Schaeffler (SHA0) Q3 2024 earnings summary

Executive summary

• Q3 sales declined 1.1% year-over-year, with strong growth in Vehicle Lifetime Solutions (VLS), outperformance in AutoTech, and a market-driven decline in Bearings & Industrial Solutions (BIS/B&IS).

• Free cash flow in Q3 reached €188 million, stronger than the previous year despite Vitesco integration and higher financing costs.

• The merger with Vitesco was completed on time and within budget, with full consolidation starting Q4 2024.

• Program Forward was announced, targeting €290 million recurring EBIT impact by 2029, with most measures implemented by 2027 and a gross headcount reduction of about 4,700, mainly in Europe.

• Guidance and dividend payout ratio (40%-60%) for 2024 are confirmed.

Financial highlights

• Q3 group margin was 4.7%, impacted by e-mobility ramp-ups and B&IS weakness; VLS delivered record EBIT margin.

• Gross profit margin remained stable at 21.8% despite sales and production volume challenges.

• Overhead expenses increased 7.5% year-over-year, mainly due to integration costs; excluding these, admin costs were flat.

• Free cash flow was strong, supported by effective working capital management.

• Leverage ratio at 2.5x, temporarily elevated due to Vitesco merger accounting; liquidity remains strong at €2.5 billion.

Outlook and guidance

• FY 2024 guidance confirmed: considerable sales growth, EBIT margin 5–8%, FCF before M&A €200–300 million.

• Q4 is expected to be challenging due to seasonal effects, but management is confident in ending above 5% EBIT margin.

• Dividend policy remains unchanged, with a commitment to continuous payout.