Schaeffler will streamline its operations and widen cooperation with Continental, in which it holds a 46 percent stake. Schaeffler wants to deepen collaboration in areas like engine and drivetrain technology. "Our goal is to improve processes and boost efficiency" by the end of 2015, Schaeffler's Chief Financial Officer Klaus Rosenfeld said.
"There's significantly more potential" to be had by working closer with Continental, remarked Schaeffler board member Peter Gutzmer, adding that past efforts "could have gone further." Schaeffler's automotive unit will still be the key earnings driver as the supplier expects global production of cars and light commercial vehicles to surge, Rosenfeld said.
Earnings before interest and taxes (EBIT) in 2013 dropped 31 percent to EUR982 million ($1.35 billion). Schaeffler recently disclosed that it took a EUR380 million provision in 2013 in relation to a European Union antitrust probe. EBIT adjusted for the provision and job-cut costs remains unchanged at EUR1.41 billion, with the margin dropping 0.1 percentage point to 12.7 percent of revenue.
The German supplier expects its margin in 2014 to amount to between 12 percent and 13 percent of sales. Schaeffler managed to cut its net debt to EUR5.9 billion at the end of 2013 from a peak of over EUR10 billion shortly after the Continental stake purchase.
Rosenfeld remarked it was "too early" to talk about possible steps for a larger debt reduction, adding that and it won't decrease substantially in 2014. He said that additional debt booked at Schaeffler's holding company remained "largely unchanged.”