Dear ladies and gentlemen, welcome to the Schaeffler Group Conference Call. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star key, followed by zero on your telephone for operator assistance. At our reserved customers request, this conference will be recorded, and the replay will be available shortly after the call on the website. May I now hand you over to Renata Casaro, who will lead you through this conference, p lease go ahead. Thank you, operator. Dear investors, dear analysts, good afternoon. Welcome to the Schaeffler Group's fiscal year 2020 earnings release. Without further ado, I leave the floor to Mr. Rosenfeld, CEO of Schaeffler Group. Klaus, the floor is yours. Thank you, Renata. Ladies and gentlemen, welcome to our annual analyst and investor conference that we do, as in the previous calls, in a digital format. You all have the presentation in front of you that we shared with you this morning, I would immediately go to page number four, where you have the overview with my six key messages and the key numbers that you have certainly already digested. The year 2020 was a challenging year. It was a test for the organization to show its intrinsic strengths, that we can also operate under adverse conditions and do the right things. I think we have passed that test quite well. Sales are down -10.4% with a strong fourth quarter recovery, 4.6%, driven by all regions. China, again, an outlier with 10.3% in Q4. Certainly, something that helped us not only on the automotive side, but also on the industrial side. Gross margin, and Klaus will give you all the detail, 23%, and an EBIT margin on an adjusted basis, 6.4%. I think tells you that this is not a normal automotive supplier, but that the fact that we are more diversified helped us here to print these numbers. The sequential development in Q4 points to even higher margin, but we all know that the swings during these crisis times are, to some extent, exceptional and should not be extrapolated. Automotive Technologies was the key driver for the strong margin print in Q4. We can say also here that this first quarter looks like that we started into the year well. On a more strategic point, the order intake in Automotive Technologies was clearly below the year before with EUR 10.2 billion, but we saw a strong E-mobility order intake of EUR 2.7 billion, exceeding our target of EUR 1.5 billion-EUR 2 billion. I think that's a positive measure that shows that we are on track to gaining our fair share in this business. I can already say here, the quality of the order intake is as strong as the momentum going forward. We clearly see that the move into E-motors brings us a lot of positive recognition. It's not only growth that clearly played a role in what we did 2020, and future growth, but the continued cost and capital discipline. Functional costs, so what we are now using as a term for overhead, -12% year-on-year. Headcount reduced by 5%, now 83,300 compared to end of the year 2019. If you see the numbers later on, that's nearly 9,200 jobs in two years, that does not include the restructuring program we announced in September 2020 with another 4,400 jobs. Capital allocation and CapEx discipline was strong. You saw that we reduced the reinvestment rate significantly below one. As we promised, all the measures that we started to implement in 2018 and 2019 start to pay off. We will share with you later on how we see the year 2021 in that respect. Free cash flow was EUR 539 million, in the middle of the range that we shared with you when we updated the guidance in November. That's a good outcome, and clearly a point to be explained later by Klaus, how that compares to the EUR 100 million guidance. I also want to emphasize here already at the beginning, we will propose to our annual general meeting a dividend for the common non-voting shares of EUR 0.25. That is a number that is in line with our overall payout strategy. You remember 30%-50% of net income adjusted for one-offs. If you calculate that through, you end up exactly at this EUR 0.25 for the non-voting common. Last but not least, I don't have to mention how important sustainability, again, not only from a business opportunity point of view, but also from fulfilling the commitments and following the rules. We are quite proud to say that in two years, we improved our CDP rating from a D to an A-minus. That clearly shows progression. We also know at the same time how important it is to deliver when it comes to EU taxonomy or when it comes to Scope three. There is still a lot of work to be done, but the organization is 100% determined to make sustainability a top key topic going forward. It is part of what we call the Roadmap 2025. That's our plan for the next five years. That has been agreed and initiated end of last year, was the basis for our Capital Markets Day, and that is now in execution. A remarkable challenging year, but also a year where we showed that we can cope with such an environment, n ext page, please. You see the guidance here. I basically already mentioned the important points. Klaus will talk later on about the details of outperformance. Automotive Technologies down LVP by 16%, while we made only 11.3%, means there is good and solid outperformance in the Automotive Technologies area. All the other points I leave for you. The next page, number six, is just a reflection of what we shared with you during the Capital Markets Day on the 18th of November. The strategy stands, the equity story has been updated. We are clearly committed to accelerate the portfolio shift in E-mobility. In Aftermarket, we want to maintain a high margin and open up the business for more third-party repair solutions. As Stefan explained, further enhance profitability in our Industrial Business with profitable growth in the core business and entering attractive new growth fields in the Industrial Business. Well, you see three examples here. The three examples don't mean that there are others as well. They are just here to illustrate what I just said. I said it several times now also in the press, we believe that Schaeffler is more than its three divisions. We have no plans to split up the company. We rather believe in the synergistic benefits across the divisions, and we want to continue with operational discipline and relentlessly focus on free cash flow and execution. Number seven is the famous page with the plus and minus, with the highlights and lowlights. I also think in the interest of time, I can cut this rather short. I've already mentioned the main important points. Let me stress again, we are pleased about the substantial performance improvement in H2, mainly in our Automotive Technologies division, and about the strong discipline. Clearly, we see that there is a way to go to until the crisis clears up. There are headwinds, and that has also then led to this more cautious guidance. As you saw, high volatility of the end markets and the supply situation speak for themselves. Let me go to page nine, and also here, to leave enough time for the detailed numbers, I would do this rather quickly. On page nine, you have the highlights and lowlights from the Automotive divisions. You see the numbers here. I think what stands out is apart from the E-mobility order intake, the 490 basis points outperformance in the fourth quarter across all regions. You see in the backup at page where you see all the details. That is then giving you per region the respective number. It's on page 51 of the book that you have in front of you. In Greater China, in Americas have been the main drivers here, as in the past. Let me go to E-mobility because that's, for all of you, clearly an important topic. You see on page number 10 what I just said, EUR 2.7 billion order intake is above our target of EUR 1.5 billion-EUR 2 billion. You know that we have raised the target going forward to EUR 2 billion-EUR 3 billion. What drives this is a good understanding that we are well into a sustained market position in three-in-one systems with major order intakes last year and good new orders being expected. The number of E-mobility projects is rising 30% more in 2020 over 2019, and an increasing