Schaeffler AG 2017 Global Auto Industry Conference - January 10, 2017 Detroit

 
Schaeffler AG 2017 Global Auto Industry Conference - January 10, 2017 Detroit
Schaeffler AG
2017 Global Auto Industry Conference

              January 10, 2017
                  Detroit
Schaeffler AG 2017 Global Auto Industry Conference - January 10, 2017 Detroit
Disclaimer

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    expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the
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    not limited to, future global economic conditions, changed market conditions affecting the automotive industry, intense competition in the markets in
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    change.

2            January 10, 2017                                 2017 Global Auto Industry Conference | © Schaeffler 2017
Schaeffler AG 2017 Global Auto Industry Conference - January 10, 2017 Detroit
Schaeffler Executive Team – Introducing Matthias Zink and Marc McGrath

                            u Matthias Zink (47) joined the Executive Board on January 1, 2017
                            u Co-CEO Automotive Schaeffler Group succeeding Norbert Indlekofer
                            u 22 years with Schaeffler
                            u Execute the mobility for tomorrow strategy with a focus on future powertrains to support
                              E-Mobility

                             u Marc McGrath (50) joined Schaeffler Americas in 1988
                             u Head of Automotive Americas since January 1, 2016
                             u 29 years with Schaeffler
                             u Pivoting resources to strengthen regional E-Mobility and mechatronics development for future
                               mobility

3      January 10, 2017                     2017 Global Auto Industry Conference | © Schaeffler 2017
Schaeffler AG 2017 Global Auto Industry Conference - January 10, 2017 Detroit
Agenda

1   Schaeffler at a glance

2   Strategy "Mobility for tomorrow"

3   Investment Highlights

4   Summary

4        January 10, 2017              2017 Global Auto Industry Conference | © Schaeffler 2017
Schaeffler AG 2017 Global Auto Industry Conference - January 10, 2017 Detroit
1 Schaeffler at a glance
Schaeffler AG – A leading automotive and industrial supplier

    Schaeffler at a glance                                                                                               Sales growth 2012-2016 (in EUR bn)
                                                                                                                                                                                 13,2
                                                                                                                                                                      12,1
                                                                                                                                    10,7            11,1    11,2
    u   Leading automotive and industrial supplier of high-precision components and
        systems
    u   Global footprint with around 85,000 employees at about 170 locations in more than
        50 countries
    u   Balanced business portfolio across sectors, geographies
        and diversified customer base with leading market positions
    u   Sizeable aftermarket exposure contributes to stable financial performance                                                  2011             2012    2013     2014        2015         2016
    u   Highly attractive profitability and cash returns                                                               Growth      +12.6%           +4.0%   +0.7%     +8.2%      +8.7%
                                                                                                                       rates

    Sales by division and region (9M 2016) (in %)                                                                        Global footprint
                                                                                                                                                                    #Plants             #R&D Centers
                                     24,4                                      22,0
                                                                                                                           Europe                                       48                           9
                                                                            14,4               53,3
                                                                                                                           Americas                                     14                           5
                        75,6                                                    10,3
                                                                                                                           Greater China                                     8                       1
                Industrial            Automotive               Europe     Asia/Pacific   Greater China   Americas          Asia / Pacific                                    5                       2
                                                                                                                           Total                                        75                       17
    EUROPE: Incl. Germany, Western, Southern and Eastern Europe, Middle East, Africa, Russia and India

5                January 10, 2017                                                        2017 Global Auto Industry Conference | © Schaeffler 2017
Schaeffler AG 2017 Global Auto Industry Conference - January 10, 2017 Detroit
2 Strategy "Mobility for tomorrow"
Strategy "Mobility for tomorrow" – 4 key elements

    Vision / Mission                                                         4 Focus areas

     8 Strategic pillars                                                     16 Strategic initiatives

6           January 10, 2017              2017 Global Auto Industry Conference | © Schaeffler 2017
Schaeffler AG 2017 Global Auto Industry Conference - January 10, 2017 Detroit
2 Strategy "Mobility for tomorrow"
Financial Ambitions for 2020 – Sustainable value creation

     Financial Ambitions 2020                                                                                                       Market assumptions

