Transcript Slide 0

The SKF Group
SKF Investor Relations
February 2011
SKF - A truly global company
Established:
1907
Sales 2010:
SEK 61,029 million
Employees:
44,742
Production sites:
around 130 in 32 countries
SKF presence:
in over 130 countries
Distributors/dealers:
15,000 locations
Global certificates:
ISO 14001
OHSAS 18001 certification
1
Net sales by customer segment 2010
2
Cars and
light trucks
Industrial
distribution
14
%
25
%
Aerospac
5% e
Railwa
4%
y
3% Off-highway
4%
Vehicle Service
Market
12
%
3%
Two-wheeler
and Electrical
5%
Special industrial
equipment
Trucks
5%
7%
Energy Heavy
industry
Industrial
business
13
%
General
industry
Commercia
l transport
SKF 2010 (2002) (1998)
3
Net sales
41
Average number of
employees
Tangible asset
43
38
(10)
(13)
27
(25)
(14)
(26)
(19)
(13)
18
(18)
11
10
(14)
24
10
Latin
America
% of group total
3
Western
Europe
Sweden
(8)
26
9
7
6 7 5
North
America
(12) (9)
5
6
Eastern
Europe
3
1 0
Middle East Asia/Pacifi
and Africa
c
SKF Group Vision
To equip the world
with SKF knowledge
4
Investing in new factories
Haridwar, India
5
Ahmedabad, India
Tver, Russia
Dalian, China
SKF Solution Factory
Segments & Application Knowledge
6
Platforms & Technology Competence
SKF
Solution Factory
Capabilities
Sealing Solutions
Bearing Service Workshop
MaPro/CoMo Product Repair
Mechanical Services
Lubrication Solutions
Condition Monitoring Services Remote Monitoring Center
A & MC
Training Center
17 SKF Solution Factories 2010
Nordic
(Gothenburg)
Edmonton
Moscow
UK
France
Germany
Italy
Monterrey
Mexico
Istanbul
Tianjin
Shangh
ai
Houston
Pune
Colombia
Opened
Planned
7
Brasil “IXION”
Johannesburg
Taiwan
SKF wind energy industry
New CRB-design with
extra-high carrying capacity
for wind-gearboxes.
8
New pitch bearing
design with improved
corrosion protection
SKF WindCon 3.0/Webcon
Intranet supervised
condition monitoring
DRTRB-unit “Nautilus”
with segmented cage
for minimized friction
Automatic centralized
lubrication kits for
reduced maintenance cost
XL Hybrid bearings
with ceramic balls
for superior insulation
What is SKF knowledge?
9
SKF’s platforms
10
Bearings
and units
SKF’s platforms
11
Seals
SKF’s platforms
12
Mechatronics
SKF’s platforms
13
Lubrication
systems
SKF’s platforms
14
Services
Acquisition 2003-2010
Identifying gaps and opportunities in all platforms
Bearings
and units
Products
SNFA
(2006)
Seals
Services
Lubrication
systems
Safematic
Economos
(2006)
15
Mechatronics
ABBA
(2007)
(2006)
GLO
(2008)
S2M
(2007)
Macrotech
Macrotech
(2006)
Jaeger
(2005)
(2009)
Baker
(2007)
Technologie
s
Geographie
s
Vogel
(2004)
Lincoln
Industrial
(2008)
PMCI
(2007)
ALS
Scandrive
PB&A
(2006)
Sommers
QPM
(2010)
TCM (2003)
(2007)
(2005)
(2003)
Monitek
Segments
Peer
(2008)
(2006)
Cirval
(2008)
Cost split, % of total expenses (2010: SEK
52,438 m)
16
Depreciation &
amortization
~4%
Other
~27%
Employees
~35%
~20% Raw material (example: bars, tubes and
rings)
~50% Components (example: forged and
turned rings)
Material
~34%
~30% Other (shop supplies and
traded
products etc.)