number in 2021. The product portfolio has been expanded. When I talk about new market segments, I'm referring to the heavy-duty area where electrification and also hybridization will come faster than expected in the last years. We see lots of requirements from that areas and have already won an important order in that respect. What drives all of this is the E-motor competence, where we are very shortly before starting mass production, also now a new plant in Hungary. Page 11 has a chronology here. I'm not going to go through all the details, but you see what I just outlined, that there are some good order wins towards the end of the year. In half, a new three-in-one hybrid module with an integrated torque converter. It's a premier European customer in the high-class segment. The heavy-duty nomination for an E-motor is also a top win. As you see from this timeline, there were also good wins on the battery electric part with the three-in-one E-axle, and also nominations for other E-motor and key elements of electrified powertrains. Let me stress here the importance of thermal management. We have not made that a big point in the past, but we see that switching from ICE to E-mobility and HEVs, that this product becomes more and more important. One last page on E-mobility, number 12. That's the latest win in the E-mobility area we're very proud of. It's a three-in-one integrated system with a micro torque converter, improved power density, where we are building on what we've invented in the past. This is probably the most sophisticated model that we have done before. It will be used also to demonstrate our modular strategy, not to reinvent at all the time new things, but building on what we have done in the past, and that's more efficient and also more interesting from a capital deployment point of view. 13 is Aftermarket, s table sales development in Q4. As you saw from the numbers here, the gross margin is more or less the same. EBIT slightly down, but with 15.8%, clearly a strong margin. The volatility during the year is well known to you. What I can say is we are quite proud that the initiatives that Michael put in place have paid off and helped us to also bring the business back in the second half. One of the key initiatives is on page 14. The aftermarket is a special business. It's not only an aftermarket business with replacement products, but it becomes more and more a digital business. Digital competence is the key going forward if we want to win in this. During the pandemic, all digitalization aspects got a boost, and in the aftermarket, it is clearly a driver as well. We have started to implement a state-of-the-art integrated ecosystem here, centered around a separate Schaeffler aftermarket cloud that serves as a one platform for online activities and customer services. Mobile apps play a role. What is key to us is this virtual online training. Those of you that have been in Berlin some years ago and saw how REPXPERT works can imagine that this can make a good difference and a big difference compared to our competitors. Let me go to page 15, t hat's Industrial. You all know the Wind story. Double-digit growth in the sector cluster was clearly a main driver. China at the forefront here. More than 30% growth in this area is difficult to repeat. We are optimistic on the Wind sector. It continues to grow and will drive our business forward. At the same time, there are first signs of recovery after a negative growth environment in 2020 in Two-Wheelers, in Off-Road, and in particular, in industrial automation. That is an area where we see, apart from Wind, great opportunities going forward, also when it comes to synergistic potential with auto. OPTIME, our little condition monitoring service, is very well accepted by the market, and we also launched it now in China. Still, the year 2020 was a year where the utilization of the plant was, let's call it heterogeneous, with negative production cost impact. Going forward, we all know that there is work to be done to catch up with our main competitors in the bearing space, Timken and SKF. What is very important for industrial is that we get our restructuring and improvement program in execution. I can say already at this juncture, we are in good conversations with our workers councils. We have announced, as you know, in September, it's now end of February, beginning of March, more or less six months behind us after the announcement. That's not unusual for German conditions. I do believe that in the next weeks, we will close these negotiations and can start with the restructuring implementation. Order book, page 16, r ecovers clearly points to some secular growth in Wind. Also, as the diversified portfolio provides for balanced growth opportunities. I already mentioned the areas. I want to stress again, the importance of industrial automation, in particular, when we want to make use of the more digitalization environment going forward. You see this on page 17. A little deep dive here. Signs of recovery and robotics with this specific speed reducer transmission for cobot joints. That is a great opportunity for us. It is interesting to see, if you see the order book for industrial automation with a three-month perspective, -30% in January 2020, and now back to +3%. One bird doesn't make the summer, we clearly see that this is going to develop positively in the future. I already said, this is an area where we can demonstrate technological synergies that make sense to have both Automotive and Industrial under one roof. Page 18 is the one on the cost management. As I said before, 9,200 people down, nearly 10%. You see here the year ends in also June, a good progression. You all should recognize that this is a function of the restructuring programs of the past. The ones that we announced in September are not part of this. It goes across the organization, but you also see from these numbers that the predominant part is outside Germany. Tackling that area now with the additional program is important, and I feel strongly that we are on a very good track to harvest what we've planted. Transformation cost, Klaus will give you more detail on this, i t was EUR 700 million announced. Clearly, during a half a year negotiation, certain things changed, but the overall direction is clear. Let me use this page also to put the restructuring a little bit into context. You all know that we booked the provisions more or less in 2020, and that the payout is now expected for 2021, the years to come. You see this in the backup when we come to what's expected for 2021. That's a number somewhere between EUR 300 million and EUR 350 million. That also may help you, and Klaus will give more details to position the free cash flow guidance in the right manner. Add this back and you see that that is a very simple calculation, EUR 100+ million, let's say EUR 350 million is EUR 450 million, and that's a number when you go back the years, that we always had in terms of a historical free cash flow performance. While the EUR 100 million as a figure may sound low, it is definitely not comparable with the EUR 539 million. In any case, you need to include and add back the restructuring payout for 2021. Let me go further to page number 19, capital allocation. I think I already mentioned the most important points. EUR 632 million CapEx leads to a CapEx ratio of 5%. 4.2% in the fourth quarter is clearly at the low end. The reinvestment rate of 0.7% is what we indicated. We see, as you also see in the backup, that the number will rise, but we will manage this very carefully. The CapEx allocation also between the regions is important, and Automotive Technologies will have to demonstrate that we are investing in the right areas. The mature business is well invested, and the investment intensity in E-mobility is, as you all know, lower than in the traditional business. What is key is the footprint going forward, and footprint is a continuous task for optimization. I do believe that we can also in next year very well operate with the EUR 800 million that is indicated. 