      Sales Growth                                                 Ø 4-6% p.a.                                                    4 Automotive: Growth of global passenger car production around 2%
                                                                   w/o external growth, FX-adjusted

                                                                                                                                  4 Industrial: Low single-digit growth of industrial production
      EBIT Margin                                                  12-13% p.a.
                                                                   Before one-off effects, w/o external growth

      Free Cash flow                                               ~€ 900M in 2020
                                                                   w/o external growth

      Earnings per Share                                           ~€ 2.00 per share in 2020
                                                                   w/o external growth

      Gearing ratio 1)
Schaeffler AG 2017 Global Auto Industry Conference - January 10, 2017 Detroit
3 Investment highlights
The Schaeffler Equity Story – 3 key elements

    3 key elements                                                                                                   Key objectives
                                                                                                 Growth

                               u Consistent growth above markets;
         Outperformance          targeting at least 4%-pts OE sales above market until 2020
     1
         in Automotive         u Best-in-class margin

                                                                                                 Margin
                                                                                                                            Profitable growth

                                                                                                                 q
                               u CORE program launched to revitalize                                                         and sustainable
         Margin upside           Industrial division
     2
         in Industrial         u Margin upside potential + 3%-points                                                          value creation

                                                                                                   Cash
                                                                                                   flow
         Strong Free           u Strong operating Cash flow Generation
     3   Cash flow             u FCF used for dividend payments, M&A and further
         generation              deleveraging

8           January 10, 2017                          2017 Global Auto Industry Conference | © Schaeffler 2017
Schaeffler AG 2017 Global Auto Industry Conference - January 10, 2017 Detroit
3 Investment highlights – Outperformance Automotive
  1 Schaeffler Automotive – Strong track                                   record of above market growth

    Sales and EBIT margin                                                                                        Out-performance in all regions1)
                                                                                                                                               Global Market +4%
                                                                             9,993         10,169
                                               8,164          8,986                                                                                 Schaeffler Automotive +9%
                                  7,658
                                                                                                                                                        Market        Schaeffler

                                                                                                                             15%                                                                                 24%

                                  2012         2013            2014          2015        LTM 2016                                                                                   9%
                                                                                                                     5%                           2%     5%                1%                             7%
    Growth rate (y-o-y)            +7.0%       +6.6%         +10.0%        +11.2%           +3.5%
    EBIT margin1)                  13.5%       13.0%          14.0%         13.6%           14.2%                     Americas                      Europe                 Asia / Pacific                Greater China
    1) Before   one-off effects                                                                                  1) Schaeffler   Automotive CAGR 2010 – 2015 excluding Aftermarket and FX

    Sales by region                                                                                              Broad customer mix
                                                                                                                   Top 10 customers
                                                22%

                                                                                                                                                                                                               40%
                                                                 53%
                                            15%
                                                                                                                                                                                       60%
                                                  10%

                                   Europe   Asia/Pacific   Greater China   Americas
                                                                                                                                                                                            Top 10 automotive customers
                                                                                                                                                                                            Other customers

9                  January 10, 2017                                              2017 Global Auto Industry Conference | © Schaeffler 2017
Schaeffler AG 2017 Global Auto Industry Conference - January 10, 2017 Detroit
3 Investment highlights – Outperformance Automotive
 1   Outperformance Automotive – Four main growth drivers

     Growth drivers                                                          Current examples
                                                                             Finger follower                                                                                  Finger follower
                                                                             (not switchable)                                      ~ 4 x more                                    (switchable)
        Growth from                                                                                                                 content1)
      1
        new technologies / products

                                                                             Conventional                                                                                      Double clutch
                                                                             clutch                                                                                           with actuation
                                                                                                                                  ~ 10 x more
        Growth from                                                                                                                 content1)
                                                                                                                                                                             and control unit
      2
        higher systems share

                                                                    q
                                                                                                                                                                              Ball screw drive
                                                                                                                                    +15% pts                                        for electric
        Growth from                                                                                                                installation                                   brake China
      3                                                                                                                               rate2)
        new customers and markets

                                                                             Dual mass                                                                                                 RepSet
                                                                             flywheel                                                                                               dual mass
                                                                                                                                   > 4 x faster
        Growth from                                                          (single parts)                                         growth3)
                                                                                                                                                                                     flywheel
      4
        Aftermarket business
                                                                             1)   based on unit price; 2) installation rate 10% in 2015, 25% in 2020; 3) Sales CAGR 2015 – 2020

