Sales Automotive – Continued Growth Above Market

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Sales Automotive – Continued Growth Above Market Schaeffler Group Barclays European High Yield and Leveraged Finance Conference 2014 London – October 30, 2014 Disclaimer This presentation contains forward-looking statements. The words "anticipate", "assume", "believe", "estimate", "expect", "intend", "may", "plan", "project", "should" and similar expressions are used to identify forward-looking statements. Forward-looking statements are statements that are not historical facts; they include statements about Schaeffler Group's beliefs and expectations and the assumptions underlying them. These statements are based on plans, estimates and projections as they are currently available to the management of Schaeffler AG. Forward-looking statements therefore speak only as of the date they are made, and Schaeffler Group undertakes no obligation to update any of them in light of new information or future events. By their very nature, forward-looking statements involve risks and uncertainties. These statements are based on Schaeffler AG management's current expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Actual results may differ from those set forth in the forward- looking statements as a result of various factors (including, but not limited to, future global economic conditions, changed market conditions affecting the automotive industry, intense competition in the markets in which we operate and costs of compliance with applicable laws, regulations and standards, diverse political, legal, economic and other conditions affecting our markets, and other factors beyond our control). This presentation is intended to provide a general overview of Schaeffler Group’s business and does not purport to deal with all aspects and details regarding Schaeffler Group. Accordingly, neither Schaeffler Group nor any of its directors, officers, employees or advisers nor any other person makes any representation or warranty, express or implied, as to, and accordingly no reliance should be placed on, the accuracy or completeness of the information contained in the presentation or of the views given or implied. Neither Schaeffler Group nor any of its directors, officers, employees or advisors nor any other person shall have any liability whatsoever for any errors or omissions or any loss howsoever arising, directly or indirectly, from any use of this information or its contents or otherwise arising in connection therewith. The material contained in this presentation reflects current legislation and the business and financial affairs of Schaeffler Group which are subject to change and audit. Page 2 Schaeffler · Barclays European High Yield and Leveraged Finance Conference 2014 · October 30, 2014 1 Schaeffler at a glance Schaeffler – A leading technology provider NumberSchaeffler of Grouppatent atregistrations a glance in Germany1) NumberStrong sales of patent growth registrations from 2009 in- 2013Germany1) in EUR bn 4 Leading manufacturer of high-precision components CAGR +11% and systems for automotive and industrial applications 10.7 11.1 11.2 9.5 4 Global footprint with over 80,000 employees in more than 50 countries 7.3 4 Above industry average profitability and revenue growth 4 Strategic participation in Continental AG 2009 2010 2011 2012 2013 inSales EUR by mn segment Sales by region Industrial Americas 21% 27% 11% 73% Greater China Automotive 58% Europe¹) 10% Asia/Pacific 1) Incl. Germany, Western, Southern and Eastern Europe, Middle East, Africa, Russia and India Page 3 Schaeffler · Barclays European High Yield and Leveraged Finance Conference 2014 · October 30, 2014 1 Schaeffler at a glance A strong history of above average growth Development of sales 2004 - 20131) EBIT and EBITDA 2004 - 20131) in EUR bn in EUR bn 11.1 11.2 2.2 CAGR +5% 10.7 2.1 2.1 2.0 9.5 9.0 8.9 1.7 1.7 1.7 8.3 7.9 1.5 7.3 7.3 1.4 1.1 1.7 1.5 1.4 1.4 1.0 1.1 1.1 1.0 0.8 0.7 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2004 2005 2006 2007 2008 2009 2010 2011 2012 20132) EBITDA margin Sales growth 19.0% 19.5% 19.9% 19.4% 19.4% 15.0% 22.1% 21.0% 18.8% 18.4% EBIT margin 7.2% 8.7% 4.7% 8.4% -1.2% -17.6% 29.4% 12.6% 4.0% 0.9% 10.8% 12.2% 12.9% 12.6% 11.7% 6.1% 15.9% 15.8% 12.7% 12.6% EBIT EBITDA 1) 2004-2005 according to German GAAP, 2006-2013 according to IFRS 2) Adjusted EBIT and EBITDA Page 4 Schaeffler · Barclays European High Yield and Leveraged Finance Conference 2014 · October 30, 2014 1 Schaeffler at a glance Two divisions with top three positions in core market sectors Automotive Industrial Transmission Systems Engine Systems Production Machinery Aerospace Chassis Systems Energy and Raw Material Mobility Aftermarket Aftermarket Page 5 Schaeffler · Barclays European High Yield and Leveraged Finance Conference 2014 · October 30, 2014 1 Schaeffler at a glance Our key success factors – Quality, Innovation and Technology Number of patent registrations in Germany1) Core technologies 2,100 1,832 1,854 1,641 1,146 826 … basic