20 is then my last page before I hand over to Klaus. On sustainability, I already said it, t here is much more detail in our sustainability report. We are proud about the progress we made, but we equally accept that this is a big obligation for us and that we need to deliver on the top goal, carbon neutral production 2030. We've added a new goal, also to demonstrate that it's not only CO2, but also other areas, 20% reduction of fresh water supply is also key. I can once again assure you that we want to be a good example for a company with a long-term view that takes this very serious and delivers on what it's promised. With this, I hand over to Klaus for the financial results. Yes, t hank you, Klaus. We go directly to page 22. On revenue, I think basically, main things have been already explained. Fourth quarter was a quarter where we have seen growth again, both nominal and also FX adjusted. Nominal was 1.2%, FX adjusted 4.6%. Klaus already mentioned the strong contribution of China. Actually, what you can see on the lower right-hand side is that there was growth in China, FX adjusted of 10.3%. For the full year, it was 8.7%, and that helped to stabilize margins also in Q4, but also in the full year. Next page on gross profit. You see that we have delivered EUR 961 million in gross profit, which translates into a gross margin of 26.5%, 300 basis points up compared to the prior-year quarter. You can see in the bridge that, obviously volume helped, but helped the negative mix was quite low. That includes what I mentioned on the region. Production cost was the significant positive here with EUR 150 million benefit, that is due to specifically the Automotive Technologies division, where we have a combination of a high operating leverage. That means cost aggression. We have, in addition, effective cost savings in the plans. Still a bit of short-term work, that has come down compared to the third quarter and more significant to the second quarter. Also, what contributed to the margin is a significant inventory decline. That means sale from inventories, also still low material prices. Next page on the functional cost, that means R&D and SG&A, for the year down 11.9%. That means basically in line with the nominal sales decrease of roughly 12%, also fourth quarter down 7.4%. If you look at the different functions, you see that there has been now an increase in the selling area, both year-over-year, but also specifically compared to the third quarter. That is a reflection of the increase in revenue and, in addition, over proportional, we also have some kind of special freights, in order to get the products out in time to our customers. A topic which we also will see in 2021. The administration expenses decreased. Obviously, that has something to do with lower personnel costs, but also lower consulting or other kind of purchased costs for 2021. As mentioned also in the CMD, we will have the first impact from the preparation of the S/4HANA switchover, and that will then impact specifically here the admin line. Next page on EBIT. You see on the left side, the EBIT in the fourth quarter on adjusted basis was EUR 418 million. It was an exceptional 11.5%. On the lower right-hand side, you see that this increase basically exclusively comes from Automotive Technologies. Automotive Aftermarket was down a bit. I come to that later. The Industrial was also down a bit, but sequentially up because third quarter margin was at 7%. If we go to the next page on Automotive Technologies, you see that E-mobility, top line rise did quite good with 12.2% FX adjusted growth. The transmission business, which is a very good margin business for us, increased by 10.3%. Klaus Rosenfeld also mentioned the outperformance, which was for the quarter 4.9%, but also, and you have seen it on the lower left-hand side, outperformance for the full year was 4.5% and percentage points and for 2019 in a similar range. In both years, as driven from Americas and Greater China. On the right-hand side on the EBIT bridge, you see gross profit was the main driver of the EBIT improvement due to the tailwinds, as mentioned before, in Automotive Technologies. There were savings in R&D and in administrative expenses, and on the other hand, somewhat higher selling expenses, mainly driven from the higher logistic costs, which I mentioned earlier. On Automotive Aftermarket, on the next page, you see the split of the 1.3% FX adjusted growth, mainly driven from the Americas with close to 10% growth. Channel-wise, the main contributor from an absolute number point of view was the independent aftermarket, which is of course much larger than the OES channel. On the right-hand side, on the EBIT bridge, you see that the gross profit there was down EUR 2 million. That includes a negative FX effect of EUR 14 million. The R&D expenses and administrative expenses, they were also down, including some FX effects. You see the selling expenses, which has increased by EUR 7 million, and that is exclusively due to the AKO spending, the logistic cost from our warehouse consolidation program, which had an expense in the fourth quarter of roughly EUR 8 million. The minus EUR 4 million on others is just a consequence of higher special items in the last fiscal year, in the fourth quarter. Next page on industry. Decline of -2.7% FX adjusted. Again, despite a strong growth in Greater China with 12%. In most of the sectors in the meantime in China have been positive or have shown positive growth in China in the fiscal year. If you look at the overall worldwide numbers, as explained earlier, Wind was growing for all the quarters then Power Transmission in the second half and now in the fourth quarter that has been joined by Off-Road and Two-Wheelers. On the EBIT side, you see that the gross profit declined somewhat, and that is driven by volume and also from FX. On the other hand, there have been also volume related, but also structural savings in the selling area and also savings in the administrative area. Again, the EUR -12 million you see in others, that is the consequence of higher special items in the fourth quarter 2019, which are reversed in that column. Next page on the net income and on the special items. If you look at the left-hand side, EBIT, as seen on one of the prior pages, was at EUR 418 million before special items. In the fourth quarter, we had special items of EUR 148 million. That is a combination of roundabout EUR 95 million from the measures which we have communicated in September. An additional close to EUR 40 million for another restructuring which we initiated in South Korea, which is also high cost for us. Also, another roundabout EUR 20 million for a legal matter. If we stay on the special items for the full year, you see that on the lower right-hand side, EUR 946 million, obviously, that includes also the goodwill impairment of the first quarter. The yearly restructuring expenses have been EUR 680 million, roughly, and out of that, the big pieces have been EUR 580 million for the program, which has communicated in September and the roughly EUR 40 million for South Korea I mentioned earlier. On the financial result, on the left side in the bridge, the EUR 72 million includes roughly EUR 40 million for the refinancing exercise, and thereof the big portion is the realization of the early redemption option of the high yield bond. The income taxes basically are driven from current income taxes, negative ones, mainly from U.S. and China, compensated by different taxes in a smaller double-digit number. Next page, again, on the profitability. Here, it's not a lot to add, t he adjusted net income was EUR 325 million for the full year. That has been the basis for the proposal on dividend, that the respective fourth quarter number is EUR 209 million, also up from the prior-year quarter. Cash flow on page 31 was strong with EUR 355 million for the quarter, and even up compared to the prior-year quarter. That is basically also driven the EUR 355 million from a release of working capital or a reduction of net working capital, specifically on the inventory side, to a level which is also now too low in order to secure our delivery capabilities that will now reverse going forward. For the full year, free cash flow was EUR 539 