Schaeffler Ag Ord

Ladies and gentlemen, welcome to the shift for Group Q4 and Full Year 2024 Earnings Conference Call and Live Webcast. I am Yusuf, the Chorus Call Operator. I would like to remind you that all participants will be in listen-only mode and that the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcasting. At this time, it's my pleasure to hand over to Heiko Eber, Head of Investor Relations. Please go ahead.

Thank you very much, Operator. Ladies and gentlemen, I'm very happy to welcome you to our today's call on the Financial Results 2024. The press release, the following presentation, and our annual report have been published today at 8 a.m. CET on our Investor Relations homepage. And for sure, we will provide a recording and a transcript of this webcast after the call. Now, before we take a look at today's agenda, I'm sure that you have all taken notice of our well-known disclaimer. Looking at the agenda, Klaus Rosenfeld, our CEO, and Klaus Bauer, our CFO, have joined the conference call to guide you through the key information in our presentation. And of course, we will also discuss our guidance for 2025. Afterwards, both gentlemen will be available for our Q&A session. And now, without further ado, let me hand over to our CEO, Klaus Rosenberg. Thank you, Heiko.

Ladies and gentlemen, welcome to our earnings call. I start on page four of the presentation that you received, and would like to quickly summarize the key messages for the past full year. You see here on this page, mixed performance in 2024, sales up by nearly 13%, but more or less driven by the full consolidation of the test in the fourth quarter. From an organic point of view, certainly worth to mention that BLS continued to grow also in the fourth quarter, very nicely with double-digit growth for the full year. Margin at 4.5, certainly a blended margin of the Schaeffler standalone businesses plus Vitesco for the specific consolidation logic in the year 2024. Schaeffler standalone margin would have been somewhere at around 6%. And that then explains, the delta is then explained by the consolidation of Vitesco at Scheffler IFRS. Free cash flow, I think a positive development, strong, better than expected, 363. And that is true despite a lower EBIT as well as the integration and financing costs that Klaus would explain. You see our guidance. Guidance not for the three segments that we reported in 2024 plus other, but a guidance for the four new segments with the structure that we already indicated, EMOP, PTC, BLS, and the bearing and industrial solution part, plus an other column that I will explain in more detail. For sure, that guidance becomes even more readable if you get the performers. They are not ready yet today, but they will be provided in due course, and Klaus will explain that in more detail. Our guidance is cautiously optimistic. That's how I would describe it. We are certainly moving into another challenging year. Uncertainties remain high. Just think about the whole question of tariffs. that we will certainly discuss then also in the Q&A session. Despite all of this and despite a negative net income driven by one of restructuring provisions and also the right of the deferred tax assets, we are paying a dividend of 25 cents above our target range of 40 to 60%. Let me go to the highlights and lowlights on page number five. I think what is fair to say on the positive resilient performance in Artec, the numbers that you see are Scheffler standalone numbers, 4.2% in a challenging environment, top-line stable, very strong earnings in VLS driven by the outstanding growth and the high profitability of this business, You see here the hedge between the OEM business in automotive and the aftermarket business in automotive works well. I think we can say that Itesco was successfully executed as a transaction in record time, exactly according to plan. And for sure, we are proud to say we have done our strategic homework. It's now all about synergies and profit improvement. That is conceptually laid out and fully integrated into our plans, so it becomes an execution play for the next years to come. Free cash flow was strong in the year, also because Klaus managed our divisions in a tight manner so that they also delivered on working capital promises. On the negative side, market environment challenging. You all know this. EV market soft, in particular here in Europe, and also in the industrial sector, we had to cope with weaknesses. The VTesco contribution is weaker than what we would have liked, but it is now, from a technical and also operational perspective, fully aligned with what we want to do going forward, and that also applies to the application of consistent accounting standards. We are applying the more conservative Scheffler accounting standards, in particular when it comes to capitalization of R&D expenses. On the negative side also, you remember the painful profit warning in December is the subdued performance of BIS. We explained that, I think, in all detail, and it's now up to us to bring that back on track. I'm quite optimistic that that is possible. For sure, the structural measures that we introduced in November will help to achieve that goal. So, all in all, a year of transition, a year where we laid the ground for the year 2025 that will be the year of the motion technology company, the year of execution, and certainly a year where you get through the guidance the promised transparency. Let me move through the next pages rather quickly because this type of segment reporting is to some extent historic. You will see a different reporting going forward. Automotive technologies, as I said, year-on-year flat top line and resilient EBIT margin, 4.2, is okay. If you see on age, the order intake with 4.7, more or less in line with 2023 for Schaeffler standalone. If I add, you see it up on the right-hand side in the bubble, 4.8 for division electrification from Vitesco, It's around 9.5 billion additional orders in this EMOP space. That is clearly showing that we are well underway to generate even more order intake. I have to say the plan for the year 2025 and beyond is to execute now and deliver on this order book. And therefore, let's not just look at how much orders we are taking in, but also how we execute on what we have on our books already. When you see on the right-hand side here, it's a broad order book that includes also across the different regions very interesting projects. There's one in China with a coaxial e-axle gearbox. and another one in engine transmission, so our classical PTC business, where we are also securing orders in the continuation of our foundation business. So you can see here already on this page that the inbuilt hedge in our automotive technology business is working, and in future that will span around two divisions. Vehicle lifetime solutions, I think the number is, Do the talking here, not much more to say, an outstanding result. And once again, testimony why it makes a lot of sense to separate this business into a separate division. Also, again, to show you the inbuilt hatch between OEM businesses and aftermarket businesses. Page 10 is an interesting little example. It's the first successful launch of a VTesco product for the Schaeffler independent aftermarket. a pump, a coolant pump with a smart actuator in it. Certainly something that we'll continue to do and that will enrich our BLS product portfolios, also helping to drive synergies. BIS, a story for 2024 that is to some extent disappointing. Sales declined minus 4.5% and also an unacceptable margin of 4.2%. We are on it. We are about to announce here the internal changes that are necessary, and we'll drive that forward. As you saw from the guidance, we are expecting some recovery, but for sure also the guidance is not the level that I would like to see from that business going forward. If you see 12, the order book industrial level, different type of order book than for automotive. But it's fair to say, Klaus, we have here the third inbuilt hedge. Automotive OEM versus aftermarket is one of them. The automotive EMOP versus PTC is the other one. And now you have the cross-sector hedge with automotive on the one hand and industrial on the other. As I've always said, Scheffler is more than auto, and we will In particular, go for further sales opportunities, further growth opportunities in the sectors that are not cars and light commercial vehicles. Today in the press conference, people asked about what are we going to do in defense. We talked about humanoid robots. So there are corners where exactly our positioning across this broad spectrum is right and will give us additional opportunities. On 12, you see that the order book industrial shows the stabilizing trend. This is also supported by our assumption that in 2025, we're expecting some increased industrial production. And if the 500 million program here in Germany becomes true, I think that should also increase a little bit more confidence into the German economy. I stop here and hand over to Klaus for the detailed financial analysis.