10         January 10, 2017                           2017 Global Auto Industry Conference | © Schaeffler 2017
3 Investment highlights – Outperformance Automotive
 1           Outperformance to increase again in 2017 – 4%-pts OE sales growth above market targeted 1)

       Outperformance YTD September 2016:                                                   Targeted outperformance 2017

         u Trucks effect:                                                                     u Order book shows strong growth potential in all regions
           Truck sales is part of our total Automotive sales, weak                              and business divisions
           markets dampening growth                                                           u Growth from existing technologies/products:
         u Phase out effect:                                                                    Torque converters in the US, new DCT projects in China,
           Phase-out of two projects affecting growth rate negatively                           new contract with UniAir system
           in 2016                                                                            u Growth from new technologies/products:
         u Americas mix effect:                                                                 Innovative thermal management module, electro
           OEM stopped production of two small sedans as market                                 mechanical cam phasing system, new e-clutch
           was shifting to SUVs and light trucks                                              u Growth from new customers/markets:
                                                                                                Strong growth in China with non Chinese OEMs as well as
                                                                                                Chinese OEMs (dual clutch dry/wet, dual mass flywheel,
                                                                                                clutch release system)

                                          2016                                                                                2017
                                 outperformance YTD 09:                                                              outperformance target:
     1) At   constant currency            ~ 2%                                                                                ~ 4%

11                  January 10, 2017                      2017 Global Auto Industry Conference | © Schaeffler 2017
3 Investment highlights – Outperformance Automotive
 1         Market growth based on increasing production of hybrid and electric vehicles – Two scenarios

     Global production volume 1)                                                 Basic scenario 2)                                     Global production volume 1)                                              Accelerated
     in millions of units                                                                                                              in millions of units                                                      scenario 2)

                                                           CAGR 2010/2030                                                                                                                 CAGR 2010/2030
                                                             +2.4% p.a.                                         120                                                                         +2.4% p.a.                                    120
                                                                                            111                                                                                                                        111
                                                                                                                10%
                                                                         102                 4%                                                                                                         102                               30%
                                                                                                                                                                                                                       15%
                                                 89                                                                                                                          89
                                                                        13%                  24%                37%                                                                                    13%
                   74                                                                                                                           74                                                                     35%
                                                                                                                                                                                                                                          40%

                 98%                            97%                     85%                  72%                53%                            98%                         97%                         85%             50%
                                                                                                                                                                                                                                          30%

               2010                             2015                    2020e               2025e               2030e                        2010                         2015                       2020e            2025e               2030e

                                                                                Battery electric vehicles                                                                                                     Battery electric vehicles
     Source: IHS, LMC Automotive, Schaeffler Group projections                                                                            Source: IHS, LMC Automotive, Schaeffler Group projections
     1) Annually expected global production volume, automobiles/small           Hybrid vehicles                                           1) Annually expected global production volume, automobiles/small    Hybrid vehicles
        utility vehicles in millions of units                                                                                                utility vehicles in millions of units
     2) Schaeffler estimates                                                    Internal combustion engines                               2) Schaeffler estimates                                             Internal combustion engines

12                       January 10, 2017                                                             2017 Global Auto Industry Conference | © Schaeffler 2017
3 Investment highlights – Outperformance Automotive
 1     Strong starting position in e-mobility – Six series contracts for hybrid modules and e-axles

     Product portfolio                                                                                                           Key aspects
                                                                                                                                 1999
                                                                                                               C02 – Reduction
                                                                                                                                 1st Schaeffler E-Mobility symposium
                                                                                                                                 2002
                                                                                                                                 1st E-Mobility concept car
                                                                                                                                 2005
                                                                                                                                 1st serial production of components
                                                       HV hybrid                                                                 for hybrid modules
                                                        module
                                      48 V hybrid                                                                                2016
                                        module                                                             Electric wheel         u 500 Million Euro investment to date1),
                                                                                                             hub drive              1,200 employees globally
              E-Clutch
                                                                                                                                  u More than 20 customer projects
                                                                                       HV e-axle
                                                                                                                                  u 6 series contracts for hybrid modules and
                                                                                                                                    e-axles
                                           48 V                        48 V
                                                                      e-axle                                                     2020
                                        Front end
                                     accessory drive                                                                              u Further 500 Million Euro investment1)
                                                                                                                                  u Doubling of employees in R&D and
            Mild hybrid vehicles (48 V)             Hybrid vehicles (HEV, PHEV)                  Electric vehicles (BEV)
                                                                                                                                    manufacturing
                                                                                                Grade of electrification
                                                                                                                                     1) IncludingR&D

