Schaeffler Profit Falls on Weaker Demand for Industrial Goods

Schaeffler AG, the family-owned bearing maker that’s the biggest investor in car-parts producer Continental AG, said profit fell as gains at the automotive unit failed to offset weaker demand at its industrial division.

First-quarter earnings before interest and taxes dropped 11 percent to 355 million euros ($457 million) from 401 million euros a year earlier, Herzogenaurach, Germany-based Schaeffler said today in a statement. Sales fell 3.6 percent to 2.76 billion euros.

“Although we are not anticipating a quick recovery of the European markets, we are expecting a modest increase in global automobile production for 2013,” Schaeffler Chief Executive Officer Juergen Geissinger said. “Given the ongoing uncertainties, we are not anticipating a positive impetus in the various industrial markets until the latter half of the year.”

European Union car sales rose in April for the first time since September 2011, adding to signs that the 27-nation bloc’s economic woes may ease. German factory orders increased for a second month in March. Consumer confidence in the EU gained last month to the highest level since July, according to the European Commission.

The company reiterated it is targeting revenue growth of about 4 percent this year on the back of rising automotive demand in North America and Asia. The Ebit margin is forecast to be about 13 percent of sales. The margin declined to 12.9 percent in the first quarter from 14 percent a year earlier.

Net debt narrowed by 300 million euros to 6.8 billion euros as of March 31, Schaeffler said today. Chief Financial Officer Klaus Rosenfeld pledged on March 21 to work on reducing financing costs further in 2013.

Schaeffler plans next year to end a shareholding accord with Continental, Europe’s second-largest auto-parts supplier and its No. 2 tiremaker, as it continues to dismantle a plan for a gradual merger. Both companies have said they plan to maintain cooperation.

Before it's here, it's on the Bloomberg Terminal.