Schaeffler sees itself back on track

At 505 million euros, consolidated net profit for the first six months was a good fifth below the previous year’s level – on sales of 5.652 billion euros (plus 5.1 percent); however, special effects from financial market transactions had pushed the profit at that time to unusual heights. If the first quarter of 2011 is disregarded, schaeffler generated its highest quarterly net profit since 2010 from april to june 2012 at 269 million euros.

CEO jurgen geibinger therefore expressed his satisfaction when presenting the half-year figures on tuesday: "we were able to continue the success story of the past two years. We have again generated a gross profit."The fact that it wasn’t rougher also has something to do with the schaeffler group’s billions in debt. In the first half of the year, the company paid more than 300 million euros in interest on its current debt of around 7.094 billion euros. All in all, the group is currently suffering from a debt burden of around 12 billion euros, part of which is parked at the schaeffler holding company.

The billion-dollar debts on schaeffler’s books will probably keep the memory of the turbulence surrounding the takeover of tire manufacturer conti alive for a long time to come. Schaeffler almost swallowed the company giant when it bought it – the french family-owned company was only able to finance the takeover with loans worth billions of euros. Now that the company is programmed for growth again, the management board seems to be relaxed about the mountain of debt. "We do not have a debt reduction target at the moment". The capital structure is intact," said schaeffler CFO klaus rosenfeld in a conference call on tuesday.

Instead, CEO geibinger is relying on a consistent growth course. Especially in the growth markets of the far east, the company has invested millions of euros in plants and expanded existing factories over the past few months. At 472 million euros, the investment sum is well above the level of previous years. Geibinger also expects sustained growth from investments in new products, including electric drive technology.

However, clouds gathering in the economic sky could dampen geibinger’s confidence. The head of schaeffler is sticking to his forecast of five percent growth for this year – but is putting a question mark over it himself: "we have to wait and see how the markets develop after the summer break. We are preparing for lower growth," he admitted, referring also to the short-time work planned by the customer opel. Although the schaeffler factories are currently still working to capacity. "But we have to prepare ourselves for a backlog of orders."The company, which currently employs 76,000 people worldwide, is planning to hire 3,600 more employees in 2012.