Thank you very much, operator. Dear investors, dear analysts, welcome to the Q3 2020 results of the Schaeffler Group.

Thank you for your time today. Although we have already published abiding with BaFin regulations our Q3 preliminary results and our full year 2020 guidance.

Leading the call will be Mr. Klaus Rosenfeld, Group CEO; and Dr.

Klaus Patzak, Group CFO. Without further ado, I leave the floor to Mr.

Rosenfeld. Klaus, the floor is yours.

Ladies and gentlemen -- Renata, thank you very much for your introduction. Welcome to our Q3 results call.

As Renata mentioned, this -- the numbers have been pre-released some days ago. And you saw yesterday evening that we also sent out an ad hoc regarding the guidance.

Let me quickly put that in perspective. We simply followed here the BaFin regulation that is relevant for us.

The tipping point for this guidance was the positive indications we have for October, and that led us to specify the so far qualitative guidance into something more quantitative that we want to explain to you during this call. Let me quickly go through my part in the overview, and if you please follow me to Page 4.

There, you have the key messages, and most of these numbers are known to you. Group sales clearly show a sequential recovery in Q3, driven by the 2 Automotive divisions, both Automotive OEM, now renamed into Automotive Technologies, and Aftermarket.

While Industrial was minus 8% in the quarter, was lagging behind. I think a positive development on the margin, it was 9.4%.

Also here, Automotive divisions with the stronger improvements in terms of earnings quality, Automotive Technologies, 8.3%. Clearly, a margin that is also benefiting from some of the tactical measures we have put in place.

And then number three, Q3 free cash flow, strong with €333 million, very close to previous year. Here, you see the impact from proactive working capital management discipline on CapEx, but also clearly, the improved business.

This number does not include, for sure, any part of the new restructuring program. That is not cash relevant in Q3.

And as I said, CapEx very conservatively managed with €181 million, below the 6% benchmark in Q3. In terms of our measures, I think we can report that the cost discipline at group, but also at the division level, is high.

And that the short-term work has, in particular, broader positive EBIT impact in Q3 that will, over time, then reduce. We see on the headcount number that the previous programs are still showing impact.

Headcount further reduced to €83,700. What is -- if you compare this over the last quarters, more than 9% down and shows that we are continuously improving in terms of cost management, the full effect related to Europe.

I just mentioned the guidance, and we'll give you more color in the later part. Let me quickly mention here, as all of you know, our next event is the Capital Markets Day, the virtual Capital Markets Day next week, November 19, where we will also explain midterm targets.

If you want to have an assessment, a high level assessment over for the quarter, Page 5 gives you the highlights and the low lights. As I mentioned, business improved in Q3.

We see a continuous recovery led by Greater China. Greater China, 16.5% FX-adjusted growth year-over-year.

What is clearly positive in Americas, also with a slight growth compared to previous year, shows that these are the two engines that are driving the recovery. Let me add here, both in the Automotive, but also in the Industrial world, where China is still, in terms of growth rate for us, above the auto growth rate.

Capacity utilization, further normalized through all the regions and also in all our activities. In particular, Industrial, we see overutilization in Greater China.

So capacity utilization, more than 100%. This shows that, again, the China business is really performing well.

We have always said that coping with this crisis needs continuous cost and capital discipline, and that is clearly implemented and followed through. And that has also led them to this strong free cash flow with a conversion rate of 32%.

The negative part, Europe is clearly lagging behind them. Also here, the impact on Industrial was bigger than all the other regions.

And we have, as explained later in the deck also, had to take some profit impact on the gross profit side on the industrial side that was driven by fixed asset write-downs and non-personnel-related provisions that Klaus will explain later on. Q3 remains a quarter with high volatility and low visibility.

And Q4, we expect not to be as strong as Q3. While there is clearly positive signs in October, the uncertainty remains high.

And that's also why our guidance for the year 2020 is rather cautious and conservative. Click quickly through the divisions, Page 7.

I'm not going to explain this all line by line. But as I said, Automotive saw a strong sequential recovery and Q3 EBIT margin is even above the previous year.

Gross margin was an improvement also from all the efficiency measures, good cost containment COVID-related and clearly also the right direction in terms of flexibilizing our labor costs. The plants are doing a very good job at the moment to avoid any deviations.

And we are quite proud also how the working capital management is steered, in particular, by the Automotive plants. Overhead cost reduction, 12%, also speaks for itself.

And the 2 other negatives, I already mentioned before, Europe sees the slowest market recovery. Also, we have also outperformance in that region.

Some color in terms of the business exemplified here on Page 8. Executing RACE, good on track.

