Hard Times for the Auto Industry - Supplier Schaeffler struggles - only spare parts business booming
Schaeffler Caught in Auto Industry Crisis
The crisis in the automotive industry is also affecting Schaeffler, the company based in Herzogenaurach, Bavaria, with nearly 84,000 employees worldwide. For the first half of the year, it reported only a modest revenue increase of 0.8 percent to nearly 8.3 billion euros, with the second quarter performing better than the first. Net profit fell slightly by one percent to 263 million euros. "In this certainly challenging environment, we performed well in the second quarter," said CEO Klaus Rosenfeld. From October 1st, the former Continental subsidiary Vitesco is to be fully integrated into Schaeffler. The enlarged company is expected to have 120,000 employees and join the ranks of the world's ten largest suppliers.
Demand for Spare Parts
Schaeffler currently has three divisions, with the smallest performing best: Revenue from the business of spare parts and service increased by 16 percent. According to Schaeffler's CEO, this is due to the current weak sales of new cars. "The aftermarket business earned more than our other divisions with a result of 228 million euros in the first half of the year," Rosenfeld told the German Press Agency. "In a situation where consumers are more likely to repair cars than buy new ones, this helps us."
Belief in the Future of Electric Mobility
The much larger "Automotive Systems" division includes transmissions, chassis systems, and components for electric motors, with revenues increasing by 0.7 percent to 3.53 billion euros. Rosenfeld expects electric vehicles to remain a growth market despite the current weak market: "We have secured orders worth 3.5 billion euros, including 2.1 billion from e-mobility. The business has still grown, partly even stronger than the market." After the merger with Vitesco, products for electric vehicles will become a separate new division, so Schaeffler will then have four instead of three areas. The integration of Vitesco is "running better than expected."
However, the industrial business, which includes roller bearings and mechatronics, performed worse than expected, with revenue falling by five percent to 3.3 billion euros. Rosenfeld spoke of a "disappointment." "The margin was only 5.5 percent in the first half of the year. The margin of this division should actually be double-digit and needs to get back there."
The automotive industry crisis is significantly impacting Schaeffler, leading to a modest revenue increase and a slight decline in net profit. The weak sales of new cars are contributing to the growth of Schaeffler's aftermarket business, which is comprised of spare parts and service.
