Transcript Slide 0

0
2007-04-24
The SKF Group
First-quarter results 2007
Tom Johnstone, President and CEO
Major events 2007
• Introduction of new energy-efficient bearings and
solutions.
• Acquisitions:
Preventive Maintenance Company Inc. (PMCI), USA
ABBA Linear Tech Co., Ltd., Taiwan
Automatic Lubrication Systems (ALS), Canada
• SKF invests SEK 600 million to increase capacity in
Göteborg.
• Sale of forging business in Luchow, Germany
2007-04-24
2
3
First quarter 2007
MSEK
2007
2006
14,371
13,289
1,886
1,609
Operating margin
13.1%
12.1%
Profit before taxes
1,825
1,599
Net profit
1,214
1,138
Basic earnings per share, SEK
2.57
2.45
Cash flow after investments before financing
538
801
-653
177
Net sales
Operating profit
Cash flow after operating investments before
financial items
2007-04-24
4
Operating margin
%
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
2005
2007-04-24
2006
2007
5
Operating margin
%
14
12
12.6
13.1
10.8
10
11.3*
10.4*
8
6
4
2
0
2005
* excluding income from the jointly
controlled company Oy Ovako Ab
2007-04-24
2006
2007 Q1
6
Operating margin per division
%
14
Service
Industrial
12
10
8
Automotive
6
4
2
0
Q1
2005
2007-04-24
Q2
Q3
Q4
Q1
2006
Q2
Q3
Q4
Q1
2007
7
Sales in local currencies (excl. structural changes)
% change y-o-y
16
14
12
10
8
6
4
2
0
2005
2007-04-24
2006
2007
Growth development / local currency
% Y-o-Y
14
12
10
8
6
4
2
0
13.7
7.3
2005
7.5
2006
Acquisitions / Divestments
Organic growth
2007-04-24
2007 Q1
8
9
Net sales development per quarter
2005
2006
2007
Percent y-o-y
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Volume
8.3
7.6
5.1
1.3
6.0
2.5
3.3
8.8
7.9
Structure
2.3
0.2
-2.9
-3.7
-4.9
-0.5
1.1
4.6
4.0
Price / Mix
3.6
3.6
2.1
2.6
2.9
2.0
2.0
2.3
1.8
Sales in
local
currency
Currency
14.2
11.4
4.3
0.2
4.0
4.0
6.4
15.7
13.7
-3.2
0.2
3.2
9.4
8.0
1.0
-2.1
-5.8
-5.6
Net sales
11.0
11.6
7.5
9.6
12.0
5.0
4.3
9.9
8.1
2007-04-24
Cash flow, after investments before financing
10
MSEK
1 800
1 600
1 400
1 200
1 000
800
600
400
200
0
- 200
- 400
- 600
- 800
- 1 000
- 1 200
Cash out from
acquisitions:
2005 MSEK
419
2006 MSEK
2,129
2007 Q1 MSEK 214
Cash from Ovako:
2006 Q4 MSEK 1,217
2005
2007-04-24
2006
2007
Cash flow after operating investments before financial
items
MSEK
1 700
1 500
1 300
1 100
900
700
500
300
100
- 100
- 300
- 500
- 700
2005
2007-04-24
2006
2007
11
Net cash (Short-term financial assets - loans)
12
MSEK
AB SKF, dividend paid:
5 500
2005 Q2, MSEK 1,366
4 500
2006 Q2, MSEK 1,821
3 500
2 500
2005 Q2, Redemption,
MSEK 2,846
1 500
500
-500
-1 500
2005
2007-04-24
2006
2007
13
Inventories as % of annual sales
%
23
Target, end 2007 - 18%
22
21
20
19
18
2005
2007-04-24
2006
2007
SKF capital structure
14
The AB SKF Board proposes to the AGM
in April 2007 to decide on:
1. a 12.5% increase in the dividend,
SEK 4.50 per share
2. a share split 2:1 combined with an
automatic redemption procedure
of one share for SEK 10
3. a mandate to the Board to repurchase
up to 5% of the company's share
2007-04-24
Adding up to a
total distribution
to shareholders
of SEK 6.6 billion
April 2007: Outlook for the second quarter 2007
(compared to the first quarter 2007)
The market demand for SKF's products and services in the
second quarter of 2007 is expected to be higher for the
Group. The demand is expected to be higher in Europe and
Latin America, significantly higher in Asia and relatively
unchanged in North America. The demand is expected to
be higher in the Industrial and Service Division and slightly
higher in the Automotive Division.
