Schaeffler Group said that its profit margin may shrink this year

Article by Christian A., on March 30, 2011

The 2011 profit margin of Schaeffler Group, which makes roller bearings, may drop as higher prices for energy, steel and aluminum raise costs. In a recent statement, the company said earnings before interest and tax will be "above 13 percent" of revenue after hitting 16 percent last year.

Since Feb. 15, 2011, when anti-government protests commenced in Libya, oil prices have increased by 23 percent. Libya is Africa's third-biggest crude producer. On March 1, 2011, Daimler AG CEO Dieter Zetsche described these steel costs to be a "headwind" for carmakers.

Schaeffler CEO Juergen Geissinger told reporters in Frankfurt that the company needs about 1 million tons of steel annually, says BusinessWeek. He added the company uses forward contracts to lessen the impact of price swings. Schaeffler posted a net income of EUR63 million in 2010 compared with a EUR1.2 billion loss in 2009.

The company said sales could increase by 8 percent to 10 percent in 2011 from EUR9.5 billion ($13.4 billion) as demand for cars and light vehicles shoots up in the Asia-Pacific and North America.

Schaeffler said that in Asia, its market share will climb to about 33 percent in the approaching years from 22 percent in 2010, with reliance on Europe decreasing as it builds new facilities or expands output at five sites in China and three in India through 2013. Schaeffler is based in Herzogenaurach, Germany.

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