Schaeffler : Commented slides presentation Q1 2024 Schaeffler AG earnings

COMMENTED SLIDES / CONFERENCE CALL Q1 2024 EARNINGS

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Company Representatives

Klaus Rosenfeld, CEO

Claus Bauer, CFO

Renata Casaro, Head of Investor Relations

Conference Call (Active) Participants

Akshat Kacker, JP Morgan

Horst Schneider, Bank of America

Marc-René Tonn, M.M. Warburg

Michael Punzet, DZ Bank

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Renata Casaro

Thank you very much. Dear analysts and dear investors, welcome to the Q1 2024 Earnings Release and without further ado I pass the floor to Mr Klaus Rosenfeld, CEO of the Schaeffler Group. Klaus, the floor is yours.

Klaus Rosenfeld

Thank you very much, Renata. Ladies and gentlemen, welcome to our Q1 earnings call. We are ready to share that presentation with you that you should have on your screens or that you should have received this morning. As usual, the presentation is structured into two main parts. I will take the overview and the business highlights and Claus is going to go in detail through the numbers.

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Let me start on page four with the key messages. We can present today a strong Q1 in a continued difficult market environment. I think the numbers speak for themselves. If you look at the top line, Q1 sales are flat but we have to look at that against the high comps of Q1 2023. Automotive Tech with a positive development, also positive outperformance. Vehicle Lifetime Solutions with a strong top line, good growth, very positive for us. And then weaker sales in Bearings & Industrial Solutions, as expected. A difficult market environment. You already see from the terms that we're using here that this is now the new segment reporting where Automotive Bearings has been transferred into the Bearings & Industrial Solutions division.

Second key message. Order Intake in Q1 strong. We are proud to say that we already booked in the first quarter EUR 1.5 billion in E-Mobility against our prudent target EUR 2.0-3.0 billion. That is half the way. And I will come back to that later, where that is coming from. Orderbook situation, Industrial. One of the key questions from the conversations we had with you, how is that going to develop? And we see that Q1 indicates that we see the trough in Q2, the Orderbook Industrial clearly gaining momentum.

Margin in Q1 nearly at the same level as in Q1 2023, 7.9% versus 8.1%. Strong in Automotive Tech. Very strong in Vehicle Lifetime Solutions, above 17%, and solid in

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Bearings & Industrial Solutions. You see already from this first page, and Claus is going to explain that in detail, that there is a bigger delta in Gross Margin, 26.6% versus 23.1%. That is a one-off impact that comes from a technical change in how we value inventories. That effect is not included in the EBIT margin, so we're talking here about the adjusted version, so 8.1% versus 7.9% compares and does not include this 3% delta in Gross Profit.

Free cash flow, minus EUR 166 million. That is a number a little bit higher than expected. Working capital drove this and, sure, the higher sales in inventory- intensive areas have impacted this. We confirmed the Guidance for all metrics. You know the Guidance this year is only a Group Guidance.

And I can also report that our transaction is on track, not only from the deal execution but also from the integration. We continue with a strong focus on business continuity and preparation for Day One. And as I've said before, 2024 is an interim year where things are changing for us. We are preparing things where we're laying the ground for a successful combination that should then take off in 2025.

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The famous page five with a CEO judgement, highlights and lowlights. I think I said it all already. Automotive Tech, strong Order Intake, strong EBIT margin, certainly also driven by the mature business. Vehicle Lifetime Solutions with a record quarter. We also see that the trend that started end of last year continues, so strong growth momentum and continued strong EBIT margin. And in Bearings & Industrial Solutions it is a little bit mixed. We see, as I said before, the Orderbook Industrial bottoming, signalling that the market pressure across multiple sectors is declining. On the other hand, we are digesting a challenging situation in the Wind market in China, where there is increased price pressure and where we can, to some extent, compensate this with lower costs but not fully and that clearly leads to an impact on the margin.

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Let me go to page seven, briefly, on the numbers. You see here what I said before, Sales flat, EBIT margin slightly lower. That also includes an impact that Claus is going to explain from the At Equity consolidation of Vitesco that sits in this EUR 322 million, with minus EUR 8.0 million.

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If you go to page number eight, you see what I said before. Top line performance flat and a little bit mixed. You see here that Americas was strong with 4.2%, Europe flat and China below Q1 2023. And if you look into the columns you see that that is more or less driven by the Bearings & Industrial Solutions division with minus 9.8%.

What is also interesting to see is how, in that first quarter, and that's just an indication for the rest of the year, the regional mix has rebalanced a little bit, 45% from Europe, 23% from Americas and 19% from China, 13% from Asia/Pacific. Typically, we have Americas and Greater China more or less on the same level and here you see that the impact of China also impacts the mix. That doesn't mean that we will reduce our Chinese business. The opposite is true. We are positive on China and this is, in particular, true for the Automotive business.

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