Schaeffler Ag Unsp/Adr

Ladies and gentlemen, welcome to the Scheffler Group Q3 2026 earnings conference call and live webcast. I'm Sergen, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and the conference being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. Operator assistance Please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Heiko Eber, Head of Investor Relations. Please go ahead, sir.

Thank you very much. Ladies and gentlemen, I'm very happy to welcome you to our today's call of Steffner's Financial Results Q3 2026. And as you all know, we have already re-released the key KPIs The press release, the presentation, and our interim statement have been published today on our Investor Relations homepage. And I know that you have, as always, taken notice of our well-known disclaimer. As a reminder, we will provide a recording and a transcript of this webcast after the call. As always, Klaus Rosenfeld, our CEO, and Christophe Hannequin, our CFO, joined the conference call to guide you through the key information in our presentation. And of course, they are both available for a Q&A session afterwards.

But just let me hand over to our CEO. Ladies and gentlemen, welcome to our Q3 conference call. Michael, thank you very much for the introduction. You have the presentation in front of you. You know the numbers from Q3. I will concentrate on the announcement this morning of our next performance improvement program. But please, before I do so, quickly on page three, the summary. I'm not going to go through the details here, but I think it's fair to say with the 4.2% Q3 EBIT margin and the 4.5% for the first nine months, a strong pre-cash flow contribution Q3, The performance in Q3 was, despite the weaknesses in auto OEM markets in China, solid. And I can always say here, Heiko, we confirm the guidance for the year 2026. What is new today, and please go to the next page, is the performance improvement program that we announced this morning. And that fits very nicely into the three key priorities that we have shared with you in our Capital Markets Day more than a year ago. These priorities stay absolutely in place, delivering e-mob recovery and achieving break-even, implementing the right self-help measures when needed, and certainly advancing new growth opportunities in humanoids and other areas. The focus is on execution. And with that, let me go to page number five. The automotive situation is, as you know, it is a continued downturn here in Europe that we are facing. I don't think that this is something that will go away tomorrow. It's more a structural change that we need to address. And that is why this performance improvement program, the next one, is a response to that situation. We have basically four issues that we need to address. The first one is in a declining market. The demand for vehicles with combustion engines is declining as well, and that results in overcapacity in Europe that we need to address. So one of the key problems is overcapacity in production, and the solution is consolidate capacity, reduce the number of plants, The second problem that we are facing is that the ramp up of e-mobility is happening slower than expected. While we are still making losses, as you all know, it is important that we also address here the cost side, and that means in particular adjusting R&D capacities that are not necessary. The key problem in Germany is personnel cost. And it's a simple fact that they are too high. If you want to be able to produce in a competitive and cost efficient manner in Germany, we need to address this issue of the personnel cost. And it's a very simple formula. It's number of employees times personnel cost per FTE. With this program, we're trying two things. We're trying to reduce the number of headcount, but we're also trying to reduce personnel cost per capita. And that you can do in several ways. You can move things from Germany into other locations, but you can also think about what we call the solidarity contribution that has impact immediately. and it's also at least for the ones that are not tariff employees, easy to implement. So we have asked this morning our top leadership levels to reduce on a five-day basis their salaries for two years in a row by 5%. The Vorstand has committed itself to reduce its salary by 10% over two years. That is not just a signal to the workers' council and our employee representatives, but also something where we want to contribute immediately to a cost problem that needs to be addressed. The last point that is also on this slide is the organization has become, also through the merger with Vitesco, too complex. We have too many management layers and too narrow spans of control, and that is also part of the program and part of the solution. If you go to the next page, you see what that means in details. We're talking here about a net reduction of 3,460 employees with 16 locations affected. The bulk of the 3,460 is in Germany with 2,660 and 800 in Europe. You see the balance across the different areas. 