14          January 10, 2017                                          2017 Global Auto Industry Conference | © Schaeffler 2017
3 Investment highlights – Outperformance Automotive
 1    Example Schaeffler North America – Developing components and systems for future technology

     48V transmission driven accessories              Hybrid module                                               HV E-Axle

      u Mild hybrid system invented and               u Expertise in components saved                             u R&D in-place in the region
        developed in US                                 >50mm when integrated into a
                                                        system                                                    u Engaged in 7 E-Axle projects
      u 12 KW
                                                      u Can be utilized as a full hybrid or                       u Component expertise yields smaller,
      u Direct energy recovery results in               plug-in hybrid                                              lighter packages
        fuel economony levels equivelant
        or greater than a P2 hybrid for the           u SOP 2018
        cost of a Belt Starter Alternator

14         January 10, 2017                            2017 Global Auto Industry Conference | © Schaeffler 2017
3 Investment highlights – Outperformance Automotive
  1 Compact Dynamics acquired – Broadening                  competence and scope

 1    System and Powertrain Competence             2   Acquisition
                                                   u Schaeffler acquires a 51% stake in Compact
                                                     Dynamics GmbH from SEMIKRON International
                                                     GmbH.

                                                   u Closing expected in Q1 2017; call option for
                                                     remaining 49% stake until June 2018.

                                                   u Compact Dynamics is a development specialist in
                                                     the field of innovative, electric drive concepts

                                                   3   Cooperation

     u 500 Million Euro investment to date1),      u At the same time, SEMIKRON and Schaeffler
       1,200 employees globally                      establish a cooperation to develop power electronic                    HV E-Axle
                                                     solutions for alternative drive concepts
     u More than 20 customer projects
                                                   u SEMIKRON is a worldwide leader for innovative                          Preferred
     u 6 series contracts for hybrid modules and     power electronics                                              Mobility Solutions Partner
       e-axles
                                                   u Schaeffler is significantly expending its expertise in
                                                     e-motors and power electronics

15          January 10, 2017                             2017 Global Auto Industry Conference | © Schaeffler 2017
3 Investment highlights – Margin upside Industrial
 2        Schaeffler Industrial – Bearing solutions for 8 sector clusters and distribution

     Sales development 2012 – 2015                                                                               Sales split by region 2015
                                                                                                                                                                                         Americas

                                    3,406
                                                                                            3,233                                                        19%
                                                                         3,138                                   Greater China                                                             Europe
                                                   3,041

                                    2012            2013                 2014              2015                                                    15%                56%
     Growth rate (y-o-y)            -1.6%          -10.7%                +3.2%             +3.0%
                                                                                                                 Asia/Pacific                            10%
     EBIT-margin1)                  12.7%          10.7%                 9.6%               9.7%
     1) Before   one-off effects

     Sales split by sector cluster & distribution channel 2015                                                   Sales split by business model 20151)
     Wind                                                                                 Raw Materials                                                                            Standard product
                                                                                                                                                                                distribution business
                                                  10%    8%                                   Aerospace
                                                              7%                                                 Customized product business
                                                                                                     Rail                                                            30%
                                                                   7%                                                                              35%

                                                                    5%                           Offroad
     Industrial Distribution                33%
                                                                    4%                    Two-Wheelers

                                                              14%                                                                                                                Standard product
                                                   13%                                                                                                         35%          OEM and MRO business
     Industrial Automation                                                           Power Transmission
                                                                                                                 1) Including   service business

16                     January 10, 2017                                          2017 Global Auto Industry Conference | © Schaeffler 2017
3 Investment highlights – Margin upside Industrial
 2   Program CORE – Revitalizing the Industrial division

