Schaeffler has turned in a positive revenue and earnings performance in the first nine months thanks to a 'solid third quarter of 2017'. Net income in the first nine months was up by 18%. 

Revenues rose over the first nine months of the year to approximately EUR10.5bn (US$12.1bn) (prior year: approximately EUR10.0bn), which represents growth of 5.0% in constant currency terms. The growth momentum increased in the third quarter of 2017. After two relatively weak quarters, growth in constant currency terms in the third quarter was 7.4% (as compared with 2.2% in the previous quarter). Following the significant margin drop in the second quarter with 9.9%, the third quarter EBIT margin before special items was 12.1%, which is close to the first quarter figure of 12.2%. The EBIT margin before special items for the first nine months was 11.4% (prior year 12.8%). Additionally, a considerable improvement in financial result increased net income for the first nine months by 18% to EUR791m (prior year: EUR672m).

Revenue growth of the Automotive division in the third quarter of 2017 amounted to 6.9% at constant currency (prior year 5.1%), bringing the constant currency growth rate for the first nine months of 2017 to 5.1%. Thus, the Automotive business expanded faster than global production volumes for passenger cars and light commercial vehicles, both in the third quarter and in the first nine months. This expansion was largely driven by the OEM business in the Greater China region, growing by 26.3%.

The Industrial division continued its growth trend in the third quarter of 2017, with a growth in revenue at constant currency of 9.2% (prior year minus 6.2%). Revenue rose by 4.6% at constant currency during the first nine months of 2017. This favourable revenue trend was supported by all 8 sectors in the third quarter.

Revenue trends differed across the four Schaeffler Group regions. While revenue in the Europe region was approximately flat with prior year (+0.4%; +0.2% at constant currency), in the Americas region, revenue increased by 5.0% (+3.8% at constant currency). Revenue in the Greater China region rose by a total of 21.3% (+24.7% at constant currency) during the first nine months, with both divisions generating double-digit growth rates. The Asia/Pacific region generated revenue growth of 6.9% (+6.2% at constant currency) with the support of both divisions.

The Schaeffler Group generated an EBIT in the third quarter of EUR416m, reaching the level of prior year with EUR417m. Thus, the temporary adverse earnings impact experienced by the Automotive division in the prior quarter was largely recovered. For the first nine months this resulted in an EBIT before one-off effects of EUR1,196m (prior year EUR1,276m).

The company's financial result improved in the same period of time to minus EUR104m from minus EUR320m in the prior year – mainly driven by lower interest expense on financial debt – resulting in net income of EUR791m after nine months (prior year: EUR672m). Earnings per share increased in the first nine months by 17%, totalling EUR1.19 (prior year: EUR1.02).

In the third quarter 2017 the Free cash flow of Schaeffler Group resulted in EUR333m (prior year EUR263m). This leads to a Free cash flow for the first nine months of EUR244m (prior year EUR479m). Capital expenditures for the first nine months were EUR873m (prior year: EUR829m), resulting in a capex ratio (capital expenditures in relation to consolidated revenue) of 8.3% (prior year: 8.3%). The number of employees rose by 3.1% to approximately 89,400 (prior year: approximately 86,700).

The company has confirmed its guidance for the full year 2017. The Schaeffler Group anticipates revenue growth of 4 to 5% at constant currency, an EBIT margin of 11 to 12% before special items, and free cash flow of approximately EUR500m before external growth.

"Following the difficult second quarter, our business and earnings have stabilised considerably in the third quarter. At the same time we were able to clearly improve our Free cash flow. We are confident that we will meet our annual targets for 2017 as adjusted in June," Klaus Rosenfeld, CEO of Schaeffler AG, said on Wednesday during the presentation of the results for the first nine months of 2017.

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