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German automotive and industrial supplier Schaeffler AG (SHA_p.DE) reported 2023 full-year adjusted core profit (EBIT) of 1.19 billion ($1.29 billion) on Tuesday, weighed down by weak demand in China for the group's Industrial division.
The profit result 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 per cent from 2022.
A supplier to machine and vehicle makers, Schaeffler's fortunes are closely tied to broader industrial activity. China accounted for about 21 per cent of the company's revenue last year and factory activity there has stumbled since the COVID 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 the company gave.
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 (VTSCn.DE).
"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 AGMs of each company in April.
Schaeffler's EBIT margin for the year was 7.3 per cent, slightly below the 7.6 per cent analysts had expected in the Vara poll.
Schaeffler expects considerable revenue growth and an EBIT margin before special items of 6 per cent to 9 per cent 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.