SCHAEFFLER AG

Recommendation history

• Q1 2026HoldHold: Schaeffler expects Q1 adjusted EBIT slightly above prior year despite slightly lower reported sales, with Powertrain & Chassis margins in the upper half of its 10%-12% full-year range and Bearings & Industrial Solutions near the upper end of 7%-9%. Full-year targets remain intact, including 3.5%-5.5% adjusted EBIT margin and €100m-€300m free cash flow, but reduced customer visibility, ongoing E-Mobility losses, and weak European and Chinese markets do not yet support a clean buy.
• Q4 2025HoldHold: Schaeffler is meeting 2025 guidance, but the setup for 2026 is mixed rather than compelling. Full-year adjusted EBIT should land around the midpoint of the 3%-5% margin range and free cash flow near the upper end of €0-200 million, but roughly €50 million of Q4 cash came from non-repeat early OEM payments; 2026 free cash flow should remain positive but is unlikely to improve, with restructuring cash costs above €100 million. The key bull case is continued E-Mobility improvement, hybrid awards and industrial resilience; the key bear case is weak auto demand, an opaque Q4 margin likely below 4%, and limited 2026 market growth.
• Q3 2025HoldHold: Schaeffler’s Q3 read-through is operationally better but not strong enough for a clean buy. Sales declined slightly quarter over quarter and year over year, while EBIT margins improved across divisions, the group margin was above the midpoint of full-year guidance, and nine-month free cash flow was around breakeven; full-year guidance was reaffirmed. The key tension is continued European weakness and North American E-Mobility shortfalls, with Q4 still exposed to customer call-offs, tariffs and the Ford supplier disruption.
• Q2 2025HoldHold: Schaeffler reiterated FY2025 guidance, with group adjusted EBIT margin of 3%-5% and free cash flow expected within -€200m to breakeven, but Q2 EBIT will be lower year over year and sequentially. The recovery case rests on contracted R&D reimbursements, smoother E-Mobility ramps and rolling tariff recovery, while weak European auto demand, only 4-6 weeks of customer visibility and US tariff uncertainty argue against a clean buy.
• 2025-04-03No clear callNo conviction after a deliberately limited pro forma update: 2024 sales were EUR24.3bn, EBIT margin before special items was 3.5%, and free cash flow was negative EUR694m, although management says underlying FCF before M&A was approximately EUR137m after EUR557m of Vitesco-related one-offs. The 2025 EBIT-margin midpoint is 4.0%, but the call provided no current-trading update and offered little evidence that the weak second-half volume environment has improved.
• Q1 2025HoldSchaeffler delivered a solid Q1, with adjusted EBIT margin of 4.7%, gross margin improving to 21.5%, free cash flow at negative EUR155 million seasonally, and leverage at 2.2x pro forma. The EUR5.6 billion automotive powertrain order intake and 3.1x book-to-bill support the long-term hybrid/e-mobility thesis, but China weakness, a structural decline in European Powertrain & Chassis, tariff uncertainty, and a distorted Bearings & Industrial Solutions quarter argue for holding rather than buying aggressively.
• Q4 2024HoldHold. Schaeffler delivered resilient underlying cash generation of €569 million and strong VLS performance, but the investment case remains execution-dependent: FY EBIT margin was only 4.5%, leverage was 2.5x, and 2025 free cash flow is guided to €0 million to negative €200 million. The €815 million synergy and improvement opportunity, plus roughly 15% expected E-Mobility growth, provides upside, but weak B&IS, negative E-Mobility profitability, integration costs, and limited pro forma transparency argue against buying ahead of proof.