By Louis van Boxel-Woolf and Chiara Holzhaeuser
(Reuters) -German automotive and industrial supplier Schaeffler AG reported 2023 full-year adjusted core profit (EBIT) of 1.19 billion euros ($1.29 billion) on Tuesday, weighed down by weak demand in China for the group's Industrial division.
The profit missed a consensus of 1.24 billion euros for the year compiled by Vara Research and supplied by the company, but was up 13.5% from 2022.
A supplier to machine and vehicle makers, Schaeffler's fortunes are closely tied to broader industrial activity. China accounted for about 21% of the company's revenue last year and factory activity there has stumbled since the pandemic, according to official surveys.
Order intake at Schaeffler's E-mobility business, however, was 5.1 billion euros for the year, beating the 2 billion to 3 billion euro guidance range given by the company.
Pal Skirta, an analyst at Metzler Equities, said strong orders were likely a result of Schaeffler's ongoing merger with Bavarian drive-train maker Vitesco Technologies.
"Customers know that after the merger Schaeffler will be a so-called 'one stop shop' for electromobility where carmakers can get everything they need in terms of e-mobility," he told Reuters.
The ball-bearings specialist said it would acquire powertrain supplier Vitesco in October last year, aiming to increase its product line of parts for electric vehicles.
The merger deal will be voted on at the respective AGMs of each company in April.
Schaeffler CEO Klaus Rosenfeld told Reuters that the family-owned firm had not undergone a "radical transformation" to become exclusively concerned with electric vehicles, pointing out that a further eight billion euros worth of orders had come in over the year to other parts of the business.
Schaeffler's EBIT margin for the year was 7.3%, slightly below the 7.6% indicated in the Vara poll.
Schaeffler expects considerable revenue growth and an EBIT margin before special items of 6% to 9% for 2024, with Vitesco to be fully included in Schaeffler's accounts after the expected conclusion of the merger in the fourth quarter of 2024.
($1 = 0.9219 euros)