Schaeffler Downgrades Guidance Amid Slow Autos Sector Recovery
Schaeffler lowered profitability and cash flow guidance for the year after peer Vitesco Technologies VTSC -0.17%decrease; red down pointing triangle, which it merges with in October, warned of a slow recovery in the automotive industry.
The German auto supplier said late Monday that it now expects a margin on adjusted earnings before interest, taxes, depreciation and amortization of 5% to 8% and a free cash flow of 200 million to 300 million euros ($217.8 million-$326.7 million) for the full year.
It previously expected an adjusted Ebitda margin of between 6% to 9% and a free cash flow of EUR300 million to EUR400 million.
The downgraded profitability guidance is a consequence of Vitesco Technologies’ warning earlier on Monday, when it cited lower sales amid a slow automotive-industry recovery, Schaeffler said.
Earlier this year, the two companies agreed to merge. Schaeffler’s new guidance is for the combined group as it assumes full consolidation of Vitesco as of Oct.1.
The decision to adjust the guidance also reflects a continuing weak performance of its bearings and industrial solutions division, the Bavaria-based company said.
Schaeffler said it expects to book second-quarter revenue of EUR4.19 billion, up from EUR4.01 billion in the same quarter last year. Meanwhile, weaker-than-expected profitability of the bearings and industrial solutions division led to an EBIT margin before special effects of 4.9 % in the quarter, down from 7.1%, and below market expectations, Schaeffler said.
Final results for the second quarter are scheduled to be published on Aug. 6.