Transcript Result for the half year

The SKF Group
Year-end result 2003
Tom Johnstone
President and CEO
SKF Group
Summary Q4, 2003
Good operational performance
- Operating margin 10.3 % (ex restructuring and impairments)
- Strong cash flow
- Inventories down
- Good sales growth in local currencies
- Positive price/mix development
Key activities
- 2 factories opened in China
- New business
Restructuring and impairment activities in line with guidance
- Restructuring MSEK 282, Impairments MSEK 205
- Booked MSEK 421 as COGS, MSEK 66 as Selling Expenses
- Main areas announced
.
SKF Group
Fourth quarter 2003
2003*
2003
2002
10 245
10 245
10 665
1 056
569
1 121
10.3 %
5.6 %
10.5 %
966
479
979
Net profit
405
719
Earning per share
3.56
6.34
Cash flow **
812
559
Net sales
Operating profit
Operating margin
Profit before taxes
* excluding restructuring and impairment in Q4 2003
**after investments before financing
SKF Group
Full year 2003
2003*
2003
2002
41 377
41 377
42 430
Operating profit
3 786
3 299
4 022
Operating margin
9.2 %
8.0 %
9.5 %
Profit before taxes
3 280
2 793
3 542
Net profit
2 039
2 466
Earning per share
17.91
21.67
Cash flow **
2 351
2 644
Net sales
* excluding restructuring and impairment in Q4 2003
**after investments before financing
SKF Group
Sales in local currency
% change y-o-y
10
8
6
4
2
0
-2
-4
-6
2001
2002
2003
SKF Group
Net sales development per quarter
Percent
y-o-y
2001
2002
2003
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
0.4
1.0
1.4
1.9
2.0
1.4
0.7
0.1
0.2
0.3
- 3.2
- 3.8
- 7.3
-0.5
3.3
3.9
6.2
3.2
4.2
3.1
1.6
2.1
1.5
1.4
1.2
1.7
1.2
0.6
1.2
0.1
Sales in local - 1.2
currency
- 0.7
- 4.4
2.8
6.5
7.0
8.1
3.9
5.6
3.5
8.9
6.7
2.2
-3.7
-8.3
-10.8
-9.3
-8.6
-5.5
-7.4
7.7
6.0
- 2.2
-0.9
-1.8
-3.8
-1.2
-4.7
0.1
-3.9
Structure
Volume
Price / Mix
Currency
Net sales
SKF Group
Operating margin
%
Adjusted*
11
10
9
8
7
6
5
4
3
2
1
0
2001
2002
2003
* excluding restructuring and impairment in Q4 2003
SKF Group
Operating margin per division
Adjusted*
%
14
Service
12
Industrial
10
8
6
Electrical
4
2
Automotive
0
Aero and
Steel
-2
Q4
Q1
Q2
2001
Q3
Q4
Q1
Q2
2002
Q3
Q4
Q1
Q2
Q3
2003
* excluding restructuring and impairment in Q4 2003
Q4
SKF Group
Inventories as % of annual sales
Target 20%
%
25
24
23
22
21
20
19
18
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2001
2002
2003
SKF Group
Net cash*
MSEK
5000
Dividend paid:
2003 Q2, MSEK 911
2002 Q2, MSEK 683
2001 Q2, MSEK 598
4000
3000
Dividend proposal:
2004 Q2, MSEK 1 138
2000
1000
0
-1000
-2000
2001
2002
2003
* Short-term financial assets - Loans
SKF Group
Net interest bearing liabilities, 2003
(Short-term financial assets - loans - net postemployment benefits)
MSEK
1000
0
-1000
-2000
-3000
-4000
-5000
-6000
Q1
Q2
Q3
Q4
SKF Group
Dividend development
SEK
12
10
8
6
4
2
0
1999
2000
2001
* Board proposal for 2003 dividend
2002
2003*
SKF B
300
300
275
275
250
250
225
225
200
200
175
175
150
150
125
125
100
100
75
75
May
Sweden SKF B, close daily
Sep
00
May
Sep
01
May
Sep
02
May
Sep
03
May
Sep
04
SKF Group
Volume trend
External
sales 2003
Europe
57%
North America
22%
Asia Pacific
14%
Latin America
Total
4%
Oct 2003
Jan 2004
SKF Group
Volume trend
External
sales 2003
Industrial
23%
Automotive
32%
Electrical
Service
Aerospace
4%
32%
4%
Oct 2003
Jan 2004
SKF Group
Outlook January 2004
The market demand for the Group's products and services is
expected to improve during the first quarter 2004. In Europe it
is expected to be slightly higher, while it will remain relatively
flat in North America. Demand is expected to increase
significantly in both Asia and Latin America.
Manufacturing will, as is normal during the first half of the
year, be increased slightly ahead of market demand to ensure
a good service level throughout the summer period.
SKF Group
Target
10 % operating margin level
10 BSEK additional annual net sales
To be reached within the 2005/2006 time period
SKF Group
Operating margin - adjusted
%
12
10
8
6
4
2
0
2001
2002
2003
SKF Group
Sales growth in local currencies
%
6
4
2
0
2001
2002
2003
SKF Group
Examples of growth areas
2003 / 2002
China
+35 %
Central and
Eastern Europe +10 %
SKF Group
Examples of growth areas
2003 / 2002
Medical segment within
Linear Motion business
12%
Vehicle Service market
10%
SKF Railway segment
10 %
SKF Group
Areas in focus 2004
Operating margin level
- maintain a positive price mix
- implement restructuring plan
Continued sales growth
- maintain organic growth pace
- acquisitions
Cash flow in line with net profit
Launch Six Sigma throughout SKF Group
SKF Group
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".