million, up EUR 66 million compared to the prior year. Now on my last slide on net debt. There has been an improvement in the second quarter, or the other way, there has been a peak in net debt and leverage in the second quarter and then an improvement in the third quarter and also in the fourth quarter. We now are with a leverage ratio of 1.3x already in the range of our midterm, not target, but in the range of our corridor, which we have explained. You see also that we are on the right-hand side, that we have no major kind of maturities which are not pre-funded until March 2024. The liquidity situation is strong. There's EUR 1.758 billion in cash and cash equivalents and an available liquidity of 28% of sales. With that, Klaus, I would hand it back to you. Thank you very much, Klaus. Let me finish our presentation with the last three pages. We have, given the environment that we are experiencing, extended a little bit on our outlook going forward. That's on page 34. I think the most important part of this Triptychon is on the left-hand side, you see what we assume for light vehicle production growth in 2021. We all know that the February IHS figures give us an estimate of 84.6 million, and we have discounted this number to come to a solid base by 5 million cars. That equals 7% year-on-year market growth. That's, at the moment, our baseline. Clearly, this is a cautious estimate due to the remaining Corona crisis uncertainties, the risk of supply chain disruptions, but also the global volatility that we all experience, t hat's our baseline. In Automotive Aftermarket and Industrial, you can't use such a figure. We have, as you saw from the midterm targets, used proxies here. One is the GDP number and one is the Industrial production number, by way of a basket that is relevant for us. That has given us then the basis for Automotive Aftermarket and Industrial. Also here, I think we are well advised to be rather on the cautious side, and we have used a midpoint, as you see on the next page 35, for the two divisions. The key numbers have been absorbed above 7% growth. Sales growth is a function of the number for Automotive Technologies with an outperformance assumption of 200 basis points-500 basis points in sync with the midterm targets, 5%-7% for Automotive Aftermarket and 4%-6% for Industrial, gives you the above 7%. On the margin side, we have decided to give you floors. These floors are absolutely there to be defended, whatever it takes: 4.5%, 11.5%, and 8.5%. We all know that we can do more, and we will do our best to overachieve that. That at the moment altogether leads to a margin range for the year of 6%-8%, and free cash flow, as has already been mentioned, is around EUR 100 million. That's the guidance. Let me stress again, it's based on cautious market assumptions, but we are confident that we can overachieve these floors. Last page with a summary. I'm not going to repeat everything that we said before, but let me stress again, our performance orientation is clearly 100% committed. We saw that the organization is able to absorb environments like the one we saw in 2020. The intrinsic strength of the company is its management team and the ability to manage through something like this with a clear ability to manage contingency on the one hand, and on the other hand, setting the course for the future. We will remain focused on execution. We know that a reliable track record counts, particularly in these days, and there is clearly value to be unlocked if we stay the course and if we focus on solid operating performance and cash generation. The Roadmap 2025 is the framework for this, and we will demonstrate to you that we will be able to leverage synergies between the automotive and industrial divisions going forward. In all these areas like clean mobility or clean energy, this is the way to go. We now come to an end and look forward to your questions. Thank you, w e will begin now our question-and-answer session. If you have a question for our speakers, please press zero and one on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it is your turn to speak, you can dial zero and two to cancel your question. If you're using speaker equipment today, please mute the handset before making a selection. One moment please for the first question. We already got a lot of questions coming in. The first coming from Akshat Kacker from J.P. Morgan, p lease go ahead, sir. Thank you, Akshat from J.P. Morgan., t wo from my side, please. The first one on your free cash flow guidance and the low conversion ratio on EBIT of close to 10%. When I look at the details on your slides, you have a lower reinvestment rate of around EUR 200 million, the delta between CapEx and D&A. I understand that there are restructuring cash outflows of EUR 315 million, but that still leaves me with close to EUR 500 million in free cash flow without any working capital outflows. I'm just trying to understand how you're thinking about the EUR 100 million guidance in some more detail. That's the first one. The second one is on E-mobility and automotive gross margin. E-mobility sales were somewhat lower year-over-year in FY 2020, despite close to 45% growth in electrified sales or volumes across your key markets. Can you just shed some more light on that division? If you have any sales target for us for the E-mobility division in 2021 and 2022, like you used to give in 2019? The last link question to that is gross margin. As you start delivering these higher E-mobility orders into 2021 and 2022, should we expect any significant start-up costs or margin dilution? Thank you. Klaus, will you do the first one? Yeah, I will, o f course. On the free cash flow side, how I would look at that is, and you also started, I think, with the EUR 539 million free cash flow, which we have delivered in the last fiscal year. Obviously, we expect that we have an increase in top line, and you saw the guidance of above 7%, but please consider that there is a negative impact from FX. That means the overall top line growth will be somewhat slower. Whatever it is, in the end, it will be a significant figure. If you basically want to come from this additional top line, then I would start to use a drop-through rate of roundabout 30%-35%, which brings you to the EBIT. In the CMD, we guided for a free cash flow conversion of 0.3- 0.5. Please keep in mind that free cash flow for us is an after-tax amount. That gives you, obviously, as a starting point, an additional free cash flow. I hinted on the topic of working capital. Specifically on the inventory side, we have a very low starting point, and there needs to be some kind of refilling there, which I would say should be roundabout EUR 100 million, on top of what is already kind of calculated within this free cash flow conversion ratio. I would assume, and you have also the numbers in the deck, that there is higher restructuring cash out than what we had in 2020. That will be a number of EUR 150 million-EUR 200 million. There is a CapEx increase of, I would say, EUR 170 million-EUR 200 million. If you calculate that, you come close to the roundabout EUR 100 million. To sum that up, on the one hand, obviously there is a drop-through on the after-tax reported free cash flow. On the other hand, there are negative impacts from an inventory normalization, higher CapEx, still below the previous numbers from 2018 and 2019. There is this higher restructuring cash out. With that, I would give it to you, Klaus, on the E-mobility top line, or should I say something about on the Automotive Tech gross margin? [crosstalk] If you want to stand on the gross margin. On the gross margin. Indeed, in the Automotive Technologies, there is an ongoing dilution in profitability from the E-mobility business, t hat is there. We have basically included that in our midterm targets already. Obviously, that is included also in our guidance for this year. It's nothing special to be expected there. There will be sequential progress on E-mobility and the traditional business, specifically with the increasing volume, will be able to compensate for that. Therefore, we said that the EBIT margin of overall Automotive