8th annual bnp paribas high yield & leveraged finance … · 2019. 5. 24. · schaeffler group...

January 2012

Schaeffler Group8th Annual BNP Paribas High Yield & Leveraged Finance Conference

Schaeffler Group ● 8th Annual BNP Paribas High Yield & Leveraged Finance Conference ● January 2012

Operational and financial overview

Q3 2011 financials

Business overview

Agenda


Public takeover bid for Continental AG shares

Acquisition of approx. 89.9% shares in Continental AG financed by EUR 11 bn acquisition loan

Additional EUR 1 bn revolving credit facility

Announcement of refinancing concept and new legal structure

Successful closing of refinancing

Capital increase Continental AG (c. EUR 1 bn)

Final implementation of refinancing concept and establishment of new legal structure

Announcement of refinancing of Junior loans and rearrangement of participation structureas well as conversion into a stock corporation (AG)

Conversion from Schaeffler GmbH into Schaeffler AG

09/01/09

01/04/09

20/11/09

29/06/10

10/01/10

29/08/08

14/08/09

Chronology

27/03/11

1 Operational and financial overviewChronology of corporate and financing changes

13/10/11


Key elements

Junior Revolver (€250 mn)not drawn

Junior Term Loan (€2.9 bn)Bullet structure maturing in 12/15

Junior Bond (€1.8 bn)Zero-coupon bond maturing in 03/18

Senior Revolver (€793 mn)only marginally drawn

Senior Term Loan (€7.0 bn)Bullet structure maturing in 06/14 and customary cash interest rates

2

1

1

Schaeffler AGSenior Revolver

Schaeffler Verwaltungs GmbH

Junior Term LoanJunior Bond

Continental AG

ITPbanks2

Holding

Schaeffler Group

1

23

SchaefflerTechnologies AG & Co. KG

Schaeffler Holding GmbH & Co. KG

Financing structure1

1 Operational and financial overviewFinancing structure

(1) Simplified for illustration purposes (2) M.M. Warburg and Bankhaus Metzler

36.1%39.7%

Free float

10.4%

13.8%

100%

100%

Junior Revolver1

Senior Term Loan2

3

2


Automotive OEM56%

Leading global manufacturer of high-precision components and systems for automotive and industrial applications73,000 headcount at over 150 locations in more than 50 countriesAbove industry average profitability and revenue growth Strategic participation in Continental AG

2008 2009 2010 9M 11

Salesgrowth in %

EBITin % of sales

8,905-1.2%

7,336-17.6%

9,49529.4%

8,08215.2%

1,04011.7%

4466.1%

1,50915.9%

1,34916.7%

EBITDAin % of sales

1,73119.4%

1,10315.0%

2,09722.1%

1,77021.9%

EUR 8,082 mn in 9M 2011

Sales by business divisions

Industrial OEM20%

Key facts Key financials

Sales by region

EUR 8,082 mn in 9M 2011(1) Excluding Germany

Industrial Aftermarket13%

Automotive Aftermarket11%

Asia/Pacific21%

Europe1

33%

Germany27%

South America6%

North America13%

1 Operational and financial overviewSchaeffler at a glance



Q3 2011 financials

Business overview

Agenda


Above average growth and sector-leading margins

Proven ability to preserve cash flow

Experienced management team

Top three positions in core market sectors

Strong aftermarket business

Attractive growth markets

Leading positions in attractive

growth markets1

Broad product and application spectrum

Highly diversified customer base

Strong regional diversification

Well-balancedbusiness portfolio2

Technology leadership and superior quality

Outstanding operational excellence

Best-in-class innovation platform

Technology, quality and innovation leadership3

Strong track-record and experienced

management team4

2 Business overviewWorldwide leader in bearings and automotive components


1

Automotive Industrial

2 Business overviewTop three positions in core market sectors¹

67% Sales2 32% Sales2

Production Machinery Wind PowerPower

Transmission

Aerospace Heavy IndustryRailwayMotorcycles

Fluids & Pneumatics

Power Generation

Consumer Products

Industrial Aftermarket

Transmission

Chassis

Engine

Aftermarket

(1) Company estimate (2) Based on September 30, 2011; excludes EUR 69 mn other revenue


Aftermarket exposure enhances the predictability of revenues and increases profitability

