This article first appeared on GuruFocus .
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Revenue:Down 2% year-over-year; China declined over 16%, Asia Pacific grew 7.6%, Americas and Europe near 0% growth.
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EBIT Margin:4.2% in Q3 2026; 4.5% for the first nine months.
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Gross Margin:20.7% in Q3, down from 21%; stable to slightly higher excluding phase-out business.
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Free Cash Flow:$260 million generated in Q3; minus $40 million year-to-date.
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CapEx:$193 million in the year to date; reinvestment rate of 0.5x.
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eMobility:Gross margin improved by 2 percentage points; EBIT improved almost 2 points year-over-year; mechatronics and modules down 21%, offset by eDrive ramp-ups in Europe and Asia Pacific.
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Power Transmission & Chassis (PTC):Sales down 6.9% year-over-year, with 2.8 points from phase-out business; chassis business grew, mainly in China.
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Vehicle Lifetime Solutions:Sales growth of 5.8%, clear market outperformance; EBIT margin of 14.4%.
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Bearings & Industrial Solutions:Slight sales growth; gross margin near 25%; automotive bearings down 4.8%; industrial automation and off-road double-digit growth; EBIT contribution up 0.8 points.
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Order Intake:Book-to-bill ratio of 1.1x; eMobility order intake lower in the quarter.
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Humanoids:Order book at $400 million.
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Restructuring Program:Net reduction of 3,460 employees across 16 locations (2,760 in Germany, 800 in Europe); 4 site closures in Germany; sustainable earnings improvement of $300 million per year from 2030; restructuring costs of $480 million; implementation mainly by 2028.
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Workforce (Germany):About 32,000 employees at end of September, down from 35,000 after Vitesco acquisition; targeted reduction to 26,300, a ~9% cut versus current levels and 25% long-term reduction.
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Guidance:Full-year 2026 guidance confirmed.
Release Date: November 03, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Schaeffler AG confirmed its full-year 2026 guidance, with Q3 EBIT margin at 4.2% and strong free cash flow generation of $260 million.
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The new performance improvement program targets annual EBIT improvement of $300 million from 2030, addressing overcapacity and cost structures.
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eMobility gross margin improved by 2 percentage points, signaling progress toward breakeven.
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Vehicle Lifetime Solutions showed strong growth of 5.8%, outperforming the market, and Industrial Solutions maintained a strong gross margin near 25%.
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The company extended its $3 billion revolving credit facility to October 2031, demonstrating strong banking relationships and financial flexibility.
Negative Points
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Schaeffler AG faces a continued downturn in European automotive markets, with structural overcapacity and declining demand for combustion engine vehicles.
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The e-mobility ramp-up is slower than expected, and the division remains loss-making, requiring R&D capacity adjustments.
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High personnel costs in Germany necessitate a net reduction of 3,460 employees, including 2,760 in Germany, with four site closures.
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Sales declined by 2% year-over-year, dragged down by a 16% drop in China, with volume declines impacting profitability.
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Restructuring costs are estimated at $480 million, and the program's cash-out timing is uncertain, with potential impacts on future dividend decisions.
Q & A Highlights
Q: What are the key details of the new performance improvement program, including headcount reductions, cost savings, and restructuring costs? A: CEO Klaus Rosenfeld outlined a net reduction of 3,460 employees across 16 locations, with 2,760 in Germany and 800 elsewhere in Europe. The program targets a sustainable earnings improvement of 300 million per year from 2030 onwards, with restructuring costs of around 480 million. The measures address overcapacity in Europe, slower e-mobility ramp-up, high personnel costs in Germany, and organizational complexity following the Vitesco merger. Implementation is intended mainly by 2028 and will be carried out in a socially responsible manner.
Q: How will the restructuring cash-outs affect the dividend decision for this year? A: CEO Klaus Rosenfeld stated that the dividend decision is driven by a formula based on net income before one-off restructuring costs, so the 480 million will be excluded from that calculation. The company also aims to align the dividend with free cash flow generated in the prior year, and significant Q4 cash flow generation provides a solid basis for a positive dividend decision. He emphasized the commitment to continuous dividend payments even during restructuring.