Technologies will increase compared to what we have in 2020. I think on the second part of your question, I'm not 100% sure whether I understood correctly what you are referring to. I think the gross margin was answered, but can you repeat the second part of your question in terms of, I think it was gross. I didn't get it 100% here. Sure, I was talking about the E-mobility revenues growth in 2020. Overall sales were flattish despite market volumes in your key markets being up 45%. I was just asking if you have, going forward, if you have a sales target for us for the division in 2021 and 2022, t hank you. Again, we have not given any targets for E-mobility growth as part of the midterm targets. You always have to understand this E-mobility composition is not only E-axle and hybrid. There are some also existing products in that. I think the latest what I can refer to is we said sometime in the past that the CAGR in this business can be somewhere around 15%. That was a UBS event, if I'm not mistaken, sometime September. Again, there is no growth target as an absolute number for the E-mobility thing. What we're giving you is the target for order intake, that has been increased. That's what I can say at the moment here. Thank you, i f I can follow up on gross margin question, just one follow-up. Klaus, you mentioned that traditional business with increasing volumes will be able to compensate the margin dilution from the E-mobility business. How confident are you on that front that we won't see more margin pressure on the traditional business lines, engine, and transmission? Maybe I can say one sentence and then Klaus can add from the numbers side. We are seeing at the moment an interesting situation. All the OEMs are articulating their electrification strategies going forward. More or less everyone says he wants to redo the product portfolio, and everything becomes electric, whether it's full electric or hybrids included. At the same time, we're seeing a situation short term where people are buying cars and there are not enough battery electric cars available. That gives us an interesting situation because they come to us and also ordering in some areas even more than we expected for traditional cars. That gives us to some extent, also an edge because, I am not saying that our pricing power will completely reverse, but there is a situation where we can also argue with customers and say, on the one end, you want us to transform to E-mobility, on the other end, you want us to keep the capacity open for all the traditional stuff, and that comes at a price. The situation slightly changes with OEMs becoming so articulated on their electrification strategies, and we have always said, last in the Capital Markets Day, that our mature business, or we call it our foundation business, is not just a run-off business. It has a lot of technological things that we can use for E-mobility as well, and it is definitely something that we will harvest. We are, and Matthias and his team is focused on the one hand growing the E-mobility at good gross margins, on the other hand, to harvest and use the cash that sits in the existing business as wisely as possible. Thank you so much. The next question is coming from Gabriel Adler from Citigroup, p lease go ahead, sir. Hi, thank you, Gabriel from Citi. Two questions from me, please, t he first is on the market outlook and your assumption of +7%, which I understand the rationale for being cautious here. My question is more whether there's anything that you're seeing maybe in the current trading in February, or with regards to conversations you're having with customers around perhaps shutdowns relating to chip shortages that's informing your view here, or is it just a prudent and cautious take on an outlook that is clearly volatile and uncertain because of shortages and the strength of recovery? My second question is on the industrial margin. Can you just help us understand what really is holding back a recovery in the industrial margin in 2021? Because revenues are growing, the order book's recovering, headcount's falling, and yet you're guiding to a margin floor of 8.5%, which is only modestly better than what you achieved this year. It's also some way off the 12%-14% target you set out at the CMD. Any color you can provide around why you're not expecting a stronger margin recovery in industrial in 2021 would also be helpful? Thank you. No, let me start with the first one, and I think you all will agree that we are hopefully at the end of an unexpected and unprecedented crisis where no one of us has the crystal ball and can say how this unfolds. We think it's starting to clear up, but we're now seeing this chip shortage that has only indirectly to do with the crisis, that is something where Schaeffler as such, is not that impacted compared to others, but it will impact demand going forward. We don't know how much and how strong that will be. We also see the uncertainties from other elements in the supply chain. Therefore, I think it's more than prudent not to go with an overly optimistic perspective now into the new year. We see that at the moment, there is a positive development in January and February, but the year is not over. Growth rates as such, have to be looked against the deep dive in the second quarter 2020, for sure. Again, I can only say at the moment, from our point of view, it's prudent to be rather on the cautious side. We have explained to you the logic with this discount. Others have done something similar. I think that's the right way to start, and to see how we move forward. As I said, this is about agility. It's about having the right information available and draw the right conclusions where necessary. I can say for us as a management team, we are optimistic for the year. We're not saying that this will be another chaotic year like 2020, but it's better to be careful than overly optimistic. Yeah, on your first one on industrial and the margin. First of all, I think that we have to just be clear that we do not expect the same overall top line compared to then like in 2019. There was a decline in 2020 of -9%, but remember that FX adjusted, and we also guided for growth in line with the industrial market. Also, here we expect a negative FX impact. That means there might be a difference of whatever, EUR 300 million-EUR 400 million in top line versus 2019. First topic. Second topic, I think also we made it always clear that in the end, there needs to be structural improvement Specifically also in Germany on the production side, because there is a very large production base in Germany. We have addressed that with the measures which have been communicated in September. At that point in time, we already said that the payback from these measures will not be effective in 2021. They will start to be effective in 2022, and then basically in 2023, we said we will have around about 90% of the savings which we expect from the whole program. Therefore, it's basically a combination of working on the structures, and improvements will come there. Then, it will also take time in the industrial space until the pre-crisis level will be reached. Okay, thanks very much. Maybe I add one sentence, y ou see the gap from today to the 12%-14% in 2025. That's the journey that we have in front of us. When you think about the measures that we implemented, then they will significantly contribute to that journey, but not in 2021. As Klaus said, it's a progression. Therefore, it's for us of utmost importance that we get these negotiations with our workers council settled. They are on a good way. We have, as you know, good and cordial relationships with them. I think that this will pave the way for this execution path. The next question is coming in from Sascha Gommel from Jefferies, p lease go ahead. Good afternoon, everyone, t hanks for taking my question. Unfortunately, I have to follow up on the guidance as well, just that I understand it correctly. If we assume the low end of your top line guidance for each of the divisions, that is when you think you will reach the stated margins, the bottom end. Is that the correct reading of the guidance? No, s