8th annual bnp paribas high yield & leveraged finance … · 2019. 5. 24. · schaeffler group...
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January 2012
Schaeffler Group8th Annual BNP Paribas High Yield & Leveraged Finance Conference
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 2
Operational and financial overview
Q3 2011 financials
Business overview
Agenda
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 3
Public takeover bid for Continental AG shares
Acquisition of approx. 89.9% shares in Continental AG financed by EUR 11 bn acquisition loan
Additional EUR 1 bn revolving credit facility
Announcement of refinancing concept and new legal structure
Successful closing of refinancing
Capital increase Continental AG (c. EUR 1 bn)
Final implementation of refinancing concept and establishment of new legal structure
Announcement of refinancing of Junior loans and rearrangement of participation structureas well as conversion into a stock corporation (AG)
Conversion from Schaeffler GmbH into Schaeffler AG
09/01/09
01/04/09
20/11/09
29/06/10
10/01/10
29/08/08
14/08/09
Chronology
27/03/11
1 Operational and financial overviewChronology of corporate and financing changes
13/10/11
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 4
Key elements
Junior Revolver (€250 mn)not drawn
Junior Term Loan (€2.9 bn)Bullet structure maturing in 12/15
Junior Bond (€1.8 bn)Zero-coupon bond maturing in 03/18
Senior Revolver (€793 mn)only marginally drawn
Senior Term Loan (€7.0 bn)Bullet structure maturing in 06/14 and customary cash interest rates
2
1
1
Schaeffler AGSenior Revolver
Schaeffler Verwaltungs GmbH
Junior Term LoanJunior Bond
Continental AG
ITPbanks2
Holding
Schaeffler Group
1
23
SchaefflerTechnologies AG & Co. KG
Schaeffler Holding GmbH & Co. KG
Financing structure1
1 Operational and financial overviewFinancing structure
(1) Simplified for illustration purposes (2) M.M. Warburg and Bankhaus Metzler
36.1%39.7%
Free float
10.4%
13.8%
100%
100%
Junior Revolver1
Senior Term Loan2
3
2
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 5
Automotive OEM56%
Leading global manufacturer of high-precision components and systems for automotive and industrial applications73,000 headcount at over 150 locations in more than 50 countriesAbove industry average profitability and revenue growth Strategic participation in Continental AG
2008 2009 2010 9M 11
Salesgrowth in %
EBITin % of sales
8,905-1.2%
7,336-17.6%
9,49529.4%
8,08215.2%
1,04011.7%
4466.1%
1,50915.9%
1,34916.7%
EBITDAin % of sales
1,73119.4%
1,10315.0%
2,09722.1%
1,77021.9%
EUR 8,082 mn in 9M 2011
Sales by business divisions
Industrial OEM20%
Key facts Key financials
Sales by region
EUR 8,082 mn in 9M 2011(1) Excluding Germany
Industrial Aftermarket13%
Automotive Aftermarket11%
Asia/Pacific21%
Europe1
33%
Germany27%
South America6%
North America13%
1 Operational and financial overviewSchaeffler at a glance
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 6
Operational and financial overview
Q3 2011 financials
Business overview
Agenda
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 7
Above average growth and sector-leading margins
Proven ability to preserve cash flow
Experienced management team
Top three positions in core market sectors
Strong aftermarket business
Attractive growth markets
Leading positions in attractive
growth markets1
Broad product and application spectrum
Highly diversified customer base
Strong regional diversification
Well-balancedbusiness portfolio2
Technology leadership and superior quality
Outstanding operational excellence
Best-in-class innovation platform
Technology, quality and innovation leadership3
Strong track-record and experienced
management team4
2 Business overviewWorldwide leader in bearings and automotive components
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 8
1
Automotive Industrial
2 Business overviewTop three positions in core market sectors¹
67% Sales2 32% Sales2
Production Machinery Wind PowerPower
Transmission
Aerospace Heavy IndustryRailwayMotorcycles
Fluids & Pneumatics
Power Generation
Consumer Products
Industrial Aftermarket
Transmission
Chassis
Engine
Aftermarket
(1) Company estimate (2) Based on September 30, 2011; excludes EUR 69 mn other revenue
