Overall assessment of the 2018 business year
The Board of Managing Directors looks back on a mixed year that brought great challenges. While earnings came under pressure in the context of the challenging automotive sector environment, the Schaeffler Group successfully pressed ahead with its transformation.
The Industrial division did very well, growing profitably with revenue growth – excluding the impact of currency translation – of 10.1% and an EBIT margin before special items of 11.0%. These results are partly attributable to the consistent implementation of the program “CORE”. The Automotive OEM division’s revenue growth (+2.2% at constant currency) and earnings (EBIT margin before special items 7.7%) fell short of expectations in a challenging market and competitive environment. This performance was attributable, on the one hand, to a noticeable decline in automobile production in the Greater China and Europe regions, especially in the second half of 2018. On the other hand, the division could not offset the impact of these lower volumes, increased pricing pressure, and costs related to the realignment of the business portfolio with sufficient compensating measures and increased efficiency. Operating in a highly competitive environment, the Automotive Aftermarket division grew less than originally expected as well. In order to strengthen its market position, the division has commissioned several new distribution centers, which has put a strain on earnings in 2018. In light of the heterogeneous performance of the divisions, this past year has once more demonstrated the importance of the Schaeffler Group being both an automotive as well as an industrial supplier.
Integrating the “Bearing & Components Technologies” (BCT) unit, which had previously acted as an internal supplier, into the Automotive OEM and Industrial divisions in 2018 represented an important step toward increasing the Schaeffler Group’s efficiency. In addition, the Schaeffler Group successfully completed the merger of the Indian Schaeffler companies and decided to reorganize its UK business activities in order to streamline the group.
The Schaeffler Group continued to execute its M&A strategy in 2018 by establishing the Schaeffler Paravan Technologie GmbH & Co. KG joint venture, which then acquired the “drive-by-wire” technology, and by acquiring Elmotec Statomat – both transactions that position the group for the “Mobility for tomorrow”.
The Board of Managing Directors expects the environment to remain challenging in 2019 as well, and it has launched the efficiency programs “RACE” for the Automotive OEM division and “FIT” for the Industrial division in response. These programs will help improve and safeguard the two divisions’ earnings quality and efficiency for the long term. As well, the program for the future, the “Agenda 4 plus One”, which was 55% complete at year-end 2018, will be consistently executed in 2019.