                                                       4 key drivers
                                                      1                                 u Strengthen sales organizations in the regions
                                                          Customer
                                                                                        u Strengthen regional engineering / customer support centers
                                                          focus and
                                                          growth                        u Establish dedicated global key account management

                                                      2                                 u Reduce overhead cost
                                                          Cost
                                                          reduction &                   u Re-dimension central departments
                                                          efficiency                    u Drive cost saving program including material cost,
                        Program                           improvement                     efficiency gains and overhead reduction
                         CORE
                                                      3                                 u Establish European distribution centers (EDC)
                                                          High
                                                                                          to ensure immediate product availability
                                                          delivery
                                                          performance                   u Increase level of standardization
                                                                                        u Implement high runner program with 24/48h delivery time

                                                      4                                 u Strengthen standard product business
                                                          Optimized
                                                          product                       u Balance customized product business / engineering solutions
                                                          and service                   u Enforce market penetration of service / digitalization
                                                          offering

17          January 10, 2017                         2017 Global Auto Industry Conference | © Schaeffler 2017
3 Investment highlights – Margin upside Industrial
 2      Program CORE – Overall target remains in place

     Successful implementation                                                                                                    Financial ambitions

                                     Today
     Indicative                                                                                                                             Stable market
     Timing
                                                                                                                                            environment

                                                                      Continuous improvement through
                                                                         further optional measures
                                                                                                                                             EBIT margin
                                                                          500 HCO                                                         Industrial Division
                                                     Cost reduction                                                                         10-11% in 2018
                                                       2nd wave

                                                 24 months

                    Cost reduction                   500 HCO
                      1st wave                                                                                                                Successful
                                                                                                                                          implementation
                                 24 months                                                                                                of CORE program

           2015                  2016           2017                    2018                  2019

18            January 10, 2017                                         2017 Global Auto Industry Conference | © Schaeffler 2017
3 Investment highlights – Strong Free Cash Flow Generation
 3   Use of cash – M&A strategy based on selected add-on acquisitions

     M&A strategy                                                                                                         Use of cash

        Approach               4 Focus on technological competence to maintain our strong position as
                                  technology and innovation leader
                                                                                                                                        External growth
                               4 Focus on smaller add-on acquisitions that contribute to a sustainable                                      Add-on
                                  value creation                                                                                          acquisitions

        Acquisition            4 Strategic and cultural fit, technological excellence and value
        Criteria
                                                                                                                                               Use
                                  contribution as the most important acquisition criteria                                                       of
                               4 Possible acquisitions will be in the three-digit million range                                                Cash

                                                                                                                             Deleveraging                 Dividends
       Automotive              4 Attractive pipeline of potential acquisition targets for both divisions                         Further                  30-40% of
       & Industrial                                                                                                          optimization of              net income
                               4 Focus in Automotive and Industrial is on technology and on                                   balance sheet
                                  strengthening market positions

19          January 10, 2017                                   2017 Global Auto Industry Conference | © Schaeffler 2017
4 Summary
Key messages

            Schaeffler is a leading global automotive and industrial supplier with superior
     1
            technologies

            Strategy "Mobility for tomorrow" implemented; Financial Ambitions 2020 with focus on
     2
            sales growth, EBIT margin, FCF generation, EPS, gearing ratio and dividend payout ratio

     3
            Returning to historic outperformance levels in Automotive targeted as of 2017; move                   Mobility for
            into e-Mobility offer significant growth potential (leveraged via recent M&A activity)                 tomorrow

            Program CORE to revitalize the Industrial division extended; second wave of efficiency
     4
            measures initiated

     5      Strong cash flow generation allow for selected technological add-on acquisitions

20          January 10, 2017                           2017 Global Auto Industry Conference | © Schaeffler 2017
IR Contact

     Investor Relations                                                                  Financial Calendar
                                                                                         FY 2016 results:           March 8, 2017
     Phone:                      + 49 9132 82 4440                                       Q1 2017 results:           May 11, 2017
     Email:                      ir@schaeffler.com                                       H1 2017 results:           August 8, 2017
     Web:                        www.schaeffler.com/ir                                   9M 2017 results:           November 8, 2017

21            January 10, 2017                           2017 Global Auto Industry Conference | © Schaeffler 2017
Backup
 2     Cost reduction and efficiency improvements – First wave mostly completed

