Schaeffler posted a first half net loss of EUR260m (US$329m) after a one-off charge related to a capital increase at Continental dragged it into the red.

On an operating level, the company dramatically improved earnings, but the privately-owned bearings maker was forced to book a EUR396m charge after its stake in Continental was diluted to 75% earlier this year from a previous level of almost 90%.

Schaeffler reduced its net debt slightly to EUR5.93bn at 30 June compared with the end of December, bringing its leverage down to 3.5 times earnings before interest, tax, depreciation and amortisation (EBITDA).

The company posted a free cash flow of EUR336m in the first half after burning EUR46m a year ago before including the acquisition of Conti shares in January 2009.

Schaeffler's financial situation is a key factor for credit rating agencies judging the default risk of Continental since the bearings maker effectively dominates the company, Reuters noted.

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