Transcript Document

The SKF Group
Nine-month result, 2005
Tom Johnstone, President and CEO
3
Third quarter 2005
MSEK
2005
2004
12 027
11 184
1 454
1 189
Operating margin
12.1%
10.6%
Profit before taxes
1 409
1 110
Net profit
974
729
Earnings per share, SEK
2.09
1.43
1 495
516
Net sales
Operating profit
Cash flow after investments before
financing
4
Nine-month result 2005
MSEK
2005
2004
36 637
33 290
Operating profit
4 025
3 251
Operating margin
11.0%
9.8%
Profit before taxes
3 852
2 974
Net profit
2 658
2 131
5.69
4.23
1 901*
1 610
Net sales
Earnings per share, SEK
Cash flow after investments before financing
* MSEK 2 366 before the acquisitions and the purchase of minority
shareholding
in previously acquired companies.
Areas in focus 2005
2005
•
•
Operating margin level
Maintain a positive price/mix
2.1%
Recovery of raw material cost increase
Ongoing
Continued sales growth
Maintain organic growth pace
Structure (mainly Ovako)
•
•
Performance Q3
7.2%
-2.9%
Strengthen the platform/segment offer
Ongoing
Cash flow before financing
and acquisitions
MSEK 1 495
5
6
Major events during the quarter
• Doubling of manufacturing capacity in Indonesia
• Locomotive axle boxes order from Alstom
• X-Tracker hub units for 2006 Cadillac STS-V
• Sustainability
- For the sixth year: DJSI World and DJSI STOXX
- For the fifth year: FTSE4Good
7
Operating margin*
%
13
12
11
10
9
8
7
6
5
4
3
2
1
0
2002
2003
* excluding restructuring and
impairment in Q4 2003
2004
2005
8
Operating margin per division*
%
14
Service
12
Industrial
10
Electrical
8
Aero and Steel
excl. Ovako
Automotive
6
4
2
0
Q1
2003
Q2
Q3
Q4
Q1
2004
* excl. restructuring and impairment
in Q4, 2003 and in Q2, 2005
Q2
Q3
Q4
Q1
2005
Q2
Q3
9
Sales in local currencies (excl. structural chang
% change y-o-y
18
16
14
12
10
8
6
4
2
0
-2
-4
-6
2002
2003
2004
2005
10
Sales in local currency (incl. structural changes
% change y-o-y
18
16
14
12
10
8
6
4
2
0
-2
-4
-6
2002
2003
2004
2005
11
Group sales volume vs Industrial
production
14
12
in %oya
10
8
6
4
2
0
03Q1
03Q2
03Q3
03Q4
Group Sales Volume
04Q1
04Q2
04Q3
04Q4
05Q1
05Q2
Global Industrial Production (Source: JP Morgan)
05Q3
12
Growth development / local currency
6% annual growth rate (whereof 4% organic)
% Y-o-Y
11.8
12
9.7
10
(Organic 9.9,
Net acq/div -0,2)
8
5.2
6
4
3.0
2
0
2002
2003
Acquisitions / Divestments
Organic growth
2004
2005
Up to September
13
Net sales development per quarter
2003
2004
2005
Percent y-o-y
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Volume
6.2
3.2
4.2
3.1
4.8
8.9
9.6
10.2
8.3
7.6
5.1
0.7
0.1
0.2
0.3
0.1
0.0
2.2
2.0
2.3
0.2
-2.9
1.2
0.6
1.2
0.1
1.1
1.8
2.3
4.2
3.6
3.6
2.1
8.1
3.9
5.6
3.5
6.0
10.7
14.1
16.4
14.2
11.4
4.3
-9.3
-8.6
-5.5
-7.4
-4.6
-2.3
-2.9
-3.8
-3.2
0.2
3.2
-1.2
-4.7
0.1
-3.9
1.4
8.4
11.2
12.6
11.0
11.6
7.5
Structure
Price / Mix
Sales in
local
currency
Currency
Net sales
14
Inventories as % of annual sales
%
25
24
23
22
21
20
19
18
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2002
2003
2004
2005
Cash flow, after investments before
financing
MSEK
1 600
1 400
1 200
1 000
800
600
400
200
0
- 200
2002
2003
2004
2005
15
16
Net cash
(Short-term financial assets - loans)
MSEK
Dividend paid:
5 500
2001 Q2, MSEK
598
2002 Q2, MSEK
683
3 500
2003 Q2, MSEK
911
2 500
2004 Q2, MSEK 1 138
4 500
2005 Q2, MSEK 1 366
1 500
500
2004 Q2, Pension:
MSEK 3 100
-500
2005 Q2, Redemption,
MSEK 2 846
-1 500
2001
2002
2003
2004
2005
17
Net interest bearing liabilities
(Short-term financial assets - loans - net postemployment benefits)
MSEK
1 000
0
- 1 000
- 2 000
- 3 000
- 4 000
- 5 000
- 6 000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2003
2004
2005
18
Accumulated change in the number of
employees
Employees
6 000
4 000
acquisitions
2 000
0
-2 000
-4 000
-6 000
-8 000
capacity adjustment
and restructuring
2000
2001
2002
2003
2004
2005
19
Fixed assets / Sales
%%
40
38
36
34
32
30
28
26
24
22
20
98
99
00
01
02
03
04
05
Up to September
20
SKF Group targets
• 10% Operating margin level
•
6% Growth per annum
2006
• 20% ROCE
• 18% Inventory / sales
2007
October 2005: Outlook for the fourth
quarter
The market demand for SKF's products and services in the
fourth quarter, compared to the previous quarter, is expected
to remain on a high level in Europe, to be slightly higher in
North America, significantly higher in Asia and to remain on
a high level in Latin America. This is in addition to normal
seasonality.
The manufacturing level will be unchanged during the fourth
quarter, compared to the third quarter, while higher in
absolute terms due to normal seasonality.
21
22
Volume trend for the fourth quarter 2005
Net sales
2004
Europe
57%
North America
20%
Asia Pacific
15%
Latin America
Total
Note: This is the sequential
development
5%
July 2005 October 2005
23
Cautionary statement
This report contains forward-looking statements that are based
on the current expectations of the management of SKF.
Although management believes that the expectations reflected
in such forward-looking statements are reasonable, no
assurance can be given that such expectations will prove to
have been correct. Accordingly, results could differ materially
from those implied in the forward-looking statements as a
result of, among other factors, changes in economic, market
and competitive conditions, changes in the regulatory
environment and other government actions, fluctuations in
exchange rates and other factors mentioned in SKF's latest 20F report on file with the SEC (United States Securities and
Exchange Commission) under "Forward-Looking Statements"
and "Risk Factors".