     Key aspects                                                                           Indicative Financial Impact
                                                                                           Δ EBIT in    EUR mn
                                                                                                                                                                                   40
     4 First wave announced in August 2015                                                                                                                       31
                                                                                                                                              152)
     4 Cost savings through HCO reduction in overhead functions of the
        Industrial Division

     4 Reduction of 500 HCO mainly in Germany until 12/2017                                                                  -36
     4 Approximately 40 EUR mn overhead cost savings (full run rate 2018)                                2014A             2015A            2016F              2017P            2018P
                                                                                        1) Financial impact  in specific year
     4 36 EUR mn restructuring provisions (booked in Q IV 2015)                         2) thereof   9 mn Euro YTD September 2016
                                                                                                                                                     EBIT Improvement     One-off effects

                                                                                                                                                                                    Completion
                                                                                            HCO reduction Overhead                                                                  Ratio 83 % 3)

                                                                                                          2.165             263

                                                                                                                                             154
                                                                                                                                                                 83
                                                                                                                                                                                 1.665
                                                                                                                                    417

                                                                                                       Overhead         Left payroll         Signed         In progress        Target
                                                                                                       Headcount                          termination                        Overhead
                                                                                                        06/2015                            contracts                         Headcount
                                                                                        3) as of   November 3, 2016                                                           12/2017

22           January 10, 2017                             2017 Global Auto Industry Conference | © Schaeffler 2017
Backup
 2        Cost reduction and efficiency improvements – Second wave initiated

     Key aspects                                                                               Indicative Financial Impact
                                                                                               Δ EBIT in   EUR mn
                                                                                                                                                                                  58
     4 Second wave announced in November 2016                                                                                                                  41
                                                                                                                                                    23
                                                                                                                                                               50                 60
     4 Cost savings through consolidation of plants in Europe and Americas                                                                         37
           and HCO reduction in overhead functions also outside the Industrial
                                                                                                                                                               -9                 -2
           division                                                                                                                                -14

     4 Reduction of 500 HCO in Germany1), Europe and other regions                                                             -50 1)
           targeted                                                                                        2015A              2016F              2017P       2018P               2019P
                                                                                            1) 2016-2019 in total75 mn Euro, thereof 50 mn Euro booked as     EBIT Improvement         One-off costs
     4 Approximately 60 EUR mn improvement from Gross Profit                                restructuring provision

           optimization and Overhead cost reduction until 2019 planned
                                                                                                                                                                                    Indicative
                                                                                               HCO reduction Plants/Overhead                                                          figures
     4 Around 75 EUR mn one-off-cost until 2019 of which approximately
           50 EUR mn shall be booked as restructuring provisions
           as of year end 2016                                                                               500              ~400

                                                                                                                                                               ~100

                                                                                                         Total HCO          Germany              Europe     Amercias             Others
                                                                                                         reduction
                                                                                                           target
     1) Subject   to negotiation with working council

23                    January 10, 2017                        2017 Global Auto Industry Conference | © Schaeffler 2017
Backup
Sales growth 9M 2016 2.7% (FX-adjusted)

 Sales                                                                                                           Sales by region 9M 2016
 in EUR mn                                                                                                       y-o-y growth (w/o FX effects)
                                                                                                                                                                                           Asia/Pacific
                                                                   +2.7%1)
                                                                                                                                                                                         +2.9% (+4.4%)
                                                                  vs 9M 2015

                                                                                                                             Greater China               10.3%
                3,339              3,382                                3,343   3,369
                                                  3,237   3,221                           3,265                              +5.5% (+10.5%)      14.3%

                                                                                                                                                                         54.2%
                                                                                                                                                  21.2%
                                                                                                                             Americas                                                          Europe
                                                                                                                             -5.0% (-0.4%)                                               +0.5% (+1.7%)
                                          13,179                                9,977

                 Q1                Q2              Q3     Q4              Q1     Q2        Q3                    Sales by division
                                                                                                                 Y-o-y growth (w/o FX effects)
                                          2015                                  2016
                                                                                                                                                                   D                                            D
              FX-adjusted sales growth in %                                                                                             9M15     9M 16       (w/o FX             Q3 15      Q3 16         (w/o FX
                 5.3               4.5             2.9     1.3           2.4    3.3        2.3                                                               effects)                                     effects)