The SKF Group
Tom Johnstone, President and
CEO
Key points, Q4 report
• Strong performance
Operating profit: SEK 2,202 m (1,004). Operating margin: 14.3% (7.2)
Profit before tax: SEK 2,048 m (765)
Cash flow: SEK -5,966 m (1,445),
Cash flow excl. acquisition of Lincoln Industrial SEK 798 m
• Strong organic sales development in local currency:
SKF Group:
+17.2%
All divisions and regions showed very good growth
• Completed acquisition of Lincoln Industrial
Outlook for Q1 for SKF Group
• Demand
Significantly higher compared to Q1 2010
Slightly higher sequentially compared to Q4 2010, adjusted for normal seasonality
• Manufacturing level
Significantly higher year over year
Slightly higher compared to Q4 2010, adjusted for normal seasonality
18
Acquisition of Lincoln Industrial, Q4 2010
• A leading supplier of lubrication systems and tools
• Headquarter in St. Louis, Missouri, USA
• Sales of around USD 400 m in 2010
• About 2,000 employees
• Total purchase price net: around SEK 6.8 bn
• Financing: around SEK 3.2 bn cash (net) and SEK 3.6 bn debt
19
New facilities opened in 2010
Tver, Russia
Haridwar, India
20
Ahmedabad, India
3
factories
1
Global Technical
Centre in Shanghai
9 Solution Factories - in total 17
Examples of new product launches in 2010
Low friction XTracker
Four-row tapered
roller bearing
21
SKF
Engineering
Simulation
Services
SKF Commutation
Sensor-Bearing Unit
SKF MetroCon –
SKF Crane Asset
Management
CBM for elevators
and escalators
SKF solutions
for special
pumps
High
performanc
e
seal
SKF Overrunning
Alternator
Pulley
Unit
SKF Drum Support
Unit
SKF SPEEDI-SLEEVE
SKF Low
Friction
Engine
Seal
SKF One Way
Clutch
SKF Hydraulic
driven lubricator
SKF Cam
Follower
Unit
2010: 251 first filings of patent applications
Six Sigma
22
2010 status:
•
•
•
463 Black Belts
2,059 Green Belts
1,155 projects closed
Hard savings
2005:
2006:
2007:
2008:
2009:
2010:
SEK 150 m
SEK 200 m
SEK 302 m
SEK 462 m
SEK 430 m
SEK 468 m
4 dimensions:
”Standard” Six Sigma, Design for Six
Sigma, Lean Six Sigma and Six
Sigma for Growth
Sales volume
23
% change y-o-y
20
15
10
5
0
-5
- 10
- 15
- 20
- 25
- 30
- 35
2008
2009
2010
24
Sales in local currencies (excl. structural changes)
% change y-o-y
20
15
10
5
0
-5
- 10
- 15
- 20
- 25
- 30
2008
2009
2010
Growth in local currency
25
(Organic growth + acquisition/divestments)
% y-o-y
20
14.2%
15
10
7.1%
-19.0%
5
0
-5
- 10
- 15
- 20
2008
2009
Organic growth
Acquisitions/Divestments
2010
Growth development by geography
26
Local currency Q4 2010 vs Q4 2009
Europe
+17%
North
America
+17%
Asia/Pacific
+20%
Latin
America
+16%
Middle East
& Africa
+8%
Growth development by geography
27
Local currency 2010 vs 2009
Europe
+7%
North
America
+13%
Asia/Pacific
+31%
Latin
America
+20%
Middle East
& Africa
+10%
Components in net sales
28
2009
2008
2010
Full
Q4 year
Percent y-o-y
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Volume
4.9
6.2
2.7 -13.0 -26.9 -30.8 -24.9 -14.1
5.3
16.6
19.0
16.3
14.1
Structure
1.0
1.3
0.5
2.4
1.4
1.1
1.2
0.4
0.0
0.0
0.0
0.0
0.0
Price / Mix
3.8
4.0
6.4
8.5
7.1
5.6
3.7
0.3
-0.3
-0.5
0.3
0.9
0.1
9.7
11.5
9.6
-2.1 -18.4 -24.1 -20.0 -13.4
5.0
16.1
19.3
17.2
14.2
Currency
-1.2
-4.1
-0.9
10.3
-1.4
-7.7
-5.2
-3.2
-6.2
-5.6
Net sales
8.5
7.4
8.7
8.2
-4.8 -11.9 -13.4 -14.8
-2.7
10.9
16.1
11.0
8.6
Sales in
local
currency
Q4
Q1
13.6
Q2
12.2
Q3
6.6
Operating profit
29
SEKm
2 400
2 200
2 000
1 800
1 600
1 400
1 200
1 000
800
600
400
200
0
2008
2009
Restructuring and one-time items
2010
Operating margin
30
%
16
14
12
10
8
6
4
2
0
2008
2009
Restructuring and one-time items
2010
Operating margin
31
%
16
14
14.2*
12.7*
13.8
12
10
12.2
8.0*
8
6
5.7
4
2
0
2008
2009
Restructuring and one-time items
*
Excluding restructuring and one-time items
2010
Operating margin per division
32
%
18
16
14
12
10
8
6
4
2
0
-2
-4
-6
-8
- 10
- 12
Service
Industrial
Automotive
Q1
Q2
2008
Q3
Q4
Q1
Q2
Q3
2009
Excluding one-off items
(eg. restructuring, impairments, capital gains)
Q4
Q1
Q2
2010
Q3
Q4
Fourth quarter 2010
33
2010
2009
15,409
13,887
2,202
1,004
Operating margin, %
14.3
7.2
Operating margin excl. restructuring, %
14.9
10.1
Profit before taxes
2,048
765
Net profit
1,350
505
2.87
1.05
-5,966
1,445
SEKm
Net sales
Operating profit
Basic earnings per share, SEK
Cash flow*
Cash flow* excl. acquisition of Lincoln Industrial
*after investments before financing
798
Full year 2010
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2010
2009
61,029
56,227
8,452
3,203
Operating margin, %
13.8
5.7
Operating margin excl. restructuring, %
14.2
8.0
Profit before taxes
7,549
2,297
Net profit
5,296
1,705
Basic earnings per share, SEK
11.28
3.61
-2,838
5,752
SEKm
Net sales
Operating profit
Cash flow*
Cash flow* excl. acquisition of Lincoln Industrial
*after investments before financing
3,926
Inventories as % of annual sales
35
Long-term target level: 18%
%
25
24
23
22
21
X Excluding
acquisition of
20
Lincoln Industrial
19
18
2008
2009
2010
Cash flow, after investments before financial items
36
SEKm
2 500
2 000
1 500
1 000
500
0
- 500
- 1 000
- 1 500
- 2 000
- 2 500
- 3 000
- 3 500
- 4 000
- 4 500
- 5 000
- 5 500
- 6 000
X Excluding
acquisition of
Lincoln Industrial
Cash out from
acquisitions (SEKm):
2008
2009
2010
2008
2009
2010
1,284
241
6,799
Return on capital employed
37
%
30
25
24.0
24.0
20
15
9.1
10
5
0
2008
2009
ROCE: Operating profit plus interest income, as a
percentage of twelve months average of total assets less the
average of non-interest bearing liabilities.
