Investing.com - Shares in Schaeffler AG (ETR:SHA0) slumped sharply in European trading on Wednesday after the car parts maker warned its full-year income margin would be below the group's guidance.
In an ad hoc release citing preliminary figures on Tuesday, the Germany-based company said earnings before interest and taxes margin before special items for the 2024 fiscal period is anticipated to come in at 4.5%. The level would be down from 7.3% in 2023 and under Schaeffler's outlook of 5% to 8%.
Market consensus estimates had seen the figure at 6.3%, Schaeffler noted. The margin figure was "mainly burdened by weak [fourth-quarter] developments" in its bearings and industrial solutions unit and sluggishness at its Vitesco Technologies division, the company said.
Schaeffler purchased electric vehicle components manufacturer Vitesco in 2023 in a bid to expand its offerings for EVs.
Annual sales, meanwhile, rose by 18.2 billion euros from 16.3 billion euros, below analysts' forecasts of 18.5 billion euros, according to Schaeffler. The top-line return was driven mostly by the full consolidation of Vitesco from the fourth quarter onwards, it added.
At the same time, free cash flow before cash in- and outflows for acquisitions was about 360 million euros, declining from 421 million euros, but above both Schaffler's guidance and market projections.
Europe's automotive sector has been grappling with tepid demand and fierce competition all while trying to carry out an expensive transition to electric vehicles. Schaeffler, along with peers Michelin (EPA:MICP) and Bosch (NSE:BOSH), have subsequently flagged that they plan to slash headcount and shutter plants to help rein in costs.
Schaeffler is tipped to release its full earnings update and unveil its guidance for the 2025 fiscal year on March 5.