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 9
Aftermarket exposure enhances the predictability of revenues and increases profitability
Products are in service for several yearsRequires continuous aftermarket support
Schaeffler will continue to capture recurring revenue due to
Increasing size of installed baseHigh service levels associated with the equipment in which products are installedHigh switching costs faced by customers Strong positioning in the replacement part market
Industrial Aftermarket
36% of division sales (2010)
Automotive Aftermarket
16% of division sales (2010)
2 Business overviewStrong aftermarket business1
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 10
Power Transmission
Automotive
Heavy Industry
Aerospace
Production Machinery
4.7%
5.6%
3.6%
Market growth estimates (p.a.)2010-20151
5.6%
7.2%
Growth is focused in regions and products growing faster than the market
We target to strongly grow in China and increase our Asia/Pacific revenue share from 22% of group sales in 2010 to 25% by 2014
Schaeffler sales estimation
2 Business overviewAttractive growth markets1
(1) Growth rates based on data that represents a good proxy for respective market sector growth: Production Machinery (consumer goods), Power Transmission (construction machinery), Heavy Industry (basic metals), Automotive (light vehicle production), Aerospace (aerospace production); Sources: IHS Global Insight Automotive (October 2011), Oxford Economics (Autumn 2011)
Key market sectors Key regions
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 11
Products are mission and safety critical for the end product
High switching costs for changing suppliers following product design approval
Requirement for tailor-made, value-added design expertise
Our products represent only a small percentage of the overall costs of the end product
Quality as key purchase criterion
2 Business overviewAttractive growth markets1
Market characteristics
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 12
Engine components and systems
INA-FAG Catalog with40,000 articles
Transmission components and systems
Chassis and accessory-drive components and systems
Radial insertball bearings
Components for
parallel kinematics
Linear guides
Thrust/radial cylindrical
roller bearings with an outside diameter
up to4,250 mm
smallest ball bearing witha 1 mm inside diameter
Tapered rollerbearings
Sphericalroller bearings Direct drives
~ 60,000 automotive products ~ 90,000 industrial products
2 Business overviewBroad spectrum of components and systems2
Automotive Industrial
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 13
~ 7,500 Automotive customers ~ 17,000 Industrial customers
Other customers 84% TOP 10 customers
16% of Industrial sales
TOP 10 customers
53% of Automotive sales
Other customers 47%
2 Business overviewHighly diversified customer base2
Automotive Industrial
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 14
13%
6%
22%
59%1
70 plants: 43 Europe, 14 North & South America, 13 Asia
150 locationsin over 50 countries
40 research & development centers25 Europe, 7 North & South America, 8 Asia
17 education centers in 17 countries9 Europe, 4 North & South America, 4 Asia
New plants opened2001-2011 – all located
in low cost or emerging countries
Irapuato, Mexico
Puebla, Mexico
Sorocaba, Brazil
Lanskroun, Czech Republic
Skalica, Slovakia
Szombathely, Hungary
Kysuce, Slovakia
Debrecen, Hungary
Brasov, Romania
Pune, India
Yinchuan, China
Anting, China
Taicang 1, China
Taicang 2, China
Nanjing, China
Ho Chi Minh City, Vietnam
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
12
3
4 5 67 89
11
2 Business overviewStrong regional diversification – “In the region, for the region”
10
16
12
13
1415
2
(1) Thereof Germany: 27%
Sales split(2010)
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 15
State-of-the-art plants and testing facilities
Outstanding know-how in raw material processing
High level of value added ensured by first class precision manufacturing
Engineering and manufacturing excellence as main competitive advantages for customer specific solutions
Uniform quality management system in all plants worldwide
High-profile business excellent programs support Schaeffler's zero-defect policy