                                           3.5                                  2.7                                 Auto-
                                                                                                                                        7,511    7,703           +5.3%           2,442      2,524          +5.1%
                                                                                                                    motive
              EBIT   margin2) in   %
                13.2               11.4            13.4    13.0         12.6    13.0      12.8                      Industrial          2,447    2,274           -5.3%            795         741          -6.2%
                                           12.3                                 12.8
                                                                                                                    Total               9,958    9,977           +2.7%           3,237      3,265          +2.3%
     1) FX-adjusted
     2) Before one-off effects

24                   January 10, 2017                                             2017 Global Auto Industry Conference | © Schaeffler 2017
Backup
Automotive – Strong growth in Greater China

     Automotive sales and market development 9M                                                                               Automotive sales by division 9M
                 Europe                Americas            Greater China            Asia/Pacific                              in EUR mn                                                            9M 2015
                                                                     +22%                                                                                      +4.7%1)                             9M 2016
                                                            +11%
                                                                                            +7%                                        +2.4%1)              3,150   3,217
                +4%     +3%
                                      0%      +1%                                                                                  1,946      1,960                                              +10.3%1)
                                                                                                                                                                               +6.2%1)
                                                                                    -3%                                                                                                        1,317    1,384
                                                                                                                                                                            1,098   1,142
                                         World production:       +3.4%
                                         Schaeffler Automotive: +5.3%
                                                (w/o FX effects)
                                                                                                                                   Engine Systems           Transmission    Chassis Systems     Automotive
                Production of light vehicles 9M 2016 vs 9M 2015 (IHS)                                                                                          Systems                          Aftermarket
                Sales growth (w/o FX effects) Schaeffler Automotive 9M 2016 vs 9M 2015

                                                                                                                               Automotive sales by division Q3
     Automotive sales by region                                                                      Asia/Pacific
                                                                                                                               in EUR mn                                                               Q3 2015
                                                                                           Q3: +3.7% FX-adjusted
                                                                                                                                                               +4.4%1)                                 Q3 2016

      Greater China                                    10%                                                                                                  1,009   1,037
                                                                                                                                       +2.4%1)
      Q3: +38.9% FX-adjusted                   15%
                                                                                                                                    625        636                                                 +9.8%1)
                                                                                                                                                                                +5.3%1)
                                                                         53%                                                                                                  352        368     456      483

     Americas                                    22%
                                                                                                          Europe
     Q3: -1.2% FX-adjusted
                                                                                            Q3: +0.2% FX-adjusted                  Engine Systems           Transmission     Chassis Systems     Automotive
                                                                                                                                                               Systems                           Aftermarket
                                        Sales 9M 2016: EUR 7,703 mn                                                           1) Growth rates FX-adjusted

25              January 10, 2017                                                             2017 Global Auto Industry Conference | © Schaeffler 2017
Backup
Industrial – Mixed development across sectors

     Industrial sales by sector cluster 9M1)                                                             Industrial sales by region 9M
                                                                                                         in EUR mn                                                                9M 2015
                                                                                                                                                                                  9M 2016
                                                                                  Two-Wheelers
                                                                                 Wind                            -0.9%1)
                                                                     Aerospace                               1,382      1,352                  -6.4%1)
                                                       Industrial Automation                                                                                  -20.4%1)
                                                                                                                                         466        423                         -5.3%1)
                                                       Offroad                                                                                              361
                                                                                                                                                                   279     238           220
                                                       Power Transmission
                                                       Rail
                                                       Raw Materials                                             Europe                    Americas       Greater China    Asia/Pacific
                                                       Industrial Distribution

            -25%          -20%     -15%   -10%   -5%           +5%      +10%         +15%

     Industrial sales by sector cluster Q31)                                                              Industrial sales by region Q3
                                                                                                          in EUR mn                                                                Q3 2015
                                                                         Two-Wheelers                                                                                              Q3 2016
                                                        Industrial Automation
                                                        Aerospace                                                -2.4%1)
                                                        Wind
                                                                                                             451        435
                                                        Offroad
                                                                                                                                           -4.7%1)           -21.1%1)
                                                        Power Transmission                                                                                                     -6.3%1)
                                                                                                                                         146       139    122      93
                                                        Rail                                                                                                              76         74
                                                       Raw Materials
                                                       Industrial Distribution                                  Europe                    Americas        Greater China   Asia/Pacific
              -25%        -20%     -15%   -10%   -5%           +5%      +10%            +15%

