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The Board of Managing Directors looks back on a successful year 2016. Schaeffler achieved its targets for the three key performance indicators growth, EBIT margin, and free cash flow. The group’s revenue growth excluding the impact of currency translation of 3.4 % was within the target corridor of 3 to 5 %. The EBIT margin before special items amounted to 12.7 %, reaching the top third of the targeted range of 12 to 13 %. Free cash flow of EUR 735 m considerably exceeded the target of approximately EUR 600 m.
This encouraging development of the key performance indicators was primarily driven by the strong performance of the Automotive division. This division benefitted from favorable overall conditions in the automotive industry which exceeded expectations, especially in China. In addition, revenue growth in the Automotive division of 6.0 % (at constant currency) outpaced growth in global automobile production. The Automotive EBIT margin before special items increased once again, reaching a very encouraging level of more than 14 %.
The Industrial division, on the other hand, continued to face a challenging market environment marked by declining demand in important sectors, particularly in China. Industrial division revenue declined by 4.8 % excluding the impact of currency translation in 2016. Its EBIT margin before special items declined as well, falling short of the division’s plan for 2016 at 7.0 %. Achieving the targeted return for 2018 of 10 to 11 % will be challenging. In light of this, the Board of Managing Directors of Schaeffler AG decided in 2016 to step up its measures for revitalizing the Industrial division - in a second wave of the program "CORE" - in order to put the Industrial division, an integral component of the Schaeffler Group, back on course for long-term success. The measures to improve efficiency and reduce costs initiated in the first wave of the program "CORE" were executed as planned.
In addition, the Board of Managing Directors, cooperating closely with the Schaeffler Group’s senior management and the Schaeffler AG Supervisory Board, finalized its strategy discussions and approved the strategy "Mobility for tomorrow" and the “Agenda 4 plus One” excellence program in October 2016. The strategy "Mobility for tomorrow" was backed with ambitious medium-term financial targets for 2020. Since the Schaeffler Group's strategy has been approved, the Board of Managing Directors views key fundamentals for profitable long-term growth and adding value to be in place.