Numerous awards emphasize Schaeffler'sleadership position in terms of engineering and quality
2 Business overviewTechnology and quality leadership3
… basic materials (steel) … inhouse tools design
… low cost precisionmanufacturing… surface treatment
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 16
More than 17,000 patents and patent applications in Germany
Schaeffler is in the Top 4 of the most innovative companies in Germany in 20101, 2
5,500 employees at 40 locations worldwideoperating in close cooperation with customers
R&D spending rate of 5% of sales(7% of sales excl. aftermarket business)
2 Business overviewBest-in-class innovation platform3
(1) Source: German Patent and Trademark Office (2) Measured by number of patent applications
Key aspects
Rank in Germany2
#5 #5#7#9 #4
Number of patent registrations1
20102006 2007 2008 2009
1,641
551667
826
1,146
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 17
… system understanding … condition monitoring… application engineering expertise
… aftermarket services
Preferred developmentpartner for our diverseglobal customer basefrom the earliest stage of concept thanks to deep systemunderstanding
Close entrenchmentwith our customers –embedded in design,evaluation andproduction processes
Unique skillset andknow-how in all areasdown the value chain
Leading applicationengineering andaftermarket service
2 Business overviewDeep system understanding3
Deep system understanding
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 18
EBITDA 2002 – September 2011in EUR bn
Sales 2002 – September 2011in EUR bn
EBITDAmargin 19% 19% 15% 22% 22%
2003 2004 20092008200720062005 9M2002
2 Business overviewAbove average growth and sector-leading margins
Revenue growth above average market growth Sector leading average EBITDA margin of 19% (2007-2010)
20102003 2004 20092008200720062005 9M2002 20100.0
5.0
10.0
0.0
1.0
2.0
4
(1) Based on 2002 - 2010
1.1
1.7
2.1
1.81.7
8.9
7.3
9.5
8.19.0
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 19
Operational and financial overview
Q3 2011 financials
Business overview
Agenda
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 20
9M 2011in EUR mn
9M 2010in EUR mn
∆in EUR mn / %
Q3 2011in EUR mn
Q3 2010in EUR mn
+15.2% 2,452
398
16.2%
147
190
3.1x 3.0x +0.1x
28.1% 21.6% +6.5%-pts.
+212 mn
+0.5%-pts.
+856 mn
∆in EUR mn / %
8,082 7,014
-297 mn
2,703
466
17.2%
102
152
+10.2%
+68 mn
+1.0%-pts.
-45 mn
-38 mn
1,349 1,137
16.7% 16.2%
743 -113
229 526
Sales
EBIT
EBIT margin
Net income
Free cash flow
Leverage ratio
ROCE
3 Q3 2011 financialsProfitable growth continues
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 21
3 Q3 2011 financialsSales growth +10% versus Q3 2010
Page 21
Salesin EUR mn
Sales by regionshare in % / vs. Q3 2010 in %
Germany+8%
Europe1
+14%
North America+6%
South America+5%
Asia/Pacific+12%
(1) without Germany
13%
6%
27%23%
31%
2009 2010
Q1 Q2Q1 Q2 Q3 Q4
23% 22% 27% 25% 31% 32%Grossprofitmargin
Q3
33%
Q4
30%
+10.2%vs. Q3 2010
1,8761,971
1,721 1,768
2,160
2,402 2,452 2,481
32%
Q1
2011
2,697 2,682
Q2
30%
8,082
2,703
31%
7,336 9,495
Q3
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 22
3 Q3 2011 financialsSales in both segments at high level
Sales Automotive in EUR mn
Sales Industrialin EUR mn
2009 2010
Q1 Q2Q1 Q2 Q3 Q4
Grossprofitmargin
Q3 Q4 Q1
2011
Q2 Q3
+13.5%vs. Q3 2010
1,2541,351
1,0081,130
1,4911,6081,5981,628
1,8221,769
5,4054,743 6,325
1,814
17% 20% 27% 24% 29% 29% 31% 27% 29% 27% 28%
2009 2010
Q1 Q2Q1 Q2 Q3 Q4 Q3 Q4 Q1
2011
Q2 Q3
Grossprofitmargin
600 587703
623 641748
810 803855 877
+8.1%vs. Q3 2010
2,6082,513 3,002
876
32% 26% 29% 28% 37% 39% 39% 37% 39% 36% 38%
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 23
3 Q3 2011 financialsStrong earnings quality
EBIT in EUR mn
2.1% 4.0% 10.0% 7.7% 15.5%16.8%EBIT margin 16.2%15.0% 17.5%
187151
3771
335
404 398372
472
411
+17.1%vs. Q3 2010
15.3%17.2%
1,349446 1,509
2009 2010
Q1 Q2Q1 Q2 Q3 Q4 Q3 Q4 Q1
2011
Q2 Q3
466
Net incomein EUR mn
2009 2010
Q1 Q2Q1 Q2 Q3 Q4 Q3 Q4
-235
-344-422
-203
-357
97147
176
Q1
2011
438
39
One-off effect ofEUR -396 mn
203
Q2
102
Q3
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 24
3 Q3 2011 financialsPositive free cash flow despite higher capex
-2,019