In powertrain, we see high activity. You remember from our structural measures, the new Competence Center for E-Mobility in Buehl is progressing well.

We are proud that we have just been honored by Ford with a prestigious Brand Pillar Global Award for our MHT module, you all know this. It's another proof that, that is a big achievement.

And obviously that car takes off quite well, so we are benefiting from this. We have seen from a Japanese OEM a new nomination for a CVT project, what is pointing in the right direction.

And also a first nomination for a Heavy Duty E-Motor that again shows our technology in terms of e-motor and the wave winding capabilities we have really pays off. Not to forget the chassis, there's a new partnership with Bosch Automotive Steering to expand the development of our Intelligent Rear Wheel Steering portfolio what also tells you that we are still focusing very much on new technology.

Automotive Aftermarket, also showed here. Sequential improvement growth in Independent Aftermarket, 5.5% compared to the previous year, what is clearly showing that, that business is also taking off robust profitability.

And we're starting to see first customer shipments from the AKO investment, a long-term investment that you have all followed for quite some time. The AKO ramped up successfully, and we will begin with the relocation of all our central German warehouses.

Just to mention it here already, there is for some times some duplication in this. But I think the tipping point has been reached where we will now successfully execute the relocation and then also harvest the improvement potential.

Sales in the OES business is -- has been rather weak, with some improvement. That's also nothing unexpected.

And the higher-than-expected increase has also challenged our supply chain. Page 10 gives you again a little bit of color on the AKO benefits.

It's a major project. 60% of worldwide inventory is expected in AKO Europe by '23.

We are consolidating 7 locations, and there is a significant challenge in improving the efficiency with a targeted 30% reduction in run through times and kitting times Industrial. Page #11.

Also here, as you saw in the second quarter already, China driving the business with strong -- continued strong business in wind. And also some improvements in the power transmission area.

We think that the election in the U.S. could further support everything that has to do with regenerated energy, and that would be good for us.

Good work on the overhead cost reduction but also the impacts that will be explained later. And also here, Europe rather contracting.

In terms of the sectors, maybe just to give you some color, some of the more pre cyclical sectors off-road show some improvement. Power transmission, also the same.

Railway, rather moving side wards with a good midterm expectation. But critical sectors like the industrial automation rather still be weak.

You all know that tool machinery, for example, is a good indicator for industrial production, textile machines, printing machines, and that is still rather weak. Aerospace, in an interesting situation with the civil aircraft, weak.

But with cargo and also with military going well. This is also then on Page 12 further exemplified with off-road.

We have done a lot in the last months to get our distribution business up to where it was and have used the digital format here with some very good feedback from our sales partners. Off-road, I mentioned.

Let me go to Page 13. I think that's a continued success story, reducing our headcount and delivering on the different schemes we have announced.

The voluntary severance scheme from end of last year is up and running well. And we are definitely in time and also in budget.

The new restructuring program announced is also achieving what we wanted to achieve. There's really no impact yet, but what is important for you to note that the plan is confirmed.

We are now in the second month after -- or a third month after announcement and have yesterday already started the implementation of one critical part. The next voluntary severance scheme has been announced here for Germany yesterday, and we have reached agreement with workers' council how to best do this.

There's still a lot of work to be done. But we are really pleased that after 2 months, our HR colleagues, in particular, have paved the way here for a successful implementation of this program.

Capital allocation, I think I already mentioned the key aspects. The CapEx ratio at the moment is running below our famous 6% threshold.

5.4% in the first 9 months shows that we are disciplined. You also see this shift in terms of where we invest.

When you look at the €459 million, €199 million come from Industrial. That's clearly demonstrating that the new capital allocation logic with the reinvestment rate logic that we introduced last year, beginning of last year, is starting to pay off, with much more focus on making sure that we invest only in the growth areas and be very conservative in the areas where we don't want to grow any more.

And that is clearly something that we'll also further explain during our Capital Markets Day. You still see a lot of investment in Europe, but also that will be more explained in the next week when we convene for the Capital Markets Day.

With this, I hand over to Klaus for more detail on the numbers.

Yes. Thanks, Klaus, and good morning also from my side.

Page 16 shows the key figures, but I will not spend time on that, because the following slides will lead you through the all relevant key figures. So on Page 17, on sales growth.

Sales is down around about €200 million, a nominal decline of 6%; FX-adjusted, 2.6%. We had, as already mentioned, strong growth in China.

Aftermarket was benefiting from a strong Americas business and Industrial, on the one hand, with a decline in Europe. On the other hand, a growth in China, and I will come back to that in a minute.

