Automotive industry: Schaeffler with bad news

Schaeffler is also clearly feeling the decline in global automobile production. The Management Board expects a profit slump for the financial year 2019. Why the situation is still not hopeless.

Not a good year for the Schaeffler Group. - Picture: Schaeffler

The Schaeffler Group is finally moving away from its targets for the 2019 financial year. Despite a program of austerity, the profit for the first half of the year remains strong.

Compared to the previous year, Schaeffler was able to slightly increase its revenue by 0.5 percent to 7.226 billion euros, but currency-adjusted sales fell by 0.8 percent. Thus, the Group's EBIT also fell by 37.5 percent to 483 million euros. As a result, the EBIT margin fell from 10.7 percent to 6.7 percent.

Which group division suffers particularly

Particularly affected is the Automotive Aftermarket division, which posted a decline in revenue of 2.3 percent to 905 million euros. The division's EBIT decreased by 24 percent to EUR 136 million, reducing the division's EBIT margin from 19.3 percent to 15 percent. The largest group division, Automotive OEM, also recorded a decrease in sales of 1.6 percent to 4.514 billion euros.

The divisional EBIT plunged by almost 2/3 to 144 million euros, resulting in a sharply lower EBIT margin from 9 percent to 3.2 percent. By contrast, the Industrial division increased sales by 7.6 percent to 1.806 billion euros, and the division's EBIT even increased by 13.4 percent to 203 million euros. This improved the EBIT margin of the industrial business from 10.7 percent to 11.2 percent.

What makes Schaeffler hope

Hope is still resting on the second half of 2019, which should improve on the previous year alone due to "base effects" in car sales. This is also reported by the analyst Frank Schwope of Nord LB in his study. Special hope also comes to the Chinese car market. After all, the Volkswagen Group in June 2019 in the Middle Kingdom had to increase in deliveries by 15 percent and Mercedes-Benz in July by 13 percent, so Schwope.

Schaeffler is still in the process of restructuring. In view of the current market environment and the Schaeffler preference share price, which has been almost halving since the 52-week high in August 2018, Nord LB recommends holding the security.