Q: What is the outlook for margin improvement in 2027 and progress toward midterm targets? A: CFO Christophe Hannequin said it is early for 2027 guidance but expects similar trends to continue, leveraging past restructuring and cost-base work, with scaling in e-mobility ultimately driving breakeven. CEO Klaus Rosenfeld added that the company is committed to its 2028 midterm target of 6% to 8% EBIT margin, implying a credible step up from the 3.5% to 5.5% range in 2026. The solidarity contribution is designed to have an immediate P&L impact, particularly for management levels.
Q: What is the status of the humanoids business, and are customers moving from prototypes to series production? A: CEO Klaus Rosenfeld said there are first signs of customers moving toward production series, with five series contracts progressing, though these do not follow typical automotive contract cycles. He expressed confidence that broader application will emerge in Germany, Europe, and the US, supported by physical AI developments and the Nvidia partnership. The order book stands at 400 million, with deepening customer engagement and potentially interesting news before year-end.
Q: What is the background and timing of the potential disposal of the stake in Schaeffler India? A: CEO Klaus Rosenfeld clarified that the announcement is a precautionary intention to sell, required by local stock market authorities, to create flexibility and allow the company to act when market conditions are right. No timeline has been set, and the liquidity is not needed for the free cash flow guidance. If proceeds materialize, they could help reduce leverage, which remains above target.
Q: How is the material cost pass-through situation for Q4, and where are the biggest inflation headaches? A: CFO Christophe Hannequin said the company is comfortable with Q4 material cost pass-through given its guidance and internal forecast, though not everything will be recovered in Q4 2026 due to timing lags. The biggest headaches come not from chips but from special metals where Schaeffler competes directly with the data center sector, which has deeper pockets and is driving significant supply inflation. The main Q4 risk is more related to finalizing customer claims on volumes, quality, and design changes rather than raw materials.
Q: What is the share of indexed sourcing for e-mobility and PTC, and could inflation pressure lead to a weak start in 2027? A: CFO Christophe Hannequin said index coverage is slightly above 50% at group level, varying by customer and region, with the rest covered through price negotiations that typically have a three-to-six-month lag. He declined to predict a weak start to 2027, noting that 2027 topics, especially significant inflation in circuit boards and PCBs, are already being discussed with customers.
Q: How are relations with unions and the workforce regarding the restructuring, and how are OEM-supplier compensation dynamics evolving? A: CEO Klaus Rosenfeld acknowledged unions are unhappy given ongoing German wage negotiations but stressed the measures are necessary given the structural automotive downturn. He noted a base level of understanding when presented factually, citing the solidarity contribution and clear commitment to Germany as constructive elements. On OEM relations, he described them as "boxing and dancing at the same time," emphasizing the need for long-term partnerships over the cycle, and noted Schaeffler now allocates capital to customer relationships to ensure returns above cost of capital.
Q: What is Schaeffler's exposure to Chinese OEMs in its order book? A: CEO Klaus Rosenfeld said the specific percentage is not publicly disclosed but acknowledged it is a frequently asked question and may be shared in the future. CFO Christophe Hannequin added that Schaeffler is in production with nine of the top 12 Chinese OEMs, likely including those the industry would consolidate around. Both emphasized that exposure to Chinese OEMs is strategically desirable, as Schaeffler is successful in that market despite recent volatility.
Q: Are there bolt-on acquisition opportunities given the weak production environment into 2027? A: CEO Klaus Rosenfeld said the company has its hands full with other activities and does not see smaller bolt-on acquisitions as a priority at the moment. Any opportunity would need to be extraordinary, interesting, profitable, and sensible to integrate, but nothing currently attracts enough attention, though the company does not completely exclude looking at opportunities.
Q: Which divisions will benefit most from the labor cost reductions? A: CEO Klaus Rosenfeld said the restructuring responds to weakness in automotive businesses, impacting PTC, e-mobility, and to some extent automotive bearings within the Bearings & Industrial Solutions subdivision. He suggested roughly one-fifth of the reductions relate to Bearings & Industrial Solutions, with the remainder split between the two automotive divisions, reflecting overcapacity in PTC and R&D adjustments in e-mobility. The goal is to maintain profitability in a shrinking PTC market and build profitability as e-mobility grows.
Q: What is the outlook for e-mobility breakeven, and which metric should investors watch? A: CEO Klaus Rosenfeld said the path to breakeven depends partly on the market but has a significant self-driven element, with gross profit margin as
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