Also as already hinted from Klaus, we had quite a good dynamic during the third quarter. So sales in September was already positive, that means this FX-adjusted growth.

And also in October, we had a continued kind of positive dynamic. And again, growth in all regions, except for Europe.

But Europe was also declining more in a low single-digit range. You can also see from the difference between nominal and FX-adjusted growth that there have quite strong currency impact, mainly coming from the Renminbi, the peso deval and the U.S.

dollar. On the next page, Page 18, on the gross profit, you see that gross profit came down around about €100 million.

The gross margin is 23.8%. This is 160 basis points lower than a year ago.

If you go -- if you look at the bridge, you can see that price was -- price was around €50 million negative, basically stemming totally from Automotive Technologies. Automotive Aftermarket was actually positive.

And Industrial was more or less flat. Then you see in the middle of the bridge the production cost.

It's only minus 12. But within that kind of piece, there are 2 different pockets.

The one is that we had a strong improvement in production costs, specifically also in Automotive Technologies. And then on the other hand, it was this positive improvement was more than compensated by write-downs of fixed assets and higher warranty accruals in both Automotive Technologies and industry.

I will come to that back later. You can also see on the FX effect that this was a €33 million negative.

Obviously, that has something to do also with the FX impact on sales, which was €122 million. So on the next slide, Page 19, you will see the EBIT adjusted development.

So EBIT adjusted was more or less flat with €320 million in the third quarter. Actually, the adjusted EBIT margin increased by 30 basis points.

This strong Q3 margin development was a result of the market recovery, at least this kind of short-term catch-up as well as temporary measures. And these temporary measures include, on the one hand, some postponements of projects, but on the other hand, the short-term work, as mentioned by Klaus Rosenfeld.

And we already saw in the third quarter that the impact of short-term work was significantly lower, basically only half of what we had in the -- in the second quarter. And again, I would expect that number to go down, again 50% in the fourth quarter.

So having said that, also what is clear to you, I guess, that the fourth quarter margin will be lower. But it has also something to do with seasonality, specifically in the Automotive area.

And with that, on Page 20, you'll see further information on Automotive Technologies. Nominal decline of 4%.

FX-adjusted, 1.1%. October, actually, again, quite good and showing also some growth.

Outperformance for the overall business was 2.4 percentage points, and year-to-date, 5.5 percentage points, which is clearly above the historical average. So that is something which I would not expect for all years to come.

Then on the right-hand side, profitability was up €22 million to €180 million in the quarter. And the margin was at 8.3%, the adjusted margin at 8.3%, 130 basis points above prior year.

And again, here, you see on the gross profit side minus €9 million reported. And here, again, you see this combination of a significantly reduced production cost, which is -- which is more than compensated by on the one hand, the price decline I mentioned earlier, but on the other hand also, write-downs of fixed assets and higher warranty accruals.

But you also can see then in the following parts of the bridge that in our savings in R&D, selling and administrative expenses helped us to improve earnings by €39 million and, had therefore, a significant impact on the margin. Again, Q4 will be seasonally lower, like in prior years.

Page 21 on Automotive Aftermarket, nominal, down 5.5%. FX-adjusted, 0.2%.

Also here, October was good with growth. And on the bridge, you see that EBIT adjusted was stable with €86 million.

And the margin was up 80 basis points. Keep in mind in Q4, margin will be lower because there will be additional costs, AKO mentioned earlier from Klaus Rosenfeld, which could be in the range of around 2 percentage points compared to the third quarter.

And also, seasonally, typically, the aftermarket business has some higher mark on costs to digest. On Industrial, Page 22, nominal decline.

Double digit, minus 11.5%. FX-adjusted, 8%.

If you look on the lower left-hand side, you see that the growth, as mentioned earlier from Klaus, was driven by wind and power transmission. In October, there was still a negative year-over-year development, but only low single digits.

Obviously, also here, at least in that month, that the business stabilized somewhat. On the margin and the profitability, EBIT adjusted was €29 million lower, coming in to €54 million.

And the margin was 7%, 240 basis points lower. And here, you see on the -- if you look at the column gross profit that the gross profit was burdened by, on the one hand, volume, lower volume.

Secondly, uneven capacity utilization, with idle capacity in Europe. And you remember that Klaus hinted also to the decline of the European business.

And on the other hand, the overcapacity in China. Overcapacity also is meaning that you have higher cost than in a perfect capacity utilization.

And then in addition, there has been write-downs of assets. And these write-downs of assets, they are adjusted in the column Others with €20 million.

