Schaeffler Group says it is continuing along its growth path, increasing its revenue for the first nine months of 2014 by 7.1% to EUR9bn (US$ 11.14bn). Excluding the impact of currency translation, the group’s revenue growth amounted to 9.0%.
It said the automotive business was key in driving the positive revenue trend. Automotive division revenue increased 8.8% to approximately EUR6.7bn. At constant currency, the division achieved a growth rate of 10.5%, again significantly higher than the growth in global vehicle production. The Group’s Industrial division reported a 2.7% increase in revenue to approximately EUR2.4bn in the first nine months of 2014. On an FX adjusted basis, Industrial division revenue rose by 4.9%.
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Klaus Rosenfeld, CEO of Schaeffler, said, “Despite the challenging environment in the third quarter of 2014, we again managed to continue along our growth path while also improving the quality of our earnings. With our ‘Mobility for tomorrow’ strategy, we are ideally positioned to maintain our profitable growth into the future.”
The Schaeffler Group’s highest growth rate, 24.5% compared to the first nine months of 2013, was generated by Greater China, followed by Asia/Pacific, where revenue was up 8.9%. The Europe and Americas regions experienced revenue growth of 5.1% and 3.4%, respectively, compared to the first nine months of 2013.
The Schaeffler Group’s EBIT for the first nine months of 2014 increased by EUR177m to EUR1.2bn (prior year: EUR1bn) from the prior year period, raising the Group’s EBIT margin by 1.2 percentage points to 13.5% (prior year: 12.3%). EBIT improved primarily due to the growth in automotive division revenue and the consistent control of overheads.
Cash flows from operating activities for the first nine months of 2014 amounted to EUR600m (prior year: EUR919m), including a total of EUR158m in one-off cash outflows related to the early redemption of bonds in the second quarter of 2014. In addition, the Group also paid the EU antitrust penalty of EUR371m in the second quarter of 2014.
Capital expenditures amounted to EUR500m, significantly more than in the prior year period (prior year: EUR343m). Capital expenditures were mainly focused on creating additional production capacity, with Schaeffler investing particularly heavily in the Greater China and Europe regions. At 5.5%, capital expenditures as a percentage of consolidated revenue also exceeded those of the prior year (4.1%), although they were still slightly below the annual target of 6% to 8% of revenue.
These factors resulted in positive free cash flow of EUR103m (prior year: EUR589m) for the first nine months of 2014. Excluding the one-off items described above, free cash flow amounted to EUR632m.
The Group’s net external financial debt (financial debt less cash excluding shareholder loans) amounted to EUR5.8bn as at 30 September 2014. The debt to EBITDA ratio, defined as the ratio of net financial debt to adjusted EBITDA, remained unchanged at 2.6 at 30 September 2014 (31 December 2013: 2.6).
Based on the positive trend during the first nine months of 2014, the Schaeffler Group confirms its guidance on the course of business for the year 2014 as a whole, which it had raised in the first quarter. The company continues to expect to generate revenue growth above 7 % at constant currency for the year 2014. The Group’s guidance regarding its EBIT margin remains at 12 to 13 %.