ay it again, please, Sascha. I don't want to say something wrong. Yeah, f or Industrial and Aftermarket, you gave a range. Similarly for Automotive, in the sense if we assume 7% market and 200 basis points of outperformance. Correct. That's when we should assume kind of 4.5%, 11.5%, and 8.5%. Correct. Okay, perfect. My question, a bit of a follow-up as well. If I assume Aftermarket or Industrial at the low end, it would basically imply that EBIT is unchanged for Industrial, despite higher top line, even at the lower end. For Aftermarket, it's down EUR 40 million or so, which basically also means the AKO headwind falls completely through and there's no offset from your incremental top line. Just trying to understand why this is the case, given you have so much restructuring in place. Let me first come back to your starting question. I think, principally, that's true. Our guidance of above 7% top line, that is based on the conservative market view on Automotive Technologies, some outperformance in the range we gave. Also more on the lower side, also considering a conservative market view on Industrial and Automotive Aftermarket, t hat I can confirm. The other topic I understood as a question, is on the Automotive Aftermarket specifically. Why are we declining in margin so strongly? Indeed, there are positive volume effects on the gross margin. They are more than compensated by mainly three factors. First topic is higher production costs. Including higher production costs mainly from our internal supply from Automotive Technologies. The second one is that we will have, as communicated earlier for the AKO, we will have an impact, which is in the range of EUR 32 million in 2021. That is significantly more than what we have in the year 2020. Here, I can give you a number of roughly EUR 12 million. The majority of that was in the fourth quarter. If you take this logistic topic together with further investments in digitalization, as mentioned and explained from Klaus, that is good for roughly two percentage points. Roughly two percentage points for higher production costs or costs for goods, two percentage points for AKO and digitalization. Then we also plan with another negative FX effect, which might be in the range of 1.5% for Automotive Aftermarket. If you take it together, that explains to you the drop in profitability. Keep also in mind, the 11.5%, which we put as a guidance, that is a floor again, right? For example, that also considers that there is p otentially, a faster increase in revenue on the Automotive Technologies side, which would, in the end, potentially limit the growth in the Automotive Aftermarket business because they would then not have enough goods to ship. It's really something which, again, as Klaus Rosenfeld said, this is what we think would even be defendable in such a scenario. Okay, perfect, t hat's very clear, t hank you. M y second question would be on the EV order intake, which obviously gained quite a bit of momentum. I was just wondering if you can just qualitatively speak about, do you think that phase of order intake is enough midterm to offset some ramp down in your legacy portfolio? Or do you think mid-decade, you really need to step up and go above the EUR 3 billion level in order to offset some of your legacy products that might fade down a bit faster than initially expected? Well, that's a good question, but for the time being, the range has been increased to two to three, not because of any offset ideas, but simply because the number of requests is increasing, the number of projects we are running is increasing. And we need to just be clear that we want to be selective in our approach, and we want to be modular in leveraging what we have done in the past. So, this is not just getting on board whatever we want and whatever may look interesting. It's a selective approach to build a portfolio in those areas where we can make a difference. And it's not only quantity, it's quality of the order intake, and it's the ability to leverage the core competencies across the spectrum. Thanks, m y last one, kind of a related question. If we listen to the OEM presentations over the last six months or so, everyone is talking about insourcing more of the EV powertrain, different areas, but overall, the tone is more towards insourcing. How are your discussions in that sense? Do you feel the OEMs go more to a component relationship, that they want more components and less systems? Or is that a misperception and you still have a lot of systems that go into the OEMs on the EV side? No, that's a fair question, I would be foolish to say that this is not a critical issue. We have seen large projects that we wanted to win that went away and were done in-house. It's a relevant point that we need to deal with. The answer to this is, from our point of view, that you need to be good with the three-in-ones and with the more system-like offering, but also be able to offer the components because certain components are difficult to do in-house. If you then think about the margin profile, if there are parts, and it could even be an E-motor. There are companies that said, "We want to do with Schaeffler the E-motor" because they can do it better than we can. Don't forget, an E-motor, a rotor and a stator, is nothing else than high-precision metal sheet forming and packaging. That requires investment if someone wants to do this in a high efficient manner. The answer is not black and white. There is this extra competition from the OEMs themselves. It doesn't allow us to do anything, but it's something that we need to take serious. Our answer is, again, a modular approach, but also approach that does not neglect a component into something bigger. So far, that has gone well. I think the best proof is here, this E-motor strategy, where a very prominent OEM, where I can't mention the name, already a year ago gave us this large order and said, "We want you to build that for us." When I look in the number of projects that we are dealing with at the moment, then this becomes a theme going forward. I also mentioned that this morning at the press, there are products that we have built a certain competence for in the ICE space that will be used much more in the battery electric area. Thermal management is a good example. I think some of the analyst studies already talked about this. There's spillover effect that you can also use. It's still a race, for sure, but we are in a much better position than we have been two years ago. Perfect, t hat's very clear. Thanks for all the color, t hanks. You're welcome. The next question is coming from Victoria Greer from Morgan Stanley, p lease go ahead. Good afternoon, thanks for taking my question. The first thing I wanted to ask was around your relationships with all of the various startups that we're seeing in the EV space. Could you talk about what is your conversation like with them, both in terms of E-mobility products, but also elsewhere in auto OEM? Just a couple of housekeeping ones, please, on your expectations for the net interest cost and the tax rate for 2021? Thanks. Okay, the startup question is an interesting one. There are all sorts of startup experience from the past, and I think if I may call this a startup, at least some years ago, it was a startup. The only one that has really made it so far is Tesla. Tesla has a very specific approach to things. You know this better than I do. All the other ones from the past have not really succeeded. I am not saying that this will be the case going forward. That would be wrong. We are approached always by these companies, and in particular, when it comes to the luxury space where the profit pool is larger than in the low end of the spectrum. We always like to talk to new companies, understand what they want. For us, we build our business around the idea that scale matters. It becomes then a discussion about where can we add value, and where does it make sense to design something that is completely new, in particular, if you want to leverage that experience. There is a whole range of newcomers in China. Our Chinese organization is engaged with most of them. Again, you have to