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21 April 2009
The SKF Group
First-quarter results 2009
Tom Johnstone, President and CEO
Highlights in the first quarter 2009
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SKF
• gained an order from CSR Zhuzhou Electric
Locomotive Co., Ltd. ZELC. 500 electric
locomotives, for Chinese railways, will be
equipped with SKF axleboxes and drive
system bearings. Order value: EUR 14 m.
• won a new contract for the supply of
tapered roller bearings to Guangdong
Fuwa Engineering Manufacturing Co Ltd.
Order value: USD 14 m.
21 April 2009
Photo: CSR Zhuzhou Electric Locomotive
First quarter 2009
3
2009
2008
14,849
15,596
768
2,040
Operating margin
5.2
13.1
Profit before taxes
531
1,924
Net profit
394
1,296
Basic earnings per share, SEK
0.86
2.77
523
-131
SEKm
Net sales
Operating profit
Cash flow after investments before
financial items
21 April 2009
Growth in local currency
4
Long-term target level: 6-8% per annum
% y-o-y
15
13.2
7.1
10
- 18.4
5
0
-5
-10
-15
-20
2007
21 April 2009
Acquisitions/Divestments
Organic growth
2008
YTD March
2009
Sales in local currencies (excl. structural changes)
% change y-o-y
12
8
4
0
-4
-8
-12
-16
-20
2007
21 April 2009
2008
2009
5
Sales volume
6
% change y-o-y
10
5
0
-5
-10
-15
-20
-25
-30
2007
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2008
2009
Components in net sales
2007
7
2009
2008
Percent y-o-y
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Volume
7.9
6.9
9.0
6.3
4.9
6.2
2.7
-13.0
-26.9
Structure
4.0
4.6
3.7
1.0
1.0
1.3
0.5
2.4
1.4
Price / Mix
1.8
2.7
2.0
3.2
3.8
4.0
6.4
8.5
7.1
Sales in local
currency
13.7
14.2
14.7
10.5
9.7
11.5
9.6
-2.1
-18.4
Currency
-5.6
-2.3
-1.9
-2.0
-1.2
-4.1
-0.9
10.3
13.6
Net sales
8.1
11.9
12.8
8.5
8.5
7.4
8.7
8.2
-4.8
21 April 2009
Operating margin
8
Long-term target level: 12%
%
14
13.3*
12
12.9
10
12.7*
12.2
8
6.4*
6
4
5.2
2
0
2007
2008
Restructuring and one-time items
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* Excluding restructuring and one-time items
YTD March
2009
Operating margin
9
Long-term target level: 12%
%
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
2007
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2008
2009
Operating margin per division
10
%
20
15
Service
10
Industrial
5
0
-5
Automotive
-10
-15
Q1
2007
Q2
Q3
Q4
Q1
Q2
2008
Excluding one-off items (eg. restructuring,
impairments, capital gains)
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Q3
Q4
Q1
2009
Activities to adapt to lower demand
• Restructuring/impairment programmes
People
- announced Q4 2008, around
- announced Q1 2009, around
Costs charged to operating profit
2,500
500
SEK 340 m
SEK 175 m
3,000
SEK 515 m
At the end of March 2009, around 1,300 people had left
under the programmes.
• In total, around 2,600 people left the Group during H2 2008
and Q1 2009.
• Around 6,000 people in short-time working (Q1 2009).
21 April 2009
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Inventories as % of annual sales
12
Long-term target level: 18%
%
25
24
23
x excl. currency
22
effects
21
20
19
18
2007
21 April 2009
2008
Inventories versus Q4 2008, in local currencies,
were reduced by around SEK 500 million.
2009
Return on capital employed
13
Long-term target level: 24%
%
30
24.9
25
24.0
18.7
20
15
10
5
0
2007
2008
ROCE: Operating profit plus interest income, as a
percentage of twelve months average of total assets
less the average of non-interest bearing liabilities.
21 April 2009
YTD March 2009
Net debt
(Short-term financial assets minus loans and post-employment benefits)14
SEKm
0
AB SKF,
dividend paid (SEKm):
2006 Q2
1,821
2007 Q2
2,049
2008 Q2
2,277
-2 000
-4 000
-6 000
-8 000
-10 000
Redemption (SEKm):
2007 Q2
4,554
2008 Q2
2,277
-12 000
-14 000
-16 000
-18 000
2007
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2008
2009
AB SKF, long-term debt structure
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Amount in million
Maturity
Euro Bond
EUR 250
2010-06
SEK Bond
SEK 1,500
2011-06
Term loan in euro
EUR 150
2013-06
Euro Bond
EUR 500
2013-12
Euro loan
EUR 100
2016-06
Euro loan
EUR 100
2014-03
21 April 2009
Cash flow, after investments before financial items
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SEKm
1 400
Cash out from
acquisitions (SEKm):
2007
1,209
2008
1,284
1 200
1 000
800
600
400
200
0
-200
-400
-600
-800
2007
21 April 2009
2008
2009
April 2009: Outlook for the second quarter 2009
The demand for SKF products and services is expected to be
significantly lower in the second quarter compared to the second
quarter last year for the Group in total, for all the Divisions and
for all regions.
Compared to the first quarter, demand is expected to be slightly
lower for the SKF Group in total and lower in Europe, slightly
lower in North America and relatively unchanged in Asia and
Latin America. Demand is expected to be relatively unchanged
for the Automotive Division and slightly lower for both the
Industrial and Service Division.
The manufacturing level will be significantly lower year on year
and relatively unchanged compared to the first quarter.
21 April 2009
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Volume trends
18
(based on current assumptions)
Net sales
2008
Daily volume trends for:
Q1 2009
Q2 2009
Europe
56%
North America
17%
Asia Pacific
19%
Latin America
5%
Total
21 April 2009
Outlook Q2
2009 vs 2008
---------
---
Volume trend for main segment Q2 2009
(based on current assumptions)
Net sales 2008
5% Trucks
20% Industrial OEM, General+Special
23% Industrial distribution
12% Industrial OEM, Heavy+Off-highway
13% Cars
3% Electrical and two-wheeler
9% VSM
5% Aerospace
3% Railway
6% Energy
21 April 2009
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Guidance for the second quarter 2009
• Tax level: around 30%
• Financial net for the second quarter:
SEK -220 million
• Exchange rates on operating profit versus 2008
Q2:
SEK 300 million
Full year: SEK 1 billion
• Additions to PPE: Around SEK 2 billion for 2009
Guidance is approximate and based on current assumptions and exchange rates
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Key focus areas ahead 2009
• Profit and cash flow
- maintain positive price/mix
- drive operational efficiency and cost reduction
- reduce working capital and investments
• Adjustment of manufacturing output to new demand levels
- restructuring
- short-time working
• Growing segments and geographies
• Strengthening the platform/segment approach
• Competence development
SKF Care and Six Sigma as guiding lights
21 April 2009
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SKF Care
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Employee Care
Business Care
14
12
10
8
6
4
2
0
2003
2004
2005
2006
2007
2008
Operating margin
BeyondZeroTM
SKF Care
Environmental Care
21 April 2009
Community Care
SKF Group Vision
To equip the world
with SKF knowledge
21 April 2009
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Cautionary statement
This presentation 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 forwardlooking 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
annual report (available on www.skf.com) under the Administration Report;
"Most important factors influencing the financial results", "Financial risks" and
"Sensitivity analysis”.
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21 April 2009