Schaeffler Earnings Report

Shares of Schaeffler (ETR:SHA0) fell after the company reported third-quarter earnings below expectations and announced a restructuring plan focused on European operations.

At 8:34 am (01:34 GMT), Schaeffler was trading 6.3% lower at €4.35.

Schaeffler’s quarterly revenue of €3.96 billion was 1% below consensus forecasts. Adjusted EBIT was €187 million, a 10% shortfall compared to estimates, resulting in an EBIT margin of 4.7%, which is 600 basis points lower than expected.

The weak performance stemmed notably from Schaeffler’s Automotive Technologies segment, where sales fell by 2.5% year-over-year to €1.68 billion, leading to a narrow 2.3% EBIT margin. Analysts at UBS indicated that rising costs related to scaling Schaeffler's E-mobility projects significantly impacted profitability in this sector.

On the other hand, the Vehicle Lifetime Solutions division reported an EBIT margin of 16.4% on €644 million in revenue, thanks to strong demand for maintenance services. However, this success was overshadowed by challenges in the Bearings & Industrial Solutions segment, which recorded a 4.5% margin, a situation UBS analysts described as a “trough” in performance.

To stabilize long-term earnings, Schaeffler has introduced a new restructuring program aimed at consolidating its European operations over the coming years. This program is projected to cost around €580 million and aims to achieve recurring EBIT benefits of €290 million annually starting in 2029.

Nonetheless, UBS noted that the restructuring process could pressure cash flow in the short term, leading to investor concerns that dampened enthusiasm for the stock. They maintained a “neutral” rating, indicating that while the restructuring may enhance profitability in the long term, immediate financial impacts and lack of upward momentum could continue to affect share performance.

J.P. Morgan analysts commented, “Overall, a weak quarter and we expect further pressure on cash flow and balance sheet leverage going forward.”