be selective in saying, where do you really want to talk, and where do you really want to put money at work? Again, it's a selective approach by looking carefully. There are no miracles. What we are seeing at the moment from Tesla in China is an aggressive approach, quite impressive, but they're obviously putting their price strategy at work with their great reputation to build inroads into the E-mobility space there, with raising the bars also for service, t hat's quite interesting to follow. Again, on the more unknown companies, we talk, but we are selective in terms of putting real money at work. Yeah, t hat's really interesting, t hank you. Actually, I wanted to also pick up on, before the more boring questions, more boring but important questions. To your point about scale, in E-mobility, are there a lot more components in your E-mobility product portfolio where they're much more standardized, basically, than you would have for ICE? Is that something also that you think about in product development and in how you sign contracts? I think, Victoria, if you break down an EV car, the composition of the bill of material is definitely different than an ICE car. Does it mean that there's a different degree of standardization when it comes to all components? Not necessarily. You can say a complex transmission with a 10-year transmission needs probably more bearings in the transmission, if you have a complex E-axle with a inverter, with a reducer, some of the complexity is replaced by something else. I'm not saying you can just extrapolate the whole complexity of the, let's say, engine valve train components into an e-car, there is definitely not a notion that says everything is easier in an e-car, t hat's not the case. In particular, if you go to the high-end, high-voltage segment, where we think there is all the transmission know-how that we have, all the system understanding that is needed, is very relevant, and also extending them into power electronics and E-motors. I think the simple notion of e-cars are more standardized and that's why you're losing value is at least not right for the high-end sophisticated E-mobility product. And I do believe that that's the area where most of the companies will make money, and the smaller cars, the ones that you drive with low voltage, they have probably a different situation. Yeah, t hank you. Actually, it wasn't so much the EVs are much simpler than ICEs that I was thinking about. It was more that, to your example of the 10-speed transition. A 10-speed transition for one OEM customer, I assume it's probably quite different to the similar product but for a different customer or even maybe on a different model for the same customer. In the hybrid modules or in e-axles, in e-motors, the difference between one e-motor for one OEM is less, than to the same product for a different OEM. Do you see where I'm going from? Yeah, sure. Basically just thinking about how scale can be different for you for E-mobility. Sorry, Victoria, I misunderstood the question. That's what I wanted to say when I talked about the modular strategy. For us, it's vital in terms of intelligent use of our capital that we don't reinvent for every project a complete new setup. We have certain competence, as you know, in hybrid systems, in terms of how to make them and how to make things smaller. The old Ford MHT example is a great example that we extended into other things. We have just won another hybrid system for a Japanese customer in the U.S., where we're basically using that concept and extending that concept. If that's what you mean, I think we are on the same page. Yeah. That is, from my point of view, of vital importance in terms of making money with this stuff. If you try to reinvent the wheel for every customer, you will not be able to make money on this. Yeah, g reat. No, thank you. Okay, then on your question on the tax rate for next year, we expect 32%, roughly 34%. If your question was more on the cash side, I would expect a similar amount of cash out from tax as in 2020. We talk here, EUR 310 million or something like that, this in the range. Obviously, that's depending on where the profitability comes from, and includes also the assumption that in the next year there is high profitability in our companies abroad. On the interest cash out, that would be somewhat higher than what we had in 2020, including somewhat higher interest on the bonds. Great, t hank you very much. The next question is coming from Horst Schneider from Bank of America, p lease go ahead. Yeah, good afternoon, and thanks for taking most of my questions. The first one that I have that relates to the top-line guidance in Automotive Technologies. You give a wide range, which is 2%-5% outperformance. I want to understand what does it depend on that it's two, and in which case is it five? We have been towards end of last year, rather at the upper end of this range. Maybe could you explain it a little bit, what it depends on? Let me try to give you some color. If you look at the page in the book with the historic outperformance, you see numbers that are inside the 2%- 5%. I think what we can say then from a regional perspective, you see that there is some volatility. The more stable number is Americas. If you go back four quarters, Americas was always positive in terms of outperformance, sometimes two digits, sometimes only high single digit. All the other numbers can fluctuate over the quarters. We think that two to five is a solid range that we can deliver. The outperformance depends on, are you on the right platform with the right product? I can tell you if we sell this MHT module, that is a high content per vehicle continuously well with our major U.S. customer because people buy large SUVs and pickup cars, that will drive outperformance. If you are in something that is not really performing well because the customer can't sell the product, then that can be negative. It's a function of what type of platform, what type of car, and what is your content per vehicle in the ones that are running or in the ones that are not running. Mm-hmm, o kay. The other question- Does that make sense? Yeah, I have got to think about it in more detail, to be honest, and maybe get back to you on that when I'm finalizing my estimates. Can I say there, Horst? Sure. The question is, from my point of view, not so much the outperformance. The question is what's the underlying market and production number. Here we said we have taken a discount, 5 million cars, that incorporates all the headwinds that are there, whether it's the demand curve because of the shortage of chips, that is not that relevant for us from a supply side, but that it can be relevant from a demand side. If you think about growth in Automotive Technologies, it's very much this combination of a decent outperformance number and the volatile production volumes. Let me just ask a follow-up on that. Where is, again, your content per vehicle? In which region is that the highest? That's a number that we need to go back to the files and look at this, but that's not a number that we have. Content per vehicle is the highest in Europe. Yeah, I think that's also a reflection of the outperformance. If you look at the 2019 and 2020 numbers, you see that in Europe the outperformance was smaller. That's also a reflection of the high content per vehicle there, right? I think that, as Klaus already mentioned, there is also a regional kind of momentum there. We had strong outperformance because there was strong growth in China and also lately in the United States, y eah. Okay. On the longer term, because I know you also guide midterm for this 2%-5%. I think I asked this question also in November at the CMD. What is, again, the path for this outperformance? Is it right to assume that it should be rather higher in a year like maybe 2021? We have got special circumstances, and then maybe it levels off in 2022, 2023, and then it accelerates maybe, or maybe even declines in 2024, 2025, when we move much more towards EV. We can take that question with us and see whether there is a pattern. What we gave you is an on average indication. Yeah, o kay. I