The recent sharp slowdown in US auto sales has claimed an unexpected victim: one of Germany’s biggest auto suppliers, Schaeffler, which overnight slashed it earnings guidance for 2017, cutting its full year adjusted EBIT margin to 11%-12% from 12%-13% due to “substantially lower 2Q earnings”, higher costs and “price pressures in the OEM business” and as a result now sees FY FFC at 500MM, down from 600MM previously.
The unexpected warning sent Schaeffler stock tumbling as much as 14% after the Frankfurt open, its biggest decline since its October 2015 IPO. The warning by the German auto supplier, promptly dragged down the broader Stoxx 600 Automobiles & Parts Index (-1.7%), and hitting peers such as Faurecia -2.9%, Continental -2.8%, Valeo -2.6%.
In addition to slamming its stock, the warning sent the yield on the company’s 3.75% Bonds of 2021 surging (courtesy of Tassos Vossos)
This post was published at Zero Hedge on Jun 27, 2017.
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