50% production, 30% R&D, and 20% in other functions. Four of the 16 sites are sites that we will close in Germany. Dortmund is a small location that manufactures parts for combustion engines, more or less the same. Berlin is a R&D area that we inherited from Vitesco in Schwalbach in the same way. So this is a necessary step. It's always difficult for people but we have done this before and I'm confident that this will also be successful this time. The implementation is intended to take place mainly by 2028 and for sure as a family-owned company that is listed, we will do this in a responsible, socially responsible manner. Our relationships with workers' council of the unions in Germany is good and that gives me hope that this will be a process That leads hopefully to a quick resolution of these issues, although the situation in Germany, as you know, is tense. But with the solidarity contribution, with the clear commitment to Germany, I think we have at least two arguments on our side that will help us to achieve that in a reduced friction way, let's put it this way. Sustainable earnings improvement of $300 million per year from 2030 onwards, one of restructuring costs in the area of $480 million. If you compare that to the last program, in the last program we announced gross reduction of $4,700. The gross reduction in the new program is around $4,300. We announced with forwards initially $290 million. Here in Horizon, A little bit more. The restructuring cost in Horizon, as we call this program, is $480 million, and the last one was about $100 million more. We didn't need everything, so you see the size of these programs are similar, and that also gives me hope that we will be able to implement this properly with the experience we have from the past. Let's go to page seven and again put this a little bit in perspective. What does this net reduction in Germany mean from a longer point of view? When you take as a starting point the workforce after acquiring Vitesco in 2024, we had 35,000 employees in Germany. Today, end of September, we have about 32,000 employees. Around 3,000 headcount cuts are going to come from the structural measures in 2024, including also the part-time reductions to RTZ measures in 2026, already agreed. That leads us to 29,000 people. Another 2,660 on top gives you 26,300. That is, if you compare that For the next program, a around 9% reduction of workforce in Germany and over the long term, a 25% reduction of what we have been doing. So you see there is a continuous approach here to streamline German operations and come to a situation where we can operate in a competitive and efficient manner here in our home country. The next page, page number eight, is simply what you know. From the past, the program will be expected in terms of EBIT improvement. The idea is that 100% of the impact will come through in the year 2030. And the solidarity contribution, if it comes true and if everyone agrees to this, will certainly help also to create an immediate impact in 2027. As it's temporary, it will not impact 2030. but it will help us also to support 2027 and also 2028. That's it on the program. More in the Q&A session. I will now very quickly go through the next pages that you have read to allow enough time for Christophe. Sales growth you saw. The weakness in China is well known. We still printed a minus two overall. I think that is not something that should be underestimated, and it shows that our edge logic works. The next page shows you the outperformance numbers for BEF as a whole. You all know that e-mobility is not just BEF only. Both automotive divisions, BTC and EMOP, have exposure to all three different categories of powertrain solutions. And you see we continue to outperform in terms of sales growth the market. The order intake this year, this quarter, was rather lower, to some extent on purpose. We'll come back to that. But we're still at a book-to-bill ratio of 1.1 times. On e-mobility, next page, the most important number here is, from my point of view, the gross margin improvement. You remember what we shared with you on Miami 2. And if you take that separate, and there is a two percentage points improvement from my point of view, absolutely pointing in the right direction. Order intake rather low in the quarter, but that also shows that we are fully concentrating on delivering properly what we have in the books already. Power Trainer Chassis, stronger order intake for sure. This is a business that is not just going down, but that also acquires new activities. There are some interesting New projects that have to do with the pickup market in the US and also with hybrid car business. So you see that Matthias' business is active. The order intake level signals commercial success in a challenging environment with AmeriCars being the main contributor. For sure, the gross margin here is something to watch out for. And this reduction here is predominantly impacted by volume design. Vehicle Lifetime Solutions, as we indicated already and answered your questions last time, good growth with 5.8%, clear outperformance of the market, some issues on the gross margin that come from higher product and logistic costs. That is hopefully now history and Christophe will report on this. Barrington Industrial Solutions, all green in that area. Slide sales growth, strong gross margin level maintained with nearly 25%, and also a good book-to-bill ratio. So you see here that part of our business that includes, never forget that, also the automotive bearing parts is on track. Last but not least, from my side, two pages left, humanoids, nothing new to report here. Since our last conversation, the order book stands at 400 million, but significant number of conversations and customer engagement is deepening, will come up as soon as we have new information here, also maybe before year end. With some interesting news, NVIDIA partnership is building. You all saw that Jensen Wang was here in Germany and gave a great speech. and also the Scheffler Lighthouse family, sorry, factory. Open in tight sun was another cornerstone that shows that we are on the right track. We have been, page 16, very disciplined in terms of capital allocation and capital deployment. You see a reinvestment rate of 0.5 times, similar like in Q3. The CapEx has been rather, We have the money available to spend what we need to spend. At the same time, we are very cautious with not overspending somewhere. So reinvestment rates are rather at the lower end. But as you all know, capital allocation is important these days to manage the capital employed. With that, I hand over to Christophe for a few minutes. More information on the numbers. Thank you very much.