Products are in service for several yearsRequires continuous aftermarket support

Schaeffler will continue to capture recurring revenue due to

Increasing size of installed baseHigh service levels associated with the equipment in which products are installedHigh switching costs faced by customers Strong positioning in the replacement part market

Industrial Aftermarket

36% of division sales (2010)

Automotive Aftermarket

16% of division sales (2010)

2 Business overviewStrong aftermarket business1


Power Transmission

Automotive

Heavy Industry

Aerospace

Production Machinery

4.7%

5.6%

3.6%

Market growth estimates (p.a.)2010-20151

5.6%

7.2%

Growth is focused in regions and products growing faster than the market

We target to strongly grow in China and increase our Asia/Pacific revenue share from 22% of group sales in 2010 to 25% by 2014

Schaeffler sales estimation

2 Business overviewAttractive growth markets1

(1) Growth rates based on data that represents a good proxy for respective market sector growth: Production Machinery (consumer goods), Power Transmission (construction machinery), Heavy Industry (basic metals), Automotive (light vehicle production), Aerospace (aerospace production); Sources: IHS Global Insight Automotive (October 2011), Oxford Economics (Autumn 2011)

Key market sectors Key regions


Products are mission and safety critical for the end product

High switching costs for changing suppliers following product design approval

Requirement for tailor-made, value-added design expertise

Our products represent only a small percentage of the overall costs of the end product

Quality as key purchase criterion

2 Business overviewAttractive growth markets1

Market characteristics


Engine components and systems

INA-FAG Catalog with40,000 articles

Transmission components and systems

Chassis and accessory-drive components and systems

Radial insertball bearings

Components for

parallel kinematics

Linear guides

Thrust/radial cylindrical

roller bearings with an outside diameter

up to4,250 mm

smallest ball bearing witha 1 mm inside diameter

Tapered rollerbearings

Sphericalroller bearings Direct drives

~ 60,000 automotive products ~ 90,000 industrial products

2 Business overviewBroad spectrum of components and systems2



~ 7,500 Automotive customers ~ 17,000 Industrial customers

Other customers 84% TOP 10 customers

16% of Industrial sales

TOP 10 customers

53% of Automotive sales

Other customers 47%

2 Business overviewHighly diversified customer base2


http://www.honda.de/atv/index.php

http://www.honda.de/atv/index.php


13%

6%

22%

59%1

70 plants: 43 Europe, 14 North & South America, 13 Asia

150 locationsin over 50 countries

40 research & development centers25 Europe, 7 North & South America, 8 Asia

17 education centers in 17 countries9 Europe, 4 North & South America, 4 Asia

New plants opened2001-2011 – all located

in low cost or emerging countries

Irapuato, Mexico

Puebla, Mexico

Sorocaba, Brazil

Lanskroun, Czech Republic

Skalica, Slovakia

Szombathely, Hungary

Kysuce, Slovakia

Debrecen, Hungary

Brasov, Romania

Pune, India

Yinchuan, China

Anting, China

Taicang 1, China

Taicang 2, China

Nanjing, China

Ho Chi Minh City, Vietnam

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

12

3

4 5 67 89

11

2 Business overviewStrong regional diversification – “In the region, for the region”

10

16

12

13

1415

2

(1) Thereof Germany: 27%

Sales split(2010)


State-of-the-art plants and testing facilities

Outstanding know-how in raw material processing

High level of value added ensured by first class precision manufacturing

Engineering and manufacturing excellence as main competitive advantages for customer specific solutions

Uniform quality management system in all plants worldwide

High-profile business excellent programs support Schaeffler's zero-defect policy

Numerous awards emphasize Schaeffler'sleadership position in terms of engineering and quality

2 Business overviewTechnology and quality leadership3

… basic materials (steel) … inhouse tools design

… low cost precisionmanufacturing… surface treatment


More than 17,000 patents and patent applications in Germany

Schaeffler is in the Top 4 of the most innovative companies in Germany in 20101, 2

5,500 employees at 40 locations worldwideoperating in close cooperation with customers

R&D spending rate of 5% of sales(7% of sales excl. aftermarket business)

2 Business overviewBest-in-class innovation platform3

(1) Source: German Patent and Trademark Office (2) Measured by number of patent applications

