Schaeffler swings to Q3 loss on restructuring costs

Schaeffler swung to a loss of 191 million euros ($225 million) in the third quarter on restructuring costs related to efforts to reduce its workforce and industrial capacity.

The German supplier posted a profit of 312 million euros in the third quarter of last year and an 8.6 percent margin.

Excluding restructuring and other special costs, the company said it would have recorded a profit of 320 million euros for the third quarter of this year.

Third-quarter revenue fell 6 percent to 3.4 billion euros compared with the same period in 2019, Schaeffler said.

For the first nine months of 2020, Schaeffler reported revenue of 8.8 billion euros, a decline of 17 percent from 2019. It recorded a loss of 413 million euros, compared with a profit of 795 million euros in the first nine months of 2019. 

The rebound in global auto production following coronavirus-related shutdowns in the spring helped Schaeffler narrow its losses in the third quarter, CEO Klaus Rosenberg said in a statement Tuesday.

“The two automotive divisions benefited from the upturn in demand, allowing them to help stabilize the Schaeffler Group’s earnings,” Rosenberg said.

Schaeffler, based in Herzogenaurach, Germany, makes bearings; engine, chassis and transmission components; clutch and transmission systems; and electric mobility products.

The supplier ranks ranks No. 28 on the Automotive News list of top 100 global suppliers with estimated sales to automakers of $10.1 billion in 2019.

Earlier this year Schaeffler announced a plan to cut 4,400 jobs and close or sell several German plants. Most of the reductions will take place at a dozen facilities in Germany and two sites elsewhere in Europe. That followed structural and efficiency measures announced in 2019 at the supplier’s three divisions, Automotive Technology, Automotive Aftermarket and Industrial. 

Schaeffler issued new guidance for 2020, after announcing in March that it would suspend full-year forecasts because of uncertainty around the coronavirus pandemic.

For 2020, the supplier expects full year revenue to decline by 11.5 percent to 13 percent (at constant currency rates), to generate EBIT margins of 4.5 percent to 5.5 percent (before special items). Free cash flow will be 500 million euros to 600 million euros, excluding merger and acquisition activities, Schaeffler said. 

Rosenberg warned of more COVID-related uncertainty as a “second wave” of the virus brings restrictions in key markets such as France and Germany. 

“Given the persistently high uncertainty regarding the further course of the coronavirus pandemic and also with a view to new lockdown measures in certain markets,” he said, “it would be premature to assume that the crisis is over.”