Future Proofing

Schaeffler Recharges its Leadership

  • Why it matters

    Why it matters

    Auto components suppliers like Schaeffler are under pressure to wean themselves off the combustion engine and embrace electric technology. They have to invest heavily while auto manufacturers are pushing them to cut prices.

  • Facts

    Facts

    • Schaeffler shocked investors last month by lowering its forecast for its adjusted 2017 operating profit margin to 11 to 12 percent from 12 to 13 percent. It said Q2 earnings were down sharply due to rising price pressures in the auto business and higher costs.
    • Schaeffler is replacing CFO Ulrich Hauck, criticized for failing to act swiftly enough when profits crumbled, with Dietmar Heinrich, its head of European operations.
    • Schaeffler CEO Klaus Rosenfeld has the support of the family-owned company’s supervisory board, sources said.
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    Audio

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Product development is going electric. Source: Schaeffler

On the face of it, German engineering group Schaeffler is doing well, predicting a return on sales of 11 to 12 percent this year, which makes the family-run company one of the world’s most profitable auto parts suppliers.

But the company, controlled by the Schaeffler family, faces huge challenges that were underlined last month by a 10 percent share price slump triggered by a profit warning that took investors by surprise and sent shock waves through the industry.

More than 50 percent of revenues generated by the ball bearings specialist come from combustion engine technology. With the auto industry on the brink of a wholesale shift into electric cars, that’s not an ideal business model.

Schaeffler has ousted Chief Financial Officer, Ulrich Hauck, whose critics in the company said had failed to manage investors’ expectations and was too slow to take action when Schaeffler’s profit margins began to crumble earlier this year. He’s being succeeded on Aug. 1 by Dietmar Heinrich, Schaeffler’s head of European operations.

CEO Klaus Rosenfeld remains on the right track with his strategy, sources close to the supervisory board said following media speculation that his job might be on the line too. He told Handelsblatt: “We weren’t able to respond quickly enough with costs cuts to the price pressure and the higher development costs.”

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