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Management Report

Report on expected development

Expected economic and sales market trends

The International Monetary Fund (IMF) anticipates that the global economy will expand more slowly in 2019 (January 2019). The IMF expects global gross domestic product to grow by 3.5% (2018: 3.7%). Oxford Economics anticipates a growth rate of 3.3% (February 2019). In light of these forecasts, the Schaeffler Group expects global economic growth of just under 3.5% in 2019.

Risks to the global economy have increased noticeably recently. Especially if a number of adverse events occur simultaneously, significantly less global economic growth than currently expected could be the result.

Further escalation of the international trade conflict represents a key risk, especially with respect to globally integrated value chains. In addition, China remains susceptible to an unpredicted economic slump; both the current trade dispute with the U.S. and the still high level of debt in that country exacerbate this risk. Further, a disorderly Brexit would result in significant economic disruption for the United Kingdom and would affect the remaining EU member states as well, albeit to a lesser extent.

Furthermore, global economic growth might be impaired by disruptions in the international financial markets. If the global financing environment tightens up faster than currently expected or significant currency fluctuations occur, this could especially hamper the development of certain emerging countries. Additionally, should the international equities markets experience widespread and persistent price decreases, this would adversely affect the global economy. Furthermore, Italy’s high national debt in combination with that country’s fragile banking system harbors risks to the financial stability of the European Union.

In addition, global economic growth might also be impaired by an escalation of existing geopolitical conflicts.

Taking into account the forecasts of research institute IHS Markit (February 2019), the Schaeffler Group expects automobile production, measured in terms of the number of passenger cars and light commercial vehicles produced, to decrease by about 1% in 2019 (2018: -1.1%). The Schaeffler Group anticipates a decline by about 0.5% for the Europe region and zero growth for the Americas region. The Greater China region is expected to experience a decrease of about 2%, while automobile production in the Asia/Pacific region is forecasted to decline by about 0.5%.

In light of the IHS Markit forecasts (February 2019), the Schaeffler Group expects the global vehicle population, measured in terms of the number of passenger cars and light commercial vehicles up to 3.5 tons in weight, to decline in 2019 compared to 2018, with the average vehicle age remaining nearly unchanged (2018: 3.6% and 9.7 years, respectively).

Based on the forecast by Oxford Economics (December 2018), the Schaeffler Group expects slower global industrial production of about 2.6% in 2019 (2018: 3.4%).

Schaeffler Group outlook

Outlook 2019 - group

Actual 2018
Actual 2018
adjusted comparative figure4)
Outlook 2019
Revenue growth 1)
3.9 %
3.9 %
1 to 3 %
EBIT-Marge before special items 2)
9.7 %
9.7 %
8 to 9 %
Free cash flow3)
EUR 384 m
EUR 384 m
~ EUR 400 m

1) Compared to prior year; excluding the impact of currency translation.
2) Please refer to chapter "Performance indicators and special items" for the definition of special items.
3) Before cash in- and outflows for M&A activities.
4) Comparative figure based on 2019 segment structure.

The Schaeffler Group expects its revenue to grow by 1 to 3% excluding the impact of currency translation in 2019.

In addition, the company expects to generate an EBIT margin before special items of 8 to 9% in 2019.

The Schaeffler Group also anticipates approximately EUR 400 m in free cash flow before cash in- and outflows for M&A activities for 2019.

Outlook 2019 - divisions

  • Actual 2018
    Actual 2018
    adjusted comparative figure3)
    Outlook 2019
    Revenue growth 1)
    2.1 %
    2.1 %
    1 to 3 %
    EBIT-Marge before special items 2)
    7.7 %
    7.5 %
    6 to 7 %
  • Actual 2018
    Actual 2018
    adjusted comparative figure3)
    Outlook 2019
    Revenue growth1)
    2.2 %
    2.2 %
    1 to 3 %
    EBIT-Marge before special items 2)
    17.0 %
    18.2 %
    15 to 16 %
  • Actual 2018
    Actual 2018
    adjusted comparative figure3)
    Outlook 2019
    Revenue growth1)
    10.1 %
    10.1 %
    1 to 3 %
    EBIT-Marge before special items 2)
    11.0 %
    10.9 %
    10 to 11 %

1) Compared to prior year; excluding the impact of currency translation.
2) Please refer to chapter "Performance indicators and special items" for the definition of special items.
3) Comparative figure based on 2019 segement structure.

The Schaeffler Group anticipates that its Automotive OEM division will continue to outperform the global automobile production of passenger cars and light commercial vehicles, expected to decline by about 1%, in 2019. Based on this expected outperformance, the Schaeffler Group expects its Automotive OEM division to generate revenue growth excluding the impact of translation of 1 to 3% in 2019 (2018, adjusted comparative figure: 2.1%). The company also expects an EBIT margin before special items of between 6 and 7% for 2019 (2018, adjusted comparative figure: 7.5%) for the Automotive OEM division.

Given less growth in the global vehicle population than in 2018 and a nearly unchanged average vehicle age, the Aftermarket business will likely grow slightly as well. Based on its own observation of the market, the group expects the Automotive Aftermarket division to generate revenue growth – excluding the impact of currency translation – of 1 to 3% (2018, adjusted comparative figure: 2.2%) and an EBIT margin before special items of 15 to 16% in 2019 (2018, adjusted comparative figure: 18.2%).

In the Industrial division, the economic environment suggests slowing growth in global industrial production. Based on this indication, the company expects its Industrial division to generate 1 to 3% (2018, adjusted comparative figure: 10.1%) in revenue growth in 2019, excluding the impact of currency translation. In addition, the Industrial division anticipates generating an EBIT margin before special items of between 10 and 11% (2018, adjusted comparative figure: 10.9%) in 2019.

The integration of the “Bearing & Components Technologies” (BCT) unit, which had previously acted as an internal supplier, into the Automotive OEM and Industrial divisions has a significant impact on the outlook 2019 for the divisions. Under this reorganization, the functions and plants previously assigned to BCT were integrated directly into these two divisions. In this context, the risk of fluctuations in production cost during the year will be borne exclusively by the two producing divisions Automotive OEM and Industrial starting in 2019, a change designed to strengthen divisional management. The changed allocation of costs has been reflected in the adjusted comparative figures for 2018 presented above as well.


Herzogenaurach, February 19, 2019


The Board of Managing Directors

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