But what's not as adjusted is these higher warranty accruals. And in the end, these higher warrantee accruals, they also led, if you want to kind of sum it up, also to this decline in margin year-over-year.

On the next slide, 23, EBIT before special items reconciliation. You see that we had special items of €511 million.

€485 million out of that are part of the structural measures we communicated on September 9. They split more or less similar to what you can see on the right-hand side into the divisions.

For the fourth quarter, I would expect further charges in the area of €50 million to €100 million. That's still depending on further negotiation and communication also outside of Germany.

And this €511 million, in addition to this €485 million, also includes this €20 million fixed asset write-down which I mentioned earlier. Then on the financial result, €24 million.

This benefited from appreciation of the embedded option of the former high yield bond. Keep in mind that for the fourth quarter, I would expect here a negative impact in this line item from the refinancing exercise.

Specifically, that includes then the full write-down of the embedded option of this former high yield bond, which has been repaid in the meantime. Income taxes is positive.

That basically is a reflection of the restructuring accruals and the deferred tax accounting, which has been considered here. On the next page, net income.

Net income is down €384 million. That is obviously due to the restructuring provisions.

And Schaeffler value added decreased to minus €75 million due to the lower EBIT. On the other hand, average capital employed declined, only in part due to the write-down of -- write-down of goodwill in -- of the Automotive Technologies division in the first quarter.

On the free cash flow, Page 25. Free cash flow reported actually is up €11 million.

If we strip out the impact from acquisitions in the prior year, we are down by €29 million. But still, I think the €333 million in the quarter is a good result and is benefiting from what Klaus Rosenfeld mentioned earlier, that we had a good management on the inventory side.

And on the other hand, followed through with the CapEx discipline of the earlier quarters. Within this €333 million, there is a cash out for restructuring expenses, roughly €35 million, but clearly more than offset by the benefits of the German short-term work.

And again, here, that positive impact will be lower in the fourth quarter. In addition, in the fourth quarter, there will be a free cash flow impact from the cost -- from the cash out from the refinancing exercises -- exercise including transaction fees is as shown early redemption costs and so forth.

On the next page, you can see the year-over-year bridge for the free cash flow in the end. But you can see, it's €29 million difference coming from net working capital, which is also a reflection of the high dynamics within the third quarter.

On the -- you see on the EBITDA, the second column to the left, that this is obviously including the restructuring and other special items in the third quarter of €511 million expense. And on the other hand, in Others, that has been reversed because this is an accounting entry, but not a cash-out at the moment.

We also had in October, a continuation of the positive trend in free cash flow. Next page, on working capital.

Working capital came down €168 million. If you look at the balance sheet, obviously, that includes a negative FX impact.

CapEx was €181 million, down €48 million year-over-year. And I guess we can say that for the fourth quarter, we will continue with the CapEx discipline.

Reinvestment rate in the third quarter was clearly below 1 and on Page 28, on net debt. Our net debt over EBITDA, you see that there is an increase from 1.4 a year ago to 1.6.

That's driven by lower EBITDA last 12 months. That is what we show here.

We expect for the fourth quarter a slight improvement there. The liquidity situation is strong.

We have now a cash balance of €1.2 billion. And the available liquidity is at 22% of last 12 months sales.

And on the upper right-hand side, you see also, again, the refinancing topic. So there was a -- in the fourth quarter, you will then finally see in the numbers a cash on the one hand of €1.5 billion.

But also what we have done in October and November is to repay debt of more than €1 billion. And with that, I would give it back to you, Klaus.

Thank you very much, Klaus. I finish the presentation with Page 30 and 31.

30 just shows again the new guidance for '22 -- for 2020, excuse me, with the quantitative numbers that you, according to the template that we used at the beginning of the year, before we suspended the guidance. I think I don't have to go through here in detail.

The only thing I want to say is that this is based on market assumptions. Automotive Technologies, we expect here a decrease of global passenger car production for the full year of minus 18% to minus 20% to previous year and also a decline of the Industrial production of around 5%.

And we have clearly based this guidance on the assumption that the coronavirus pandemic will not result in any significant new adverse implications in terms of a second full lockdown or anything that could even be more serious. So you should regard this as a conservative guidance against a development that we see rather cautiously optimistic.

Let me conclude on 31. Sequential top line recovery, as I mentioned.

Industrial lagging a little bit behind, with gradual improvements, but an environment that is still muted. Strong earnings quality improvements in both Automotive divisions and Industrial with the higher provisions in Q3 that Klaus explained.

We are clearly focused on cost reduction, as you know. And the structural measures that are announced at the beginning of September are in implementation and will clearly be executed as promised.