think I've not seen anyone who gives the walk in terms of outperformance through the years. Yeah. Again, it's very much dependent. Don't forget, this business is a consumer business. It depends what are the consumer buying, and even if there's a big talk about electrification these days, and we think that's right that there's this conversation about electrification and the OEMs are going this direction. What the consumer does in 2021 remains to be seen. Yeah, sure. The other question that I had that relates more to the seasonality. How should we think about the way through 2021? It's fair to say that H1 is going to be weaker than H2, or there is no special seasonality that you would expect? Weak in terms of what? In terms of growth or in terms of profitability? If you can comment, then certainly on both. I see the likely production numbers, of course. I think for January, February, we have got a trend, I don't know, for EBIT margin? What I can say at the moment is we started well into the first quarter. To be a little bit more explicit, that means a positive growth rate. You all know that in the first quarter, there was already a decline in China starting earlier than in the rest of the world. In the second quarter, you will definitely see significant growth rates because of the low comps. How this then progresses into the second half of the year is a function of what happens with this crisis. If the crisis is over, don't underestimate all these support programs that now come through in the United States. We already see inflation expectations rising. We don't know how people will behave in the second quarter. It's crystal ball, Horst. I can't give you something that now says, I'm confident that the second half is growing faster than the first. I think in terms of growth rates, you need to factor in that the comps of the previous year of 2020 will play an important role when you determine growth rates. Sure, y ear-on-year growth rate, I don't know if that perspective is useful. Maybe we should more talk about sequential growth, right? Yeah. In that respect as well, forgive me this question- Sure. ... in conference call the statement that you make on Automotive Aftermarket, where you clearly explained how you get to the cautious margin. When I look at Automotive Technologies, I have not yet fully understood why it's just more than 4.5%. I understand you want to be cautious, but then when I look at the margin, of course, that you did in Q3, in Q4, and then I look at the total level of production volumes globally in Q1, Q2, Q3, Q4, I cannot really see why the margin is coming down that much. If I look at the average of 2020, it's easier to understand, but when I just look at the run rate that you hit in H2, I do not really understand why it's getting down that much. Maybe if you could clarify that. Horst, I think we tried to explain this at the beginning. This is a floor. It's not a point guidance and not a range guidance, i t's a floor. It's there to be also defended in the more adverse developments. Okay. I think maybe you take that away. Yeah. To add on that, I think what I tried to make clear in its general remarks that the fourth quarter is a special quarter and exceptional quarter. If we run through a couple of topics again, or in more clearness, hopefully, with regard to Automotive Technologies. I think the first topic is the fourth quarter was volume-wise a very, very strong quarter. It would not fit to our guidance, which is based on a more conservative market outlook. If you just take the fourth quarter volume times four, t hat's the first topic. Consider a lower absolute top line. Second one is there have been raw material savings in 2020 compared to 2019, and that will reverse. That is definitely a headwind. While obviously we can compensate or pass through a bit, but not fully and not necessarily in the same year. The third one was, I mentioned that on a group level, that there has been significant sale from inventory. That gives you a really strong gross margin, which you have seen in the fourth quarter, and that is nothing to repeat. That, again, if you want on the margin, that's a headwind. We had this short-term work benefit, which we also, I think, mentioned at some point in time, mentioned in earlier quarters. It was still visible in the fourth quarter, smaller number compared to the third. Again, this benefit still in the fourth quarter will not be there in the full fiscal year. Finally, there have been savings in the R&D side, for example, which are the consequence of some customer projects which have been delayed, and they are ramping up now. I think there are a couple of reasons which contribute to the fact that the margin will definitely be lower. Again, as Klaus says, the 4.5%, that is what we believe is a defendable floor. We purposely said it will be larger than 4.5%. Okay, f orgive me again, this question. Maybe can you quantify the effect that you mentioned raw mat impact, R&D increase, and the reversal of these short-term work savings? Well, I would say that's a bit difficult because we have not given a volume or top-line forecast for Automotive Technologies, right? You can do that yourself. We said, for the full year, 7% market growth as an assumption, we have used this outperformance. Probably we have not been at 5%, but a bit lower. Consider this negative FX impact, of which might be roughly 2.5%, you are on an absolute kind of volume. That has an impact. Raw material is, at Automotive Technologies annualized, I would say, a mid-double-digit number. The inventory topic is also probably a high double-digit number. You go to the functional cost, it also includes a bit higher special freight. I mentioned it earlier in the call. I think that gives you enough flavor, yeah? Yeah, o kay. Excellent, t hank you. The next question is coming from Stephanie Vincent from J.P. Morgan, p lease go ahead. Hi, t hank you so much for all the transparency and for taking my questions. Just really housekeeping questions, actually. I believe that the factoring balance is zero, but just for housekeeping, if there's any reverse factoring balances in there, that would be useful to know. Also, on the Schaeffler Finance B.V. entity, obviously you called the 2025 bond. Just had a question as to whether there are any further public filings regarding that entity, or if you've made a decision about what to do with that entity, keep it outstanding or otherwise. Finally, on M&A, you've given a lot of transparency about free cash flow, but just wondering if you had any updated comments on bolt-ons or even some potential small or medium-sized divestments that we could think about in 2021. Stephanie, let me take the last one, and then Klaus continues with the two other questions. The last one is pretty easy to answer. There is nothing new that we can share with you. The M&A strategy is in place, and I can only confirm we are looking to smaller acquisitions that fit technologically. That's the answer to your last question. Okay, t hank you. On the B.V. side, indeed, we have fully redeemed the last bond of Schaeffler Finance B.V. on November fourth. We have made no decision so far on the future of Schaeffler Finance B.V., so that is something which is open. On the factoring, with regard to the ABCP program, that has a volume of roughly EUR 150 million unchanged, and also no change, which is included in our guidance. Okay, t hank you. Regarding the time, we're coming to an end to Q&A session. I give this back to the speakers for closing remarks. Well, ladies and gentlemen, thanks for joining this call. We look forward to the next events that are coming up. There's a roadshow planned virtually in the next couple of days, starting next week. We have our annual general meeting in April, and then the first release on the first quarter. That will certainly be very interesting. In May, once again, thank you very much for staying with us today, and we look forward to all your questions, all your interaction, and everything you need to know from us. Thanks a lot, and bye-bye. Dear ladies and gentlemen, thank you for your attendance. This call has concluded, y ou may disconnect.