Schaeffler has announced preliminary key figures for 2017. The company confirmed the 5.9 percent increase in revenue at constant currency previously announced on Jan. 15, which exceeded the company’s guidance for 2017 of 4 to 5 percent. Total revenue rose to 14 billion euros (approximately $17.39 billion USD) in 2017 (prior year: 13.3 billion euros, or approximately $16.52 billion USD). Fourth quarter revenue increased to approximately 3.5 billion euros (approximately $4.35 billion USD). This represents constant currency revenue growth of 8.5 percent for the fourth quarter of 2017.
Both of the company’s divisions contributed to this positive revenue development in 2017. While the Automotive division reported revenue growth of 5.9 percent at constant currency, the Industrial division’s constant currency growth rate amounted to 5.7 percent. In the fourth quarter, the Industrial division grew by 9.1 percent at constant currency, exceeding the Automotive division’s growth.
Automotive OEM business order intake showed a promising trend: It reached 11.5 billion euros for the full year, representing a “book-to-bill ratio,” the ratio of order intake to revenue, of 1.3x. The Industrial division continued to show growing order book as well.
On this basis, the Schaeffler Group generated EBIT before special items of 1,584 million euros (approximately $1,987 million USD) in 2017 (prior year: 1,700 million euros, or approximately $2,111 million USD). The resulting EBIT margin before special items of 11.3 percent (prior year: 12.7 percent) was in line with the company’s guidance of 11-12 percent for the full year 2017.
The Automotive division reported an EBIT margin before special items of 12.2 percent in 2017 (prior year: 14.3 percent). The decrease in EBIT margin was primarily due to the temporarily weak performance in the second quarter of 2017. The Industrial division saw its EBIT margin before special items rise to 8.1 percent (prior year: 7.3 percent).
Free cash flow for 2017 came in at 488 million euros (approximately $606 million USD, with the prior year at 735 million euros, or approximately $913 million USD). This figure includes approximately 27 million euros (approximately $33.5 million USD) in net cash outflows from M&A activities. Excluding these outflows, free cash flow was slightly higher than the guidance for the full year 2017 of 500 million euros (approximately $621 million USD). The decline in free cash flow is primarily due to an increase in capital expenditures to 1,273 million euros (approximately $1,582 million USD, with a prior year of 1,146 million euros, or $1,423 million USD). The capex ratio, i.e. capital expenditures as a percentage of consolidated revenue, amounted to 9.1 percent (prior year: 8.6 percent).
“With our excellence program Agenda 4 plus One and its 20 initiatives, we have laid the foundation to make the Schaeffler Group even more future-proof. Like any transformation program, the Agenda 4 plus One will initially result in one-time charges and investments that will impact our earnings also in 2018. We have decided to accelerate the implementation of the program in 2018. We adhere to our Financial Ambitions 2020,” said Klaus Rosenfeld, CEO of Schaeffler AG.
For 2018, the Schaeffler Group anticipates revenue growth of 5 to 6 percent at constant currency and expects to generate an EBIT margin of between 10.5 and 11.5 percent before special items. In addition, the company expects approximately 450 million euros (approximately $559 million USD) in free cash flow before M&A activities in 2018.
Schaeffler AG will present its results for 2017 and announce further details of its outlook 2018 at its annual financial press conference on March 7 in Munich.