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.”