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Deutsche Bank has lowered its price target for Schaeffler AG to EUR4.00 from EUR4.50 while maintaining a Hold rating, following the company's Q4-24 earnings report that fell in line with preliminary warnings. The guidance, seen as conservative, reflects challenges in the Automotive and Industrial sectors and emphasizes the importance of the e-mobility division for mid-term growth. Despite disappointing cash flow expectations, Schaeffler's management has proposed a dividend of EUR0.25 per share, citing strong adjusted free cash flow generation.
Deutsche Bank has downgraded Schaeffler AG's stock rating from "Buy" to "Hold," reducing the price target from EUR6.00 to EUR4.50 following disappointing preliminary earnings for 2024. This marks the second warning for the year, as the company struggles with the integration of Vitesco and challenging market conditions. Investors are now looking ahead to guidance for 2025, which is expected to be another transitional year without significant improvements.
UBS has maintained a "Neutral" rating for Schaeffler, setting a target price of 4.30 euros following a profit warning regarding the adjusted operating result for the year. Analyst Juan Perez-Carrascosa noted that the ongoing weakness in the Bearings & Industrial Solutions division is more severe than anticipated, leading to increased skepticism among investors for 2025.
Schaeffler AG, a German manufacturer of automotive parts, operates in three segments: Automotive Technologies, Automotive Aftermarket, and Industrial. The Automotive Technologies segment includes four divisions focused on e-mobility, engine and transmission systems, and bearing applications, while the Industrial segment offers bearing solutions and sensor-based monitoring systems.
UBS has dampened sentiment in the automotive sector by downgrading its recommendations for suppliers Forvia and Valeo, leading to declines of 4.9% and 2.9%, respectively. Schaeffler also fell by 4.6%, while Mercedes-Benz dropped 2.0%. In contrast, BMW saw a slight increase of 0.3% due to positive remarks, and Continental's loss was limited to 0.6% thanks to its strong tire business.
The European car industry is facing a severe crisis, with major manufacturers like VW, Audi, and Nissan reporting significant profit declines and mass layoffs. The VW Group has seen profits drop over 60% in the third quarter, prompting strict cost-cutting measures, plant closures, and thousands of job cuts across the sector.
Schaeffler AG, a German manufacturer of automotive parts, operates in two main sectors: Automotive and Industrial. The Automotive sector includes subdivisions such as Engine Systems, Transmission Systems, Chassis Systems, and the Automotive Aftermarket, while the Industrial segment is managed regionally across Europe, the Americas, Greater China, and Asia/Pacific. The company is also engaged in production digitization.
In Bavaria, IG Metall has initiated warning strikes across 14 companies, with an additional 7 joining later, impacting the automotive sector. Schaeffler plans to cut 4,700 jobs in Europe, including 2,800 in Germany, following a weak quarterly performance, prompting criticism from employee representatives. UBS and JPMorgan have both maintained a 'Neutral' rating for Schaeffler, with target prices set at 4.40 euros and 4.20 euros, respectively.
Schaeffler AG plans to cut approximately 4,700 jobs in Europe and close two sites due to a significant downturn in the automotive sector, particularly affecting Volkswagen AG and other German manufacturers. Around 2,800 job losses will occur across 10 locations in Germany as part of a strategy aimed at saving about €290 million ($316 million) annually by the end of 2029.
Schaeffler AG
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