Transcript Slide 0

SKF Half-year results 2012
Tom Johnstone, President and CEO
18 July 2012
Highlights Q2 2012
• New businesses
- A five-year contract for integrated maintenance solutions with
the Brazilian pulp and paper company Fibria.
- A seven-year contract with Volvo Car Corporation for the delivery
of rear wheel bearing units
and front suspension bearing units.
- A three-year supply agreement for the new generation NautilusTM
bearing with a major wind
turbine manufacturer.
• New facilities:
- Railway test centre in Tver, Russia
- SKF Solution Factory in Perth, Australia
• New
New generation
SKF System 24
products:
• New app:
Shaft
sealing
solution
© SKF Group
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18 July 2012
SKF Seal Select App
Highlights Q2 2012
• SKF launched the BeyondZeroTM portfolio with products
and solutions, which will both improve energy efficiency
and reduce the environmental impact.
Growth target:
SEK 2.5 bn to
SEK 10 bn by 2016
• SKF revised targets for its climate strategy and also partnered
with the WWF in their Climate Savers Programme.
• SKF announced the divestment of its distributor businesses in
Australia and New Zealand
• SKF renewed its partnership with Scuderia Ferrari.
© SKF Group
Slide 2
18 July 2012
SKF Group - Q2 2012
Financial performance
Net sales, SEKm
Operating profit, SEKm
Operating margin, %
Profit before tax, SEKm
Cash flow, SEKm
Q2 2012
17,174
2,053
12.0
1,801
686
Q2 2011
16,712
2,623
15.7
2,446
1,300
SKF took steps to reduce its cost base in Europe. The quarter included
one-time costs of around SEK 140 million.
Organic sales growth in local currency:
SKF Group:
-0.8%
Europe:
-3.4%
Industrial market, Strategic Industries:
North America:
+8.5%
Industrial market, Regional Sales and Service:
Asia:
-7.9%
Automotive:
Latin America:
+16.6%
Key points
Volumes down by 2.8% y-o-y
Manufacturing level significantly lower y-o-y
Inventories relatively unchanged
© SKF Group
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18 July 2012
+0.6%
+0.6%
-4.6%
Organic sales growth in local currency
% change
y-o-y
25
20
15
10
5
0
2010
© SKF Group
Slide 4
18 July 2012
2011
2012
Sales volume
% change
y-o-y
25
20
15
10
5
0
-5
2010
© SKF Group
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18 July 2012
2011
2012
Growth development by geography
Organic growth in local currency Q2 2012 vs Q2 2011
Europe
-3.4%
North
America
+8.5%
Asia/Pacific
-7.9%
Latin
America
+16.6%
© SKF Group
Slide 6
18 July 2012
Middle East
& Africa
+1.7%
Growth development by geography
Organic growth in local currency YTD 2012 vs YTD 2011
Europe
-2.3%
North
America
+11.6%
Asia/Pacific
-8.0%
Latin
America
+13.8%
© SKF Group
Slide 7
18 July 2012
Middle East
& Africa
+2.2%
Growth in local currency
Long-term target: 8% per annum
% y-o-y
20
16.3%*
14.2%
15
10
5
0.1%
0
-5
2010
* whereof acquisition 4.8%
© SKF Group
Slide 8
18 July 2012
2011
YTD 2012
Components in net sales
2010
2011
2012
Percent y-o-y
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Volume
5.3
16.6
19.0
16.3
20.1
12.6
6.2
0.0
-0.8
-2.8
Structure
0.0
0.0
0.0
0.0
5.0
4.4
5.1
4.8
-0.1
0.0
Price/mix
-0.3
-0.5
0.3
0.9
1.3
1.6
2.0
2.8
1.9
2.0
5.0
16.1
19.3
17.2
26.4
18.6
13.3
7.6
1.0
-0.8
Currency
-7.7
-5.2
-3.2
-6.2
-10.8
-12.2
-6.3
-2.1
0.4
3.6
Net sales
-2.7
10.9
16.1
11.0
15.6
6.4
7.0
5.5
1.4
2.8
Sales in local
currency
© SKF Group
Slide 9
18 July 2012
Operating profit
SEKm
2 700
2 400
2 100
1 800
1 500
1 200
900
600
300
0
2010
One-time items
© SKF Group
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18 July 2012
2011
2012
Operating margin
Long-term target level: 15%
%
16
14
12
10
8
6
4
2
0
2010
One-time items
© SKF Group
Slide 11
18 July 2012
2011
2012
Operating margin
Long-term target level: 15%
%
16
14.2*
14
12
13.8
14.7*
14.5
12.7*
12.3
10
8
6
4
2
0
2010
One-time items
* Excluding one-time items
© SKF Group
Slide 12
18 July 2012
2011
YTD 2012
Operating margin per business area
%
18
15
Regional Sales
and Service
12
Strategic Industries
9
6
Automotive
3
0
Q1
Q2
2010
Q3
Q4
Q1
Q2
Q3
2011
Excluding one-off items
(eg. restructuring, impairments, capital gains)
© SKF Group
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18 July 2012
Q4
Q1
Q2
2012
Second quarter 2012
2012
2011
17,174
16,712
2,053
2,623
12.0
15.7
Profit before taxes
1,801
2,446
Net profit
1,260
1,743
Basic earnings per share, SEK
2.67
3.76
Cash flow, after investments before financing
686
1,300
SEKm
Net sales
Operating profit
Operating margin, %
© SKF Group
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18 July 2012
Half year 2012
2012
2011
34,105
33,414
4,193
5,127
12.3
15.3
Profit before taxes
3,782
4,764
Net profit
2,601
3,363
5.51
7.20
1,382
1,672
SEKm
Net sales
Operating profit
Operating margin, %
Basic earnings per share, SEK
Cash flow, after investments before financing
© SKF Group
Slide 15
18 July 2012
Inventories as % of annual sales
Long-term target level: 18%
%
25
24
23
22
21
20
19
18
2010
© SKF Group
Slide 16
18 July 2012
2011
2012
Cash flow, after investments before financing
SEKm
2 000
1 000
*
0
- 1 000
- 2 000
- 3 000
- 4 000
- 5 000
- 6 000
2010
2011
* SEK 798 million, excluding SEK 6,799 million
for the acquisition of Lincoln.
