Transcript - SKF.com
Tom Johnstone, President and CEO
CMD 2013
Key items
• H1 summary and outlook • SKF priorities • Specific focus IT investment (UNITE) Cost reduction and Purchasing © SKF Group CMD 2013
Highlights H1 2013
• •
Acquisitions and divestments
SKF completed the acquisition of German-based ship components provider Blohm + Voss Industries (BVI) SKF divested the aerospace metallic rods business • •
New facilities in India
a new lubrication systems laboratory in SKF Global Technical Centre a new manufacturing unit in Pune for producing housings for bearings
Two new SKF Solution Factories
Inaugurated in Madrid, Spain and Katowice, Poland
Madrid, Spain Katowice, Poland
• •
Programme to improve efficiency, reduce cost and strengthen profitable growth continues
one-off costs of around SEK 440 million annual savings of around SEK 180 million © SKF Group CMD 2013
Highlights H1 2013 Some examples of new business
• with Pratt & Whitney, to supply engine main shaft bearings • with Nordex for delivery of mainshaft bearings and lubrication systems • for automated lubrication systems installed in the MSC Home Terminal cranes in Belgium’s Port of Antwerp • with a steel and mining company for industrial bearings and units, seals, mechatronics, and services • with Öhlins Racing AB for SKF’s integrated monotube seal • with the Chinese customer Great Wall for hub bearing units • 10-year contract worth SEK 900 million with Turbomeca • service contracts worth SEK 200 million in Latin America • contract for wheel hub bearing units (HBU3) to Volvo Car Corporation Thrust main shaft bearing, one of the bearings for the ARRANO Engine of TURBOMECA © SKF Group CMD 2013
Half year 2013
SEKm Net sales Operating profit Operating margin, % Operating margin excl. one-offs, % Profit before taxes Net profit Basic earnings per share, SEK Cash flow, after investments before financing
2013
31,544 3,317 10.5
11.9
2,864 1,922 4.10
255
2012
34,105 4,185 12.3
12.7
3,730 2,570 5.44
1,382 © SKF Group CMD 2013
Growth development by geography and by business area
Organic growth in local currency YTD 2013 vs YTD 2012 Europe -7% North America -6% Latin America 11% SKF Group: -5.1% Strategic Industries: -9.9% Regional Sales and Service -6.3% Automotive © SKF Group CMD 2013 2.0% Middle East & Africa -4% Asia/Pacific -5%
SKF demand outlook Q3 2013, regions
Share of net sales 2012 Europe 43% Asia Pacific North America 24% 23% Latin America Total 7% Sequential trend for Q3 2013 Q3 2013 vs Q3 2012 +/ + + ++ + © SKF Group CMD 2013
SKF demand outlook Q3 2013, business areas
Share of net sales 2012 Strategic Industries Regional Sales and Service 31% 39% Automotive 27% Total Sequential trend for Q3 2013 Q3 2013 vs Q3 2012 + + + + © SKF Group CMD 2013
Key items
• H1 summary and outlook • SKF priorities • Specific focus - IT investment (UNITE) - Cost reduction and Purchasing © SKF Group CMD 2013
SKF priorities
© SKF Group CMD 2013
Growth and operating margin 2002 - 2012
SEKm 70 000 +51% 60 000 50 000 +17% Operating margin 9.5% -4% 40 000 30 000 20 000 10 000 0 Sa le s 20 02 Ac qu is iti on s D iv es tm en ts O rg an ic g ro w th © SKF Group CMD 2013 -12% C ur re nc y Sa le s 20 12 Operating margin 11.4%, excl. one-time costs 12.0%
Key elements of Sustainable Profitable Growth
S2M PEER QPM GLO Cirval ALS Lincoln Baker BVI Macrotech ABBA GBC Acquisitions Platforms 2nd brands New products SKF BeyondZero portfolio Asset life cycle + service © SKF Group CMD 2013
Key items
• H1 summary and outlook • SKF priorities • Specific focus IT investment (UNITE) Cost reduction and Purchasing © SKF Group CMD 2013
SKF investment in IT – UNITE programme
Preferred by customers, employees and partners. Strong in purchasing and operations.
