on net income attributable to the shareholders of the parent company and without the adjustments above, earnings per common non-voting share were 0.47 euros (prior year: 0.84 euros).
At the extraordinary general meeting on February 2, 2024, Schaeffler announced that a dividend payment of 0.45 euros per common non-voting share will be proposed to the annual general meeting on this basis (prior year: 0.45 euros). This represents a dividend payout ratio of approximately 47.3 percent (prior year: 48.3 percent) of net income attributable to shareholders before special items. The company also announced that the dividend payout ratio will be raised from previously 30 to 50 percent of net income attributable to shareholders before special items to 40 to 60 percent going forward.
“During the past financial year, the Schaeffler Group generated good results and continued to consistently pursue its transformation based on its Roadmap 2025,” says Klaus Rosenfeld, CEO of Schaeffler AG. “In a challenging market environment, our diversified positioning proved to be a competitive advantage once again. We will propose an attractive dividend of 45 cents to the annual general meeting in order to share the company’s success with our shareholders.”
Automotive Technologies – EBIT margin before special items improved considerably
The Automotive Technologies division generated revenue of 9,772 million euros in 2023 (prior year: 9,498 million euros). The constant-currency growth of 5.4 percent year on year resulted primarily from a market-driven increase in volumes.
In the E-Mobility business division (BD), revenue was in line with the prior year’s level at constant currency, while order intake of 5.1 billion euros was once again considerably above the targeted range of 2 to 3 billion euros per year. The constant-currency increase in revenue in the Engine & Transmission Systems and Bearings BDs was largely driven by growth in the Europe region and amounted to 5.3 percent and 5.6 percent compared to the prior year. At 24.1 percent, the Chassis Systems BD reported the strongest constant-currency growth rate. The main drivers here were the Europe and Greater China regions.
The Europe region grew the most, recording an increase in revenue of 12.4 percent at constant currency. While the Americas region reported a constant-currency decline of 2.8 percent, revenue in the Greater China and Asia/Pacific regions rose by 2.0 and 7.3 percent at constant currency. The overall increase in the division’s revenue was less than the growth rate of global automobile production.
EBIT before special items in the Automotive Technologies division amounted to 435 million euros in 2023 (prior year: 292 million euros), representing a considerable increase of approximately 49 percent and an EBIT margin before special items of 4.5 percent (prior year: 3.1 percent). The marked increase in the EBIT margin before special items in 2023 was mainly due to the impact of volumes.
Automotive Aftermarket – strong growth, strong margin
The Automotive Aftermarket division reported revenue of 2,253 million euros in 2023 (prior year: 2,040 million euros). The considerable constant-currency increase in revenue of 11.8 percent was due to the favorable impact of volumes and sales prices. Increased procurement costs were passed on to the market.
In the Europe region, which generates the highest revenue, the Automotive Aftermarket division reported constant-currency growth of 10.3 percent, driven primarily by the considerable increase at the Independent Aftermarket business in Central & Eastern Europe. Revenue in the Americas region rose by 12.0 percent at constant currency in 2023. At 28.7 percent at constant currency, the Greater China region reported the strongest revenue growth in 2023, primarily driven by the considerable increase in e-commerce business. In Asia/Pacific, revenue was 11.8 percent higher at constant currency in 2023 than in the prior year. At 367 million euros, EBIT before special items was 41.2 percent higher than the prior-year figure of 260 million euros. The resulting EBIT margin before special items of 16.3 percent (prior year: 12.8 percent) exceeded the guidance. The continued growth was predominantly the result of a higher gross margin due to a favorable revenue mix and adjustments to sales prices.
Industrial – market-related decline in margin
The Industrial division increased its revenue by 3.9 percent at constant currency to 4,288 million euros in 2023 (prior year: 4,271 million euros). The constant-currency growth in revenue resulted from the positive contribution of the Ewellix Group, acquired early in the year, which amounted to 219 million euros and was reflected in the Industrial Automation sector cluster. The decline in the remaining sales volumes, primarily due to the weak market environment in the Greater China region, was only partly offset by a favorable impact of sales prices.
The Europe region reported a constant-currency increase in revenue of 7.0 percent. In the Americas region, revenue rose by 11.3 percent at constant currency. In the Greater China region, the weak market environment had a considerable adverse impact on the revenue trend. Revenue in this region was down 6.3 percent year on year at constant currency, while revenue in the Asia/Pacific region increased by 5.3 percent at constant currency.
EBIT before special items amounted to 385 million euros in 2023 (prior year: 493 million euros), with an EBIT margin before special items of 9.0 percent (prior year: 11.5 percent). Factors influencing earnings included a decline in gross margin as a result of a change in the revenue mix, primarily due to the market trend in the Greater China region and the market-driven overall decline in production volume.