On Jan. 21, 2025, Germany-based auto and industrial component supplier Schaeffler AG released preliminary figures for 2024 indicating an operating profit margin of 4.5% compared with its previous guidance of 5%-8%, mainly reflecting very weak performance in the company's Bearings&Industrial Solutions (B&IS) segment and at recently acquired powertrain components supplier Vitesco. In our view, the profit warning points to challenging conditions continuing in Schaeffler's industrial segment in 2025, as well as for parts of the automotive product portfolio, leading us to forecast slower leverage reduction this year than we previously expected. We therefore revised our outlook on Schaeffler AG and IHO Verwaltungs GmbH to negative from stable and affirmed our 'BB+' long-term issuer credit rating on these entities.
