FRANKFURT -- Schaeffler AG forecast slower sales growth and lower profitability in 2012 as the European market weakens.
Earnings before interest and taxes in 2012 will represent more than 13 percent of revenue, which will climb more than 5 percent, the German supplier said on Tuesday.
Schaeffler's 2011 Ebit margin was 15.8 percent, while sales gained 13 percent to 10.7 billion euros ($14.2 billion), a record for the group.
Sales at the group's two divisions - automotive and industrial - grew considerably faster than their respective markets in 2011, the supplier said. Automotive division sales increased by 13 percent to 7.2 billion euros while the industrial division grew by 15 percent to 3.5 billion euros.
"We are currently seeing demand in the European markets weaken," CEO Juergen Geissinger said in a statement. "Globally, however, our business is continuing to show a positive trend. We are anticipating particularly North America, but also China, India, and Russia providing impetus for growth."
In 2011, Asia/Pacific was the company's fastest growing region, generating revenue growth of 18 percent, followed by Europe excluding Germany with 14 percent, North America with 12 percent and Germany with 11 percent.
Schaeffler is closely held and accumulated 12 billion euros of debt from purchasing a controlling stake in car-parts maker Continental AG in 2008. The supplier became a joint-stock corporation in October to improve access to outside funding.
The company is struggling to generate enough cash to make a dent in its growing debt pile. Net debt surged to 7.09 billion euros at the end of December versus 5.74 billion as free cash flow nearly halved to 319 million euros. Its operating margin stood at 15.8 percent.
Net income grew more than fourteen-fold in 2011 to 889 million euros from 63 million euros a year earlier, including income of 324 million from the suppplier's stake in Continental. Operating profit gained 12 percent to 1.7 billion euros.
Schaeffler added 6,500 employees to its 74,000 global workforce in 2011.
Growth last year surpassed the company's targets of more than 10 percent sales growth and an operating margin of more than 13 percent.
Schaeffler is a supplier of bearings, engine components, clutch and transmission systems and dampers. It ranked No. 32 in the Automotive News 2011 Guide to the Top 100 Global Suppliers.
Sources: Bloomberg and Reuters