materials (steel) … inhouse tool design 2008 2009 2010 2011 2012 2013 Rank in Germany #5 #5 #4 #4 #4 #2 … precision … surface treatment 1) Source: Deutsches Patent- und Markenamt (DPMA) manufacturing Page 6 Schaeffler · Barclays European High Yield and Leveraged Finance Conference 2014 · October 30, 2014 2 Mobility for tomorrow Strategy refocused – "Mobility for tomorrow" Environmentally friendly drives 1 2 Urban mobility "Mobility for tomorrow" Interurban mobility 3 4 Energy chain Page 7 Schaeffler · Barclays European High Yield and Leveraged Finance Conference 2014 · October 30, 2014 2 Mobility for tomorrow 1 Environmentally friendly drives Reduced losses Efficiency for Increased variability environmental friendly drives Electrification Page 8 Schaeffler · Barclays European High Yield and Leveraged Finance Conference 2014 · October 30, 2014 2 Mobility for tomorrow 1 Combustion engine remains dominant but will be further electrified Powertrain concepts CO2 legislation worldwide ●LightTrends vehicle production Light vehicles in g CO2 2% 1% Proposed target 260 Enacted target 9% USA: incl. light duty vehicles 19% 240 35% 220 200 98% 180 80% 160 56% China: 117 g USA: 109 g in 2020 in 2025 140 120 Japan: 105 g in 2020 2013 2020 2030 100 EU: 95 g in 2020 Combustion engine Hybrids Electric 80 2000 2005 2010 2015 2020 2025 Source: University of Duisburg-Essen, 2012 Source: icct, 2013 Page 9 Schaeffler · Barclays European High Yield and Leveraged Finance Conference 2014 · October 30, 2014 2 Mobility for tomorrow 1 Possible approaches to reduce the fleet-CO2-emissions Three approaches 1. Optimization 2. Downsizing / 3. Hybridization/ conventional Downspeeding Electrification powertrain Example: Example: New Mercedes-Benz S-class Toyota Prius – most successful with 4 cylinders hybrid on the market + + Threefold approach Page 10 Schaeffler · Barclays European High Yield and Leveraged Finance Conference 2014 · October 30, 2014 2 Mobility for tomorrow 1 Market specific concepts to fulfill regional requirements Fiesta eWheelDrive Schaeffler Fiesta eWheelDrive Schaeffler CO ncept-10% Schaeffler 2 Hybrid Schaeffler CO ncept-10% Hybrid 2 Schaeffler ACTIVeDRIVESchaeffler ChinaChina ACTIVeDRIVE ConceptConcept Car Car Gasoline Technology Car 1. Gasoline Diesel TechnologyEco Car Schaeffler Efficient Drive2. Diesel Eco Drive FutureSchaeffler Mobility Efficient North 3. 48V Democar AmericaFuture Mobility North America System 48V Schaeffler Efficient Schaeffler Efficient Future Mobility India Future Mobility India Page 11 Schaeffler · Barclays European High Yield and Leveraged Finance Conference 2014 · October 30, 2014 2 Mobility for tomorrow 1 Meeting stringent US emission targets of 2020 already today Efficient Future Mobility – Fuel reduction in % Schaeffler North America Demonstration Vehicle Technology City Highway Belt Drive Friction 1.0 1.0 Optimization Valve Train Friction 0.5 0.5 Optimization Balance Shaft 0.6 1.0 Bearings Thermal Management 1.0 1.0 Module Adaptive Grill 0.2 0.8 Shutters Engine Start-Stop 6.0 2.0 § Developed in North America for market-specific AWD Disconnect 2.0 6.0 demands and customer requirements Wheel Bearings 0.5 1.0 § Schaeffler shows solutions for optimizing North Optimization American combustion engines and drive trains TC with Centrifugal § Additional fuel savings potential up to 15% Pendulum-type 3.0 1.0 Absorber Total: ~15 ~14 Page 12 Schaeffler · Barclays European High Yield and Leveraged Finance Conference 2014 · October 30, 2014 2 Mobility for tomorrow 1 Latest concept car shows further fuel saving potential Gasoline Technology Car Fuel reduction in % (simulation according to NEDC) Measure Reduction Start/stop 20 km/h 1.1 Recuperation 2.6 Torque repartition 0.8 Dedicated braking pedal 0.5 Free gear selection 5.4 External exhaust gas recirculation (EGR) 2.0 Electric heatable catalyst 2.0 Thermal management module (real simulation) 1.0 Total ~15 § Ford Focus, 1.0l 3-cylinder, turbo charger, 92 kW, 114 g/km Total incl. synergies between measures ~17 CO2, Start/Stop, EU5 § Mild Hybridization 48V BSA, thermal management module, coated tappets, decoupling belt tensioner, optimized turbo Emission reduction charger, engine control unit, injection system, heated catalyst, low-pressure EGR, hydr. clutch actuator, DMF with centrifugal pendulum absorber In addition to fuel savings, emission reduction § Fuel savings potential ~15% (aim ~17%: 95 g/km) and (NMHC, NOx, CO, PM) was achieved to comply with emission reduction EU6c the guideline EU6c. Page 13 Schaeffler · Barclays European High Yield and Leveraged Finance Conference 2014 · October 30, 2014 2 Mobility for tomorrow 2 Urban Mobility Today: 2025: 7.1 bn people 8.0 bn people 50% in metropolitan regions 60% in metropolitan regions Page 14 Schaeffler · Barclays European High Yield and Leveraged Finance Conference 2014 · October 30, 2014 2 Mobility for tomorrow 2 Strong market development LEVs and e-bikes LEVs volume per application worldwide Forecast sales E-Bikes Units in mn.
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