9. Overall assessment of the 2011 business year
The worldwide economic recovery continued with growth of approximately 3.8 % in 2011. The recovery was again driven by the developing countries, primarily China, with growth of approximately 9.2 %. We not only benefitted from this growth because of our strong local presence [--break--] in Asia/Pacific, but also in Germany and the European region in the form of increased exports.
Being a leading globally integrated technology company, the Schaeffler Group has taken excellent advantage of this situation and benefitted from the upswing more than proportionally.
Revenue increased 12.6 % over the record year 2010 to EUR 10,694 m. Both the Automotive and the Industrial divisions contributed increases of 13.2 % and 15.3 %, respectively, to this revenue growth. The excellent development of our business was driven by the continuing increase in demand for our components, modules, and systems in the Automotive division and from the key sectors production machinery and power transmission in the Industrial division.
Gross profit of EUR 3,231 m (prior year: EUR 2,989 m) reflects higher raw materials prices and energy costs as well as expenses resulting from additional expansion of capacity which were only partially offset by price increases, improvements in efficiency, and economies of scale.
Our EBIT increased again considerably from the prior year record of EUR 1,509 m to EUR 1,689 m. [--break--] The EBIT margin of 15.8 %, nearly unchanged, remained high. We increased research and development expenses by 6.0 % to EUR 495 m. We accelerated our activities in this area in order to further expand our technological expertise, particularly in energy efficiency and environmental technology.
We improved our cash flows from operating activities by 21.8 % to EUR 1,084 m. Cash paid for capital expenditures on property, plant and equipment of EUR 758 m more than doubled compared to the prior year. Cash paid for acquisitions of intangible assets declined slightly to EUR 15 m (prior year: EUR 21 m) in 2011. The refinancing arrangement completed in March 2011 significantly reduced financial debt at the parent INA holding company and improved its financing conditions. As a consequence of this agreement, Schaeffler GmbH distributed dividends totaling EUR 2,364 m before it was converted to a stock corporation, bringing consolidated shareholders’ equity to EUR 1,714 m as at December 31. With the additional refinancing arrangement completed on January 27, 2012 and its newly optimized capital structure, Schaeffler AG has laid the foundation for its continued successful strategic development.
The overall very positive course of business in 2011, with its more than proportionately strong development of revenue and earnings compared to the overall economy, validates the Schaeffler [--break--] Group’s global strategic direction. As in the past, we are currently excellently represented in the particularly high-growth markets of tomorrow, particularly in Asia, and plan to build on our innovations and increased capital expenditures of 2011 to continue generating profitable growth.