      1) FX-adjusted                                                                                       1) Growth rates FX-adjusted

26                   January 10, 2017                                    2017 Global Auto Industry Conference | © Schaeffler 2017
Backup
Overview Corporate and Financing Structure

     Corporate Structure (simplified)                                                                                                Financing Structure
     as of October 14, 2016                                                                                                          as of October 14, 2016
                                                        INA-Holding Schaeffler                                                       IHO Verwaltungs GmbH (HoldCo)
                                                           GmbH & Co. KG
                                                                                                                                                                                    Nominal      Nominal
                                                                                                                                             Debt instrument                                                 Interest    Maturity    Rating
                                                                                                                                                                                   (USD mn)     (EUR mn)
                                                                                                                                             Term loan (EUR)                           -          4251)      E+2.75%      Sep-21    not rated

                                                                                                                                     Loans
                                                            IHO Beteiligungs
                                                                 GmbH                                                                        RCF (EUR 200 mn)                            -         -         E+2.75%      Sep-21    not rated
                                                            (formerly Schaeffler            10.0%
                                                            Verwaltungs GmbH)                                                                2.75% SSNs 2021 (EUR)2)                  -           750          2.75%      Sep-21    Ba1/BB-
                                                                                                                                             4.125% SSNs 2021 (USD)2)                500         4553)        4.125%      Sep-21    Ba1/BB-
                                                                                                                                             3.25% SSNs 2023 (EUR)2)                  -           750          3.25%      Sep-23    Ba1/BB-

                                                                                                                                     Bonds
                                                                                                                                             4.50% SSNs 2023 (USD)2)                 500         4553)         4.50%      Sep-23    Ba1/BB-
                                        HoldCo bonds
                                                            IHO Verwaltungs                                                                  3.75% SSNs 2026 (EUR)2)                  -           750          3.75%      Sep-26    Ba1/BB-
                                                                 GmbH                                                                        4.75% SSNs 2026 (USD)2)                 500         4553)         4.75%      Sep-26    Ba1/BB-
                                        and loans            (formerly Schaeffler
                                                           Verwaltung Zwei GmbH)                                                             Total                                               4,040
                        Free                                                                               Free
                        float                                                                              float
                                                                                                                                     Schaeffler Group (OpCo)
                  24.9%                             75.1%                           36.0%                    54.0%                                                                Nominal      Nominal
                                                                                                                                             Debt instrument                                               Interest     Maturity     Rating
                                                                                                                                                                                 (USD mn)     (EUR mn)
                                                                                                                                             Term loan (EUR)                         -          1,000      E+1.45%       Jul-21     not rated

                                                                                                                                     Loans
                                OpCo                                                                                                         RCF (EUR 1,300 mn)                     -            -         E+1.05%      Jul-21      not rated
                                           Schaeffler AG                            Continental AG                                           2.50% SSNs 2020 (EUR)                  -           400         2.50%       May-20      Baa3/BB+
                                loans
                                                                                                                                             4.25% SSNs 2021 (USD)                 700         6363)        4.25%       May-21      Baa3/BB+

                                                                                                                                     Bonds
                                                                                                                                             3.50% SSNs 2022 (EUR)                  -           500         3.50%       May-22      Baa3/BB+
                                                                                                                                             4.75% SSNs 2023 (USD)                 600         5453)        4.75%       May-23      Baa3/BB+
                                                                                                                                             3.25% SSNs 2025 (EUR)                  -           600         3.25%       May-25      Baa3/BB+
                OpCo                                    Schaeffler
                                  Schaeffler                                                                                                 Total                                             3,681
                                                       Technologies
                bonds            Finance B.V.
                                                        AG & Co. KG
                                                                                                                                     1) Up to EUR 600 mn.
                                                                                                                                     2) Senior Secured PIK Toggle Notes.
                                                                                                                                     3) EUR/USD = 1.10 as of October 14, 2016.

27             January 10, 2017                                                                      2017 Global Auto Industry Conference | © Schaeffler 2017
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