The guidance is specified. And we all know that the uncertainty will not go away tomorrow, so it's still something that we are very focused on to make sure that we improve our competitiveness and also the resilience of the company.

I think the organization has shown that it can cope with the crisis. We are quite proud of what in particular our colleagues on the plants and the shop floors are delivering every day.

And that makes us also optimistic that with our diversified portfolio, with the strong balance sheet, Klaus mentioned the strong liquidity, but also our ability, the proven ability to manage free cash flow, we're on the right track to position us well for the year 2021 and thereafter. 32 has the main dates, we will do after the Capital Markets Day a little roadshow in selected countries with the help of JPMorgan, Berenberg and Jefferies.

But more importantly, next week, at 1:00 pm CET, our virtual Capital Markets Day, where we'll also share with you our midterm targets. Thank you very much, and back to you, Renata, for the Q&A session.

Thank you very much, Klaus. Dear operator, thank you to leading us through the queue of questions.

Akshat from JPMorgan. The first one is on M&A and inorganic growth opportunities.

Is there any update that you would like to share with us on the M&A optionalities or any targets that you're looking at? Also in your presentation, I don't see a mention of hydrogen.

Any initiatives there that you would like to highlight? And finally, in this context and this topic of other growth opportunities.

When you look at your balance sheet with an expected unrestricted cash of around €1.1 billion by year-end, do you agree that bolt-on acquisitions can be financed by cash? That's the first one, broadly around M&A.

The second one is the first nomination for Heavy Duty E-Motors. Is it possible to share more details around the size of this motor and the time line of delivery?

Also, Klaus, if you could share the rationale for OEMs to outsource this to suppliers in an industry that is much more concentrated and vertically integrated, that will be helpful, please. And the last one is on your full year 2020 guidance released yesterday.

What are you seeing from your OEM customers in Q4? And some color around Europe expansion into the fourth quarter will be helpful.

Okay. These were basically 6 questions.

Let's share them. As we have the capital markets there in front of us, we refrain on this presentation from talking about M&A.

The radar and the strategy, we'll share more with you also in terms of criteria in the Capital Markets Day. The same was true for the hydrogen.

I think we indicated that, that's one of the growth initiatives. It's also a very interesting proof point to show why Automotive and Industrial in our Schaeffler case makes a lot of sense to do it together.

We are fully determined here, and I will also give you a little bit of insight on what that means. There's a hype on hydrogen, for sure, but our ability to industrialize a certain technology here is clearly something that is seen as a positive from the many inquiries we get.

And we feel that we are well positioned on that front. On the unrestricted cash, I hand that over to Klaus.

The e-motor order, please understand that we cannot give more detail here at this moment. I think this is in the -- in the truck area.

So quite interesting to see that also the business here is not only passenger cars, but it covers more sectors. Also here, we will give you a little bit of insight next week.

The OEM behavior in terms of what's coming indicates that the recovery stabilizes. I can say that in -- across the board, in our Automotive plants, we see good demand also for the next 2 or 3 months to come.

The outsourcing question is a more strategic question. The key focus is going forward for us on E-Mobility.

And we know that we compete in certain areas with our OEMs themselves. But in our core technology, I think we have a competitive edge USPs that they cannot really do themselves.

On the question for the unrestricted cash and the guidance, I would hand over to Klaus.

Yes. I think there was a question also on cash and M&A.

I think, first of all, if we talk unrestricted cash, I rather want to first talk about restricted cash, because I want to bring that number down. And this number will come down in this year.

And obviously, but probably also in the next year. We are working on that in part with our banks in order to come here to good solutions.

So that will then also help the unrestricted cash. At the moment, we are running at 22% of the last 12-month sales.

I think that makes a lot of sense in the current environment. But if you would see that the pandemic is out and the market is getting stable, then also we can bring that down to a figure which is more in comparison to the historic numbers.

Having -- that means also that if there is a stabilization, there could be -- we could free up cash and then bring it into growth initiatives. That's the first point I want to make.

Obviously, we want to keep net debt over EBITDA in a reasonable range. You saw the numbers.

It was -- is it 1.6. So I said also that will come down a bit in Q4, and that might then be also kind of a level where we feel comfortable with.

Then the other thing I mentioned is -- I want to mention is on the M&A side that our radar is obviously on. On the Capital Markets Day, we also might give an indication what kind of financial criteria we have discussed in the Board.

So therefore, please bear with us until next week.

I have three questions, please. The first one is, if I understood right from Klaus Patzak, I think you said you're anticipating a 2 percentage point margin dilution in aftermarket in Q4 as compared to Q3 from the AKO.