2010
Net debt
38
(Short-term financial assets minus loans and post-employment benefits)
AB SKF,
dividend paid
(SEKm):
2008 Q2
2,277
2009 Q2
1,594
2010 Q2
1,594
SEKm
0
- 2 000
- 4 000
- 6 000
- 8 000
Redemption (SEKm):
2008 Q2
2,277
Cash out from
acquisitions (SEKm):
- 10 000
- 12 000
- 14 000
- 16 000
- 18 000
2008
2009
2010
2008
2009
2010
1,284
241
6,799
Debt structure
39
Maturity years, EURm
600
530
500
446
400
400*
400*
300
200
100
100
100
2015
2016
130
130
55
0
2010
2011
2012
2013
2014
• Credit facilities:
• No financial covenants nor
EUR 500 m 2014, whereof EUR 400* m utilized material adverse change clause
SEK 3,000 m 2017, unutilized
Key focus areas ahead 2010
• Profit and cash flow
• Adjustment of manufacturing output to new
demand levels
• Growing segments and geographies
• Strengthening the platform/segment
approach
• Competence development
SKF Care and Six Sigma as guiding lights
40
Key focus areas ahead 2010
• Profit and cash flow
• Adjustment of manufacturing output to new
demand levels
• Growing segments and geographies
• Strengthening the platform/segment
approach
• Competence development
SKF Care and Six Sigma as guiding lights
41
Dividend proposal
AB SKF’s Board proposes the Annual General
Meeting an increase in the dividend of 43%, giving
a dividend of SEK 5.00 (3.50) per share
42
December 2010:
Outlook for the first quarter 2011
Development compared to the first quarter last year
The demand for SKF products and services is expected to be
significantly higher for the Group, the divisions and for the different
geographical areas.
Development compared to the fourth quarter 2010 and adjusted
for normal seasonality
The demand is expected to be slightly higher for the Group and for the
different geographical areas. The Industrial Division and the Service
Division are expected to be slightly higher and the Automotive Division
higher.
Manufacturing level
The manufacturing level will be significantly higher year on year and
slightly higher compared to the fourth quarter, adjusted for normal
seasonality.
43
Volume trends, regions
44
(based on current assumptions and adjusted for seasonality)
Net sales
2010
Daily volume trends for:
Q4 2010
Q1 2011
Outlook Q1
2011 vs 2010
46%
+++
North America 18%
+++
Asia Pacific
27%
+++
Latin America
7%
+++
Europe
Total
+++
Volume trends, divisions
45
(based on current assumptions and adjusted for seasonality)
Net sales
2010
Daily volume trends
for Q1 2011
Outlook Q1
2011 vs 2010
Industrial
32%
+++
Service
36%
+++
Automotive
30%
+++
Total
+++
Sequential volume trend main segments Q1
2011
(based on current assumptions)
Net sales 2010
5% Energy
25% Industrial distribution
18% Industrial OEM, General+Special
10% Industrial OEM, Heavy + Off5% highway
4% Aerospace
14% Railway
12% Cars
3% Vehicle Service Market
4% Electrical and two-wheeler
Trucks
46
Guidance for the first quarter 2011
47
• Tax level: around 30%
• Financial net for the first quarter:
Around SEK -200 m
• Exchange rates on operating profit versus 2010
Q1:
SEK -150 m
Full year: SEK -900 m
• Additions to PPE: Around SEK 2.3 bn for 2011
Guidance is approximate and based on current assumptions and exchange rates.
Long-term financial targets
48
Targets
Operating margin level
Annual sales growth in local currencies
ROCE
Inventory to sales
15%
8%
27%
18%
Main initiatives going forward
• Accelerate profitable growth
• Reduce cost and eliminate waste
• Invest for growth
One SKF and SKF Care as guiding lights
49
Main actions going forward
Accelerate profitable growth
• Continue to strengthen the platform/segment
approach
• Increase the development, launch and
commercialisation of new offerings (green)
• Value based selling – using
Documented Solutions Programme
• Strengthen our service business
• Acquisitions to strengthen platform offer
• Develop other brands of the SKF Group
50
Main actions going forward
