| 1:35 PM EST

Schaeffler Trims Outlook on Higher Costs for Materials, Research


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Bearings supplier Schaeffler Group has lowered its outlook for 2017, citing rising prices for steel and a surge in the cost of doing prototype work related to electrified powertrains.

CEO Klaus Rosenfeld notes in a conference call with analysts that neither trend can be offset by reducing production costs. He cautioned two months ago about the likely effect on margins, but at the time he didn’t quantify the impact.

Schaeffler now expects a full-year adjusted operating profit margin of 11%-12%, down from a previous forecast of 12%-13%. The company also estimates its free cash flow will be €500 million ($560 million) compared with a previous forecast of €600 million ($672 million).

Reuters notes that the company’s downwardly revised outlook prompted a drop in its stock price and those of rivals Elringklinger, Continental and ZF earlier today. The latter companies say their earnings outlooks haven’t changed.

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