If you could please confirm that and also talk about how you see that developing going forward, because I think Klaus Rosenfeld said in his opening remarks that there's a tipping point coming and at some point, of course, the efficiencies will start offsetting the cost redundancy. So if you could just remind us of the trajectory of the benefits and the double cost structure.

The second question is on the price component in Automotive. It does seem a little bit elevated as compared to normal levels.

So if you could just talk about that a little bit again. Is it related to certain regions?

To certain customers? Do you regard this as rather exceptional?

Or should we sort of brace ourselves for something more similar going forward? And then the third question, going a little bit into the CMD direction, again, clearly, a super strong quarter.

Again, as were Q1, as were Q2. Quite exciting CMD coming up.

All the investors agree basically. But at the same time, they're all a bit anxious to put fresh money behind the story ahead of a looming potentially quite large capital increase.

So can you just maybe say again if you think this is something that you expect will go away or something you'll be able to say next week and give people more confidence to start getting involved with the case more again? Or do you envisage this to last beyond the CMD, having the risk of jeopardizing the strong message of the CMD a little bit?

Thank you, Henning. Maybe I'll take the last one first and explain again that what we asked for in the summer was an authorization and not a capital increase.

That's a big difference. We explained that there is no need for a capital increase, particularly not from an operating point of view.

And I think you see now in the third quarter that, that was completely right. And the third answer to that point is we explained that and said we want to have something in our toolbox and have that completed going forward.

And that was also the question from the colleague from JPMorgan. There are opportunities that we may want to look at.

But there's nothing in the making, nothing concrete that would hint to a capital increase. It's all about flexibility and all about optionality.

And I can only repeat what we said before. This is totally consistent with what we always said.

There's please, no intention at all to finance restructuring costs or anything like this with a capital increase, that would be completely wrong. This is, again, it's about flexibility and making sure that we have the right tools available in an efficient manner at the right moment in time.

And don't forget, others have also authorized capital, and this is something very normal in a German environment. So there's nothing else than this behind that.

So on the other, I think, two questions. First, on the Automotive Aftermarket business, yes, I can confirm that sequentially, fourth quarter compared to third quarter, I expect increase in expenses for AKO, and that would be around 2% margin impact.

And also, in 2021, there will be a negative impact, investments in AKO, which will be followed then in 2022 with a positive impact coming from the topics which Klaus Rosenfeld mentioned, the better productivity and then there are also material costs coming out of that consolidation. And on the price decline, I would regard it as a normal price decline.

So there is nothing which I would see as a big change here. What is good and important is that we are able, with productivity measures, to counter that price decline.

And with that, back to the next question.

Yes. Thank you.

Sorry, just to clarify then. In 2021, the net effect of the AKO is still a negative effect, right?

But in 2022, it turns into a positive, is that correct?

Correct, that's correct, Henning.

It's Sascha from Jefferies. My first question would actually be on the organic growth in E-Mobility.

Compared to the last quarter, that was a bit soft against the market recovery. Maybe you can give us some more details what was behind that?

That would be my first question.

Well, let's go to the page.

E-Mobility was down 5% organically in Q3. And in the last quarters, E-Mobility was outperforming quite drastically versus all the other divisions.

So I was just wondering why -- I think on...

As we always said, I mean you see this also from the sales number, this is €190 million in Q3 2019 and €180 million in Q3 2020. And there are some structural effects here that explain these numbers.

That have to do with also the inclusion of Compact Dynamics and Elmotec, the recovery of the China, Americas market. Don't take this as a trend.

This is still the smallest part of our Automotive business. What we need here is the midterm focus and the long-term focus.

And as we're not sharing order book details in the quarter, I can say that there is a positive development there. The price -- the book-to-bill ratio is definitely significantly above the ordinary or, let's say, traditional core business, and that's a number to look to.

We are quite -- we feel quite good about our E-Mobility position. And I think the two trades that are just -- the two projects that I just mentioned show that even in such a crisis, there is positive momentum to be expected in the future.

So we shouldn't consider kind of €180 million, €190 million as a plateau, it's rather be kind of accelerating again from there?

No, definitely not.

Okay. Okay.

Good. My second question, coming back to the guidance, with a bit of focus on Automotive since you clarified aftermarket.

Why is Automotive seasonally weaker from a profitability perspective in Q4? Because my understanding is, in most cases, you should get your R&D reimbursement in Q4.

Can you explain that again to me?

Well, it's typically demand-driven. And I would say Q4 this time is a very unusual situation.

But in Europe, where we have still the bulk of our business, typically, the December month is not a full month. That normally explains the weakness.