Key aspects

Rank in Germany2

#5 #5#7#9 #4

Number of patent registrations1

20102006 2007 2008 2009

1,641

551667

826

1,146


… system understanding … condition monitoring… application engineering expertise

… aftermarket services

Preferred developmentpartner for our diverseglobal customer basefrom the earliest stage of concept thanks to deep systemunderstanding

Close entrenchmentwith our customers –embedded in design,evaluation andproduction processes

Unique skillset andknow-how in all areasdown the value chain

Leading applicationengineering andaftermarket service

2 Business overviewDeep system understanding3

Deep system understanding


EBITDA 2002 – September 2011in EUR bn

Sales 2002 – September 2011in EUR bn

EBITDAmargin 19% 19% 15% 22% 22%

2003 2004 20092008200720062005 9M2002

2 Business overviewAbove average growth and sector-leading margins

Revenue growth above average market growth Sector leading average EBITDA margin of 19% (2007-2010)

20102003 2004 20092008200720062005 9M2002 20100.0

5.0

10.0

0.0

1.0

2.0

4

(1) Based on 2002 - 2010

1.1

1.7

2.1

1.81.7

8.9

7.3

9.5

8.19.0



Q3 2011 financials

Business overview

Agenda


9M 2011in EUR mn

9M 2010in EUR mn

∆in EUR mn / %

Q3 2011in EUR mn

Q3 2010in EUR mn

+15.2% 2,452

398

16.2%

147

190

3.1x 3.0x +0.1x

28.1% 21.6% +6.5%-pts.

+212 mn

+0.5%-pts.

+856 mn

∆in EUR mn / %

8,082 7,014

-297 mn

2,703

466

17.2%

102

152

+10.2%

+68 mn

+1.0%-pts.