The manufacturing level for the second quarter will be
unchanged compared to the first quarter 2007 and
significantly higher compared to the second quarter last
year.
2007-04-24
15
16
Volume development
Net sales
2006
Europe
North America
Asia Pacific
Latin America
Total
Daily volume trend for:
Q1 2007
Q2 2007
54%
Outlook Q2
2007 vs
2006
++
20%
=
18%
+++
5%
*
++
++
* Updated in March 2007 from slightly higher to higher.
2007-04-24
17
Financial targets – long term
Operating margin, level
12%
Growth in local currencies, per annum 6-8%
Return on capital employed
Gearing
Inventories, by end 2007
2007-04-24
24%
around 50%
18%
Guidance 2007
• Underlying tax level: around 32-33%
• Financial net
Q2: around minus SEK 100-120 million
Full year forecast: around minus SEK 500 million
• Exchange rates
Q2: a negative effect of approximately SEK 200 million
Full year: a negative effect of approximately SEK 550
million
• Additions to property, plant and equipment:
slightly above SEK 2 billion
Guidance based on current assumptions and exchange rates
2007-04-24
18
Acquisition – ABBA Linear Tech Co., Ltd.
• Annual turnover: SEK 250 million
• 400 employees
• A leading Asian manufacturer
of profile rail guides.
• Price: SEK 400 million for 90%
shareholding
2007-04-24
19
20
Acquisitions 2007
Preventive Maintenance Company
Inc.
Automatic Lubrication Systems
(ALS)
• Annual turnover: USD 10 million
• Yearly sales:
approximately CAD 2 million
• 13 employees
• A leading service company to
mobile transportation equipment
and industrial machinery
customers for lubrication systems
• 70 employees
• A market leader in Predicitve
maintenance (PdM) services
2007-04-24
21
Bearings and units
Acquisitions:
• SNFA SAS, France
New factories:
• Dalian, China
Bearings
and units
• Shanghai, China
• Jakarta, Indonesia
• Busan, South Korea
Significant manufacturing
expansion:
• India
Restructuring:
• North America
• Brazil
• Mexico
• Sweden
• France
Setting new standards: • Det Norske Veritas and Germanischer Lloyd
announced official verification - SKF Explorer
bearings
has set a new
performance standard.
• SKF Life Theory - new standard for bearing life
calculations.
2007-04-24
22
Seals/Mechatronics/Services/Lubrication systems
Seals
Mechatronics
Acquisitions: • Macrotech Polyseal Inc., USA
• Economos Austria GmbH,
Austria
New factories:
• Taegu, Korea
Significant
manufacturing
expansion: • Bulgaria
• India
• ABBA Linear Tech Co., Ltd.,
Taiwan
• Shanghai, China
• Mexico
Services
Lubrication
systems
Acquisitions:• Precision Balancing & Analyzing, USA • Safematic lubrication, Finland
• Monitek Australia, Australia
• Preventive Maintenance Company
Inc.,
USA
2007-04-24
• Automatic Lubrication
Systems,
Canada
SKF Energy efficient bearings
Providing a minimum of 30% reduction in energy
consumption.
Deep groove ball bearings
2007-04-24
Taper roller bearings
23
24
Energy-efficient solutions
SKF actuators in spot
welding cut energy use by
more than 90% in welding
robots.
SKF magnetic bearings
in gas compressors
reduce energy by 90%.
2007-04-24
SKF actuators
in buildings
cut energy use
by 30-50%.
SKF Client Energy and
Environment Analysis (CEEA)
is a web-based tool that
identifies high-energy
consumption areas within
an operation.
SKF throttle-by-wire
reduces fuel use by 5%
in business jets.
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 20-F report on file with the SEC (United States Securities and
Exchange Commission) under "Forward-Looking Statements" and
"Risk Factors".
2007-04-24
25
26
2007-04-24