Schaeffler (SHA0) Q4 2024 earnings summary

Executive summary

• FY 2024 sales grew 12.9% year-over-year to €18,188 million, mainly from full consolidation of Vitesco and double-digit growth in Vehicle Lifetime Solutions (VLS), while organic growth was flat.

• Free cash flow was strong at €363 million, exceeding expectations despite lower EBIT and integration costs.

• The year was marked as a transition, with groundwork laid for 2025 and a new segment structure introduced.

• Dividend of €0.25 per share was declared, above the 40%-60% payout target, despite negative net income from one-off restructuring and tax asset write-offs.

• FY 2025 guidance indicates continued challenges, with high uncertainties and a detailed divisional outlook.

Financial highlights

• Group sales increased 49.2% FX-adjusted in Q4 2024, mainly due to Vitesco consolidation, while Schaeffler standalone sales were flat year-over-year.

• Gross margin for Schaeffler standalone improved to 20.8%, but group gross margin diluted to 16.9% post-Vitesco.

• EBIT margin before special items dropped to 1.7% in Q4 2024 from 5.5% in Q4 2023.

• Net income was significantly negative, impacted by €488 million in restructuring provisions and €352 million in deferred tax asset impairments.

• Leverage ratio increased to 2.5x LTM EBITDA, above the 1.25-1.75x target, due to Vitesco acquisition financing.

Outlook and guidance

• FY 2025 group sales expected between €23.0–25.0 billion, with EBIT margin (before special items) of 3–5%.

• Free cash flow before M&A guided at €0 to -€200 million, reflecting restructuring and synergy investments.

• Synergy potential of €600 million per annum targeted by 2029, with one-off costs of €665 million.

• E-Mobility division expected to grow ~15% in 2025, with margin improvement anticipated midterm as ramp-up and R&D costs normalize.

• Midterm targets and further details will be provided at the September capital markets day.