-45 mn

-38 mn

1,349 1,137

16.7% 16.2%

743 -113

229 526

Sales

EBIT

EBIT margin

Net income

Free cash flow

Leverage ratio

ROCE

3 Q3 2011 financialsProfitable growth continues


3 Q3 2011 financialsSales growth +10% versus Q3 2010

Page 21

Salesin EUR mn

Sales by regionshare in % / vs. Q3 2010 in %

Germany+8%

Europe1

+14%

North America+6%

South America+5%

Asia/Pacific+12%

(1) without Germany

13%

6%

27%23%

31%

2009 2010

Q1 Q2Q1 Q2 Q3 Q4

23% 22% 27% 25% 31% 32%Grossprofitmargin

Q3

33%

Q4

30%

+10.2%vs. Q3 2010

1,8761,971

1,721 1,768

2,160

2,402 2,452 2,481

32%

Q1

2011

2,697 2,682

Q2

30%

8,082

2,703

31%

7,336 9,495

Q3


3 Q3 2011 financialsSales in both segments at high level

Sales Automotive in EUR mn

Sales Industrialin EUR mn

2009 2010

Q1 Q2Q1 Q2 Q3 Q4

Grossprofitmargin

Q3 Q4 Q1

2011

Q2 Q3

+13.5%vs. Q3 2010

1,2541,351

1,0081,130

1,4911,6081,5981,628

1,8221,769

5,4054,743 6,325

1,814

17% 20% 27% 24% 29% 29% 31% 27% 29% 27% 28%

2009 2010

Q1 Q2Q1 Q2 Q3 Q4 Q3 Q4 Q1

2011

Q2 Q3

Grossprofitmargin

600 587703

623 641748

810 803855 877

+8.1%vs. Q3 2010

2,6082,513 3,002

876

32% 26% 29% 28% 37% 39% 39% 37% 39% 36% 38%


3 Q3 2011 financialsStrong earnings quality

EBIT in EUR mn

2.1% 4.0% 10.0% 7.7% 15.5%16.8%EBIT margin 16.2%15.0% 17.5%

187151

3771

335

404 398372

472

411

+17.1%vs. Q3 2010

15.3%17.2%

1,349446 1,509

2009 2010

Q1 Q2Q1 Q2 Q3 Q4 Q3 Q4 Q1

2011

Q2 Q3

466

Net incomein EUR mn

2009 2010

Q1 Q2Q1 Q2 Q3 Q4 Q3 Q4

-235

-344-422

-203

-357

97147

176

Q1

2011

438

39

One-off effect ofEUR -396 mn

203

Q2

102

Q3


3 Q3 2011 financialsPositive free cash flow despite higher capex

-2,019

184

331

104

190

40

127

209

1166

-1,400

566 229

152

2009 2010

Q1 Q2Q1 Q2 Q3 Q4 Q3 Q4 Q1

2011

Q2 Q3

Free cash flowin EUR mn

Capital expenditure1

in EUR mn

6.9 5.5 2.1 3.3 2.4 3.0 3.1 6.5in %ofsales

4.4

39

65

11998

5172 76

162

120

188

7.0

514321 361

2009 2010

Q1 Q2Q1 Q2 Q3 Q4 Q3 Q4 Q1

2011

Q2 Q3

206

7.6

(1) For illustration purposes, negative results are shown as positive values


3 Q3 2011 financialsLeverage ratio at 3.1x

Available fundsin EUR mn

6,104 6,098

5,8976,020

6,131

5,9305,763

4.2x

5.0x

4.9x

5.6x

4.4x

3.5x2.7x

6,124

2.8x

5,744

3.0x

Revolver Ancillary lines Cash & cash equivalents

976 998

1,2151,092

1,1901,325

1,481 1,475

1,049

6,069

2.7x

1,093

(1) Incl. debt push down of EUR 600 mn effective as of 07/11 and intercompany loan of EUR 600 mn

2009 2010

03 0603 06 09 12 09 12 03

2011

06 09

7,1451)

3.1x

2009 2010

03 0603 06 09 12 09 12 03

2011

06 09

1,243

Leverage ratio (Net financial debt / LTM EBITDA)

Net financial debt / Leverage ratio¹in EUR mn


Sales growth

CAPEX

Growth

> 10 %

6-8 % of sales

Quality policy

Employees

Quality

Zero defects

> 8,000 new em-ployees to support worldwide growth

EBIT margin

Free Cash Flow

Profitability

> 13 %

sustainably positive

R&D expenses

Innovation management

Innovation

around 5 % of sales

> 1,600 patent registrations in Germany

3 Q3 2011 financialsKey objectives for 2011 to be overachieved


Disclaimer

Page 27

This presentation contains forward-looking statements. The words "anticipate", "assume", "believe", "estimate", "expect", "intend", "may", "plan", "project", "should" and similar expressions are used to identify forward-looking statements. Forward-looking statements are statements that are not historical facts; they include statements about Schaeffler Group's beliefs and expectations and the assumptions underlying them. These statements are based on plans, estimates and projections as they are currently available to the management of Schaeffler AG. Forward-looking statements therefore speak only as of the date they are made, and Schaeffler Group undertakes no obligation to update any of them in light of new information or future events.

By their very nature, forward-looking statements involve risks and uncertainties. These statements are based on Schaeffler AGmanagement's current expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Actual results may differ from those set forth in the forward-looking statements as a result of various factors (including, but not limited to, future global economic conditions, changed market conditions affecting the automotive industry, intense competition in the markets in which we operate and costs of compliance with applicable laws, regulations and standards, diverse political, legal, economic and other conditions affecting our markets, and other factors beyond our control).

This presentation is intended to provide a general overview of Schaeffler Group’s business and does not purport to deal with all aspects and details regarding Schaeffler Group. Accordingly, neither Schaeffler Group nor any of its directors, officers, employees or advisers nor any other person makes any representation or warranty, express or implied, as to, and accordingly no reliance should be placed on, the accuracy or completeness of the information contained in the presentation or of the views given or implied. Neither Schaeffler Group nor any of its directors, officers, employees or advisors nor any other person shall have any liabilitywhatsoever for any errors or omissions or any loss howsoever arising, directly or indirectly, from any use of this information or its contents or otherwise arising in connection therewith.

The material contained in this presentation reflects current legislation and the business and financial affairs of Schaeffler Group which are subject to change and audit.

Schaeffler IR contact

Investor Relations Financial Calendar 2012phone: + 49 9132 82 4440 FY 2011 results: March 20fax: + 49 9132 82 4444 Q1 2012 results: May [email protected] Q2 2012 results: August 28www.schaeffler-group.com/ir Q3 2012 results: November 20

8th annual bnp paribas high yield & leveraged finance … · 2019. 5. 24. · schaeffler group...

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