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March 6, 2019, 3:07 a.m. EST

Schaeffler reports lower profit, looks to cut cost

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By Max Bernhard

Schaeffler AG (SHA.XE) on Wednesday reported a fall in full-year net profit and said that it would implement measures to increase efficiency and optimize its portfolio.

Net profit for 2018 fell to 881 million euros ($997.3 million), down from EUR980 million a year ago, the German automotive supplier said.

Revenue for the year rose to EUR14.2 billion, from EUR14.0 billion.

"Following a good first six months for the Schaeffler group, market conditions in the global automotive business deteriorated considerably during the second half of 2018. This put pressure on our earnings," said Chief Executive Klaus Rosenfeld, adding that some of the problems the company was facing were homegrown.

Schaeffler said that in 2019 it expects revenue growth of between 1% and 3% at constant currency and forecasts an adjusted EBIT margin of between 8% and 9%. The company expects free cash flow of around EUR400 million, excluding mergers and acquisitions, it said.

The company said it plans to improve the profitability of its core automotive division with a number of measures, including cost cuts. As part of the plan it targets to increase earnings at the business by about EUR90 million and an adjusted EBIT margin "in the high single-digits" mid-term.

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