In China, that may be different. So I think the answer there was more a historically related question.

You saw from our guidance, and that's the general logic there that we are conservative on purpose. The environment is still challenging.

There's a lot of uncertainty. And whatever this semi lockdown means now, it's difficult to project.

Therefore, again, take this as a conservative guidance for both Automotive Technologies and aftermarket.

Okay. Perfect.

Understood. And then my last question would be on the restructuring charges.

You booked, let's say, call about €500 million after 9 months. I think you said you want to book €700 million.

But Mr. Patzak said, you only expect another €50 million to €100 million in Q4.

Does that mean there will be another 100-ish in 2021? Or do you think you need less than the €700 million initially expected?

No. The €700 million still stands.

When -- and I recall correctly, we said, of that €700 million, we expect 80% to 90% to be booked in the current fiscal year, depending on the progress. And it was clear from the beginning that a part of that can be booked only in 2021, a smaller part, because that has something to do with moving production from one location to the other location, right?

This is something which you cannot just book by announcing your plan. These are costs which then need to be carried when they arise.

So no change...

I would have three questions. The first one is on your financial results.

Can you please quantify what will be the Q4 impact of the refinancing on the bond on the financial results, which is the first question. Second one is on your liquidity position.

So as I can see on your Slide 40, your liquidity position stands at €2.8 billion, excluding restricting cash at the end of Q3. And it looks to me that historically it stands below €2 billion, implying over €800 million of excess liquidity.

When the market is normalizing, can you please help us to understand what will be, first, a fair level of liquidity? And then secondly, will you potentially consider outside acquisition to potentially repay some debt?

And if so, what type of debt will you repay? And the last question is on net leverage.

Your net leverage ratio is at 1.6x. What will be the acceptable range for this ratio?

Is it between 1 and 2x? Or are you willing to go over 2x on a potential acquisition?

That's it.

So then I give it a shot. The first one was on the financial result and the refinancing impact.

And what this refinancing impact, as I mentioned earlier, includes the noncash impact, which is that we kind of write down the value of the embedded derivative of the high-yield bonds. The overall impact could be close to €40 million.

The cash impact, obviously, will be lower than because the write-down is not cash effective. That's on the first question.

Second one on liquidity. So please keep in mind two things.

The overall refinancing exercise was -- was €1.5 billion in new bonds in order to repay €1.6 billion in existing bonds, right? So that was not a kind of increase in our -- in the interim, there is an increase.

But that will go away when we have fully paid out -- paid back the bond due in 2022. Also, you have to keep in mind that what your colleague said earlier, the €700 million charge out of the communicated restructuring measures of September, they will be, and that's what I said in the call, around about at 90% cash effective.

So that basically flows into cash flow in the years 2021 and '22, mainly. In addition, there is restructuring cash-out from the former programs.

And I mentioned in the call in September that this is around €100 million, a bit more. So I would say, rather, €120 million.

And that needs to be kept in mind. Obviously, on the other hand, we expect and we work on having operational free cash flow and, therefore, we try to work against that.

You will also, on the CMD, see that the cash flow will play a significant role also going forward in our target system. On the net debt over EBITDA, I think that the 1.6, that will actually come down a bit, that's what I said already.

I think if you talk M&A, then you have to talk about the quarter, but also long term, right? Because in the end, I would not be worried if that is a higher number for a couple of quarters, right?

But then there needs to be a plan to bring it back, including with the profitability and cash performance of that entity.

So maybe just to follow up, what will be your long-term target of net leverage ratio then?

That will be communicated in the CMD.

I have three questions. So the first one would be on the free cash flow, since it was strong versus the prior year.

Looking forward into 2021, can we expect to see a continuation of the improvement in free cash flow as well similarly? Like how much of the lower CapEx spend is -- would you consider sustainable?

And how does that tie in with the investment requirements that you might need for the E-Mobility division? The second question would be on the cost reductions.

Could you may be shed some light on how much of the cost reductions are sustainable into the next years? Some of your competitors have given a split on how much they think is temporary and how much they think is sustainable for the next 2 years.

And the last question is on the Q4 quarter. Some suppliers have been speaking of OEMs potentially prolonging Christmas vacations and therefore having less production days in December.

You kind of insinuated generally that there is a seasonality aspect in Europe anyways, but have you heard similar comments on this? And is this baked into your more conservative guidance expectations as well?

Okay. Let me take the last one and the first one.

I think we will, as Klaus mentioned several times, we will on the Capital Markets Day give you also our midterm targets. The guidance for '21 will come with the annual report some time at the beginning of next year.