© SKF Group
Slide 17
18 July 2012
2012
Return on capital employed
Long-term target: 27%
%
30
24.0
25
23.6
20.0
20
15
10
5
0
2010
2011
ROCE: Operating profit plus interest income, as a percentage
of twelve months rolling average of total assets less
the average of non-interest bearing liabilities.
© SKF Group
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18 July 2012
YTD 2012
Net debt
SEKm
0
AB SKF,
dividend paid (SEKm):
2010 Q2
1,594
2011 Q2
2,277
2012 Q2
2,504
- 2 000
- 4 000
- 6 000
- 8 000
- 10 000
Cash out from
acquisition (SEKm):
2010
6,799
- 12 000
- 14 000
- 16 000
- 18 000
- 20 000
2010
2011
2012
Net debt: Loans and net provisions for post-employment
benefits less short-term financial assets
excluding derivatives.
© SKF Group
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18 July 2012
Debt structure, maturity years
EURm
600
500
500
396
400
300
200
130
100
2012
2013
2014
• Credit facilities:
EUR 500 million 2014
SEK 3,000 million 2017
Slide 20
100
110
2015
2016
2017
0
0
© SKF Group
100
18 July 2012
2018
• No financial covenants nor material
adverse change clause
July 2012: SKF demand outlook Q3 2012
Demand compared to the third quarter last year
The demand for SKF’s products and services is expected to be relatively
unchanged for the Group. It is expected to be lower in Europe, relatively
unchanged in Asia, higher in North America and slightly higher in Latin America.
The demand is expected to be slightly higher for Industrial Strategic Industries and
relatively unchanged for Automotive and Industrial Regional Sales and Service.
Demand compared to the second quarter 2012
The demand for SKF’s products and services is expected to be relatively
unchanged for the Group. It is expected to be slightly lower in Europe, relatively
unchanged in Asia and North America and higher in Latin America. The demand
is expected to be relatively unchanged for Industrial Strategic Industries and
Industrial Regional Sales and Service and slightly lower for Automotive.
Manufacturing level
The manufacturing level is expected to be lower year on year and slightly lower
compared to the second quarter.
© SKF Group
Slide 21
18 July 2012
SKF demand outlook Q3 2012, regions
Share of net sales
2011*
Sequential trends for:
Q2 2012
Q3 2012
Q3 2012
vs Q3 2011
Europe
44%
-
Asia Pacific
28%
+/-
North America 19%
++
Latin America
8%
+/-
Total
* Previously published shares have been restated to reflect
the total Group business and customer delivery locations.
© SKF Group
Slide 22
+
18 July 2012
SKF demand outlook Q3 2012, business areas
Share of net sales
2011
Sequential trends for
Q3 2012
Q3 2012
vs Q3 2011
Strategic
Industries
31%
+
Regional Sales
and Service
39%
+/-
Automotive
27%
+/-
+/-
Total
© SKF Group
Slide 23
18 July 2012
SKF sequential demand trend Q3 2012
Share of net
sales 2011*
5% Energy
5% Aerospace
28% Industrial distribution
13% Industrial, general
12% Industrial, heavy, special and
off-highway
10% Vehicle service market
4% Railway
3% Two-wheelers and electrical
13% Cars and light vehicles
5% Trucks
* Previously published shares have been restated to reflect
the total Group business and customer delivery locations.
© SKF Group
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18 July 2012
Guidance for the third quarter 2012
• Tax level: around 30%
• Financial net for the third quarter:
Around SEK -180 million
• Exchange rates on operating profit versus 2011
Q3:
SEK 125 million
Full year:
SEK 350 million
• Additions to PPE: Around SEK 2.0 billion for 2012
Guidance is approximate and based on current assumptions
and exchange rates
© SKF Group
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18 July 2012
Key focus areas ahead 2012
• Managing the uncertain and different demand environment
- regions and segments
• Profit and cash flow
- inventory management
• Initiatives and actions to support long-term financial targets
• Continue the integration of Lincoln
• Business Excellence and competence development
• Implement the new organization for the Industrial market
One SKF and SKF Care as guiding lights
© SKF Group
Slide 26
18 July 2012
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 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 annual report (available on www.skf.com) under the
Administration Report; “Important factors influencing the financial results", "Financial
risks" and "Sensitivity analysis”.
© SKF Group
Slide 27
18 July 2012
© SKF Group
Slide 28
18 July 2012