184
331
104
190
40
127
209
1166
-1,400
566 229
152
2009 2010
Q1 Q2Q1 Q2 Q3 Q4 Q3 Q4 Q1
2011
Q2 Q3
Free cash flowin EUR mn
Capital expenditure1
in EUR mn
6.9 5.5 2.1 3.3 2.4 3.0 3.1 6.5in %ofsales
4.4
39
65
11998
5172 76
162
120
188
7.0
514321 361
2009 2010
Q1 Q2Q1 Q2 Q3 Q4 Q3 Q4 Q1
2011
Q2 Q3
206
7.6
(1) For illustration purposes, negative results are shown as positive values
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 25
3 Q3 2011 financialsLeverage ratio at 3.1x
Available fundsin EUR mn
6,104 6,098
5,8976,020
6,131
5,9305,763
4.2x
5.0x
4.9x
5.6x
4.4x
3.5x2.7x
6,124
2.8x
5,744
3.0x
Revolver Ancillary lines Cash & cash equivalents
976 998
1,2151,092
1,1901,325
1,481 1,475
1,049
6,069
2.7x
1,093
(1) Incl. debt push down of EUR 600 mn effective as of 07/11 and intercompany loan of EUR 600 mn
2009 2010
03 0603 06 09 12 09 12 03
2011
06 09
7,1451)
3.1x
2009 2010
03 0603 06 09 12 09 12 03
2011
06 09
1,243
Leverage ratio (Net financial debt / LTM EBITDA)
Net financial debt / Leverage ratio¹in EUR mn
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 26
Sales growth
CAPEX
Growth
> 10 %
6-8 % of sales
Quality policy
Employees
Quality
Zero defects
> 8,000 new em-ployees to support worldwide growth
EBIT margin
Free Cash Flow
Profitability
> 13 %
sustainably positive
R&D expenses
Innovation management
Innovation
around 5 % of sales
> 1,600 patent registrations in Germany
3 Q3 2011 financialsKey objectives for 2011 to be overachieved
Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012Page 27
Disclaimer
Page 27
This presentation contains forward-looking statements. The words "anticipate", "assume", "believe", "estimate", "expect", "intend", "may", "plan", "project", "should" and similar expressions are used to identify forward-looking statements. Forward-looking statements are statements that are not historical facts; they include statements about Schaeffler Group's beliefs and expectations and the assumptions underlying them. These statements are based on plans, estimates and projections as they are currently available to the management of Schaeffler AG. Forward-looking statements therefore speak only as of the date they are made, and Schaeffler Group undertakes no obligation to update any of them in light of new information or future events.
By their very nature, forward-looking statements involve risks and uncertainties. These statements are based on Schaeffler AGmanagement's current expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Actual results may differ from those set forth in the forward-looking statements as a result of various factors (including, but not limited to, future global economic conditions, changed market conditions affecting the automotive industry, intense competition in the markets in which we operate and costs of compliance with applicable laws, regulations and standards, diverse political, legal, economic and other conditions affecting our markets, and other factors beyond our control).
This presentation is intended to provide a general overview of Schaeffler Group’s business and does not purport to deal with all aspects and details regarding Schaeffler Group. Accordingly, neither Schaeffler Group nor any of its directors, officers, employees or advisers nor any other person makes any representation or warranty, express or implied, as to, and accordingly no reliance should be placed on, the accuracy or completeness of the information contained in the presentation or of the views given or implied. Neither Schaeffler Group nor any of its directors, officers, employees or advisors nor any other person shall have any liabilitywhatsoever for any errors or omissions or any loss howsoever arising, directly or indirectly, from any use of this information or its contents or otherwise arising in connection therewith.
The material contained in this presentation reflects current legislation and the business and financial affairs of Schaeffler Group which are subject to change and audit.
Schaeffler IR contact
Investor Relations Financial Calendar 2012phone: + 49 9132 82 4440 FY 2011 results: March 20fax: + 49 9132 82 4444 Q1 2012 results: May [email protected] Q2 2012 results: August 28www.schaeffler-group.com/ir Q3 2012 results: November 20