In terms of free cash flow, I think you know that this is our major KPI to look at. We have always been good at managing free cash flow.

Certainly, there are, as also already mentioned, there are some impacts in the forms, for example, from short-term work that is not sustainable. And clearly, in terms of CapEx, we follow a strict capital allocation and use of cash policy that is driven by the portfolio and the growth prospects.

I would like to leave it like this and more to come then in the Capital Markets Day. Last point, what are we seeing for Q1?

Call-offs are definitely showing a positive momentum. I can say that I've not heard anyone who says they're going to extend Christmas vacation.

I would, at the moment, rather think that the opposite is going to be the case. At least in some areas, we're seeing that capacity utilization is rising.

But I cannot say that there's a company that has told us that they want to extend Christmas vacation. And then on the cost reduction, Klaus, I'm not sure whether you want to add something there.

Well, there is an impact, obviously, from kind of postponements of projects, right? And therefore, I would expect that the run rate of the overhead costs will be higher in next year than in the third quarter.

That's quite normal. In addition, we mentioned that the impact of short-term work, which has helped us in the second and the third, and also still in the fourth quarter, that will probably be not material anymore.

But on the other hand, I think also cost discipline will stay in our focus. And -- but we still are investing in improving the company, including in IT and digitalization.

We will make sure that structurally we will improve also the cost situation by means of shared services and things like that. So we will -- again, here, we will tell you more about kind of the midterm targets in the CMD.

I have got basically just two questions left. They both relate a little bit to outperformance and production outlook.

For the fourth quarter, I just want to understand basically how the outperformance is going to develop in the fourth quarter. I understand on market volumes, there's always some uncertainty.

But on outperformance, you should have better visibility. So what is driving that outperformance in the fourth quarter?

Can it accelerate further? And in that context also, can you explain again what has driven the great outperformance in transmission systems in Q3.

Coming back to this comment that you made on Christmas vacations, what is your visibility on that? I mean, if the OEMS now run into too high stock levels, they can still change their mind and they can nevertheless make December already into plant holidays, right?

Or you know already today that this is not going to happen?

Let me try to take the one on outperformance. As Klaus said, the year-to-date number, we see above 5%, should not simply extrapolate it.

In Q3 it was more in the 2 to 3 percentage range. And again, we're going through an unusual situation in terms of developments.

The transmission situation clearly tells you that when people buy cars, there are not enough e-cars available. So the transmission area is benefiting from traditional demand.

It's one of our areas where we have the highest profitability as well. So at the end of the day, it all depends on which projects are ramping up.

To just give you an example, the outperformance in the Americas was strong in Q3 because of the MHT module. That's an E-Mobility part.

And transmission systems were strong because there was new projects from torque converters and 1 way clutches. There's also in the terminal management module, it's going well.

Also in wheel bearings is going well. So across the board where, at the moment, we see this regional outperformance in Q3.

And again, when demand continues, as it is continuing, I think, we should expect something in the normal range that we always have, that is somewhere between 2% to 4%. But it remains to be seen.

This is demand-driven. And visibility is still -- is getting better.

We talked to you about October being with a positive development, but the year is not over, and there is still a lot of risk. So I would like to remain cautious here with any detailed number on Q4 outperformance.

But the trend, from my point of view, is solidifying.

It's driven then really by the regional mix and the different content per vehicle by region?

Yes. And just think about the dual mass flywheel that you know is one of the key contributors.

If that demand is high in China, it makes a difference.

Yes. Okay.

All right. And Christmas vacation, the last question I had.

Again, I've said that. We don't have any information that people will go into an extended Christmas vacation.

What I see from production levels, and again, we saw this at the beginning of this year when we shared that with you during the crisis, I mean these numbers all point into a different direction, that the week-by-week plant utilization is rather going up and down.

What is the notification period for that, for the Christmas -- for the December production then? And you have full visibility on that?

That's different plant by plant and region by region. I can't give you that number.

We can come back to you, and I will talk to them. What I can say again that the plants have done an excellent job at the moment, and you see this from working capital, what we had always in the past, where there was some sort of consumption deviations and so on, that's all handled in a very, very proactive manner.

And we're really proud of what the plants are contributing at the moment in terms of cost management and working capital management.

I'm not sure whether you are in a position to answer this question.

Sorry, we couldn't hear what you said. Can you please repeat that.

Hello?

Well, then, thank you very much for coming together, ladies and gentlemen. We appreciate the interest in the Schaeffler story, and there's more to come next week on the 18th.

You're cordially invited, and we look forward to a next session on the story. Thank you very much.

Bye-bye.