Customers Employees Suppliers Knowledge Engineering Company Operations One SKF UNITE
© SKF Group CMD 2013
UNITE - One End-to-End Process 1. Go To Market 2. Manage opportunities 3. Process order & confirmation 4. Sales & Operations Planning Customer to Cash Purchase-to-Pay Forecast-to-Fulfill Record-to-Report 5.S&OP Meeting Customers 10. Deliver & customer Follow-up + Payment 9. Production execution 8. Production scheduling 6. Manage suppliers & contracts 7. Order & receive goods/ services Suppliers
© SKF Group CMD 2013
SKF investment in IT – UNITE programme
• •
Multi year programme
New Demand Chain systems New Finance system • •
First main installations
Sales unit in Q2 2014 Sales & Manufacturing unit in Q4 2014 • •
Estimated cost
SEK ~500 m in 2013 (of which SEK ~300 m capitalised) SEK ~900 m in 2014 © SKF Group CMD 2013
Key items
• H1 summary and outlook • SKF priorities • Specific focus - IT investment Cost reduction and Purchasing © SKF Group CMD 2013
SKF Restructuring programme – costs and expected savings
SEKm One-off costs Annual savings when fully implemented Restructuring activities launched in: Q4 2012 Q1 2013 Q2 2013 200 250 190 150 100 80 • The savings for the second half 2013 from these programmes will be around SEK 150 million, evenly split between the third and the fourth quarter.
Total 640 330 © SKF Group CMD 2013
SKF Global Spend Total SKF spend
40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0 Total SKF spend is
SEK 36 billion
– direct and indirect representing ~ 50% respectively 36 153 19 119 17 034 Total Direct Material Indirect Material © SKF Group CMD 2013
Direct Material
18% 44% 38% SEK 17.7 billion Steel Raw Material & Rolling Elements Rings & Subcontracting Components
Indirect Material & CAPEX
12% 8% 27% 13% 18% 21% SEK 15.6 billion MRO Facility Management Professional Services Logistics IT CAPEX
Challenges in the global supply chain – many factors
Natural disasters Geopolitical Risk Supply Chain Disruptions Price and currency volatility Effective sourcing strategy Market demand variations and volatility Global & Local Supplier Relationships Supplier Innovations Sustainable and Responsible Sourcing © SKF Group CMD 2013
Key initiatives to achieve savings
•
Category and business driven purchasing
•
Supplier consolidation and localization
•
Leverage of all purchasing power across all businesses
•
Product, process & system standardization
•
Total cost approach and leading purchasing practices applied
© SKF Group CMD 2013
Success Story – localization of cages in China
•
Target:
China supplier development to secure capacity and Q C D I M targets • • • • •
SKF benefits:
Access to a supplier base in China close to Dalian 100% localization 2 suppliers fully approved in China Worldwide supplier market base fitting with new SKF manufacturing footprint Development of a Chinese suppliers base with export capacity
Contract Status:
2012/2013
Savings:
-40/50% vs Import in China © SKF Group CMD 2013
Success Story Packaging – Cross platform leverage
Corrugated & Anti-counterfeit packaging
Activity
Combine purchasing of packaging materials across a number of units • • •
SKF benefits
Reduction in supply base Cost savings Standardized packaging from one supplier
Total Savings
:
USD 760,000 – 30% savings Supplier reduction:
14 3 © SKF Group CMD 2013
Success Story Standardization of capital equipment
• Equipment for Grinding, Honing, Laser marking and Assembly • HBU3 channel standardization © SKF Group CMD 2013
SEK 280 million of total cost savings
•
Clear business requirements
•
Improved sourcing process
•
Standardization of equipment
•
Cross business leverage
•
Regional Asian supplier base developed with global capabilities
Purchasing ramp up and saving plan
2013 2014 2015 •
New Group Purchasing organization in operation
•
New process framework
•
Sourcing waves 1 / Speed sourcing started to leverage spend across all BUs
•
Integration of BU Purchasing
•
Localization of the strategic supplier base
•
Separation of strategic tasks from transactional tasks
•
Sourcing waves 2 and continued Speed Sourcing activities
•
Supplier Innovation Programmes on stream
•
Strategic Partnership Agreements with key suppliers
•
Common purchasing processes
•
Supplier consolidation
• • • • • •
Category and business driven organization fully leveraging SKF’s purchasing power Purchasing supporting the full internal value chain Focus on Total Cost of Ownership (TCO) Strong alignment with the business through a clear target setting process Highly competent purchasing professionals Reduced supply chain risk and costs through top performing suppliers in Q C D I M
2016 SEK 1,500 m © SKF Group CMD 2013
SKF priorities
© SKF Group CMD 2013
Key business message
• No change in demand outlook for Q3 • SKF priorities in focus – good progress in H1 • New IT investment (UNITE) and purchasing programmes going according to plan © SKF Group CMD 2013