Schaeffler : Commented slides Q1 2021 Schaeffler AG earnings

COMMENTED SLIDES / CONFERENCE CALL RESULTS Q1 2021

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Company Representatives

Klaus Rosenfeld, CEO

Dr. Klaus Patzak, CFO

Renata Casaro, Head of Investor Relations

Conference Call (Active) Participants

Edoardo Spina, HSBC

Sascha Gommel, Jefferies

Horst Schneider, BofA Merrill Lynch

Akshat Kacker, JP Morgan Chase

Christoph Laskawi, Deutsche Bank

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Renata Casaro

Thank you, Stewart. Dear investors, dear analysts, good morning. Welcome to the first quarter 2021 earnings call of the Schaeffler Group. Mr Rosenfeld, group CEO, and Dr Patzak, group CFO, will take you through the presentation slides prepared by the IR team.

May I remind you to limit the number of your follow-up questions to one, so that everyone has the chance to participate in the call. Without further ado, I leave the floor to Mr Rosenfeld. Klaus, the floor is yours.

Klaus Rosenfeld

Thank you very much, Renata. Good morning, ladies and gentlemen. Welcome to our Q1 results conference call. You received the PIRM (IR -note: Press IR Message) this morning, and I think it's fair to summarise, this is another strong quarter in an ongoing market recovery.

The key figures were pre-released on April 19th, and the real news from this morning is that we decided, after finalising our forecasting work, to raise our guidance. And that is, from my point of view, a sign of confidence despite the volatile and still uncertain environment that we're facing for the rest of this year.

Before I come to my first page, the page with the key messages, let me say one sentence on the latest market rumours. You all saw that Bloomberg had a quick note yesterday on the ABB Dodge situation. I want to tackle this upfront. You will understand that, as a matter of principle, we do not comment on such market rumours.

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Klaus Rosenfeld

Now, let me come to the key messages. Q1 sales strong, 11.2% up, driven by China. In particular in Automotive, very strong, 74%. It shouldn't come as a big surprise, the Q1 gross margin that Klaus will explain in more detail later on, showed a positive year- on-year development, also here clearly driven by Auto Tech.

We can say this is a broader recovery. All the three divisions showed double-digit EBIT margins, what is also a reflection of the continuous overhead cost control. Free cash flow 130 million in the first quarter is positive, driven in particular by the higher EBITDA and lower Capex, so the weaker quarters are behind us.

And below previous year, clearly due to the restructuring cash-outs that will also continue throughout the year, and Net Working Capital outflows in particular, driven by higher receivables and also higher inventory need.

Return on capital is back in the range that we articulated as part of our Mid-Term Target, and here you also see the capital discipline that we initiated some time ago, clearly pays off.

The other news that I have for you today is that our restructuring program, and I'll give you more detail in a moment, that we initiated in September 2020, is progressing well. We are in the final stage of the negotiations, and I can say that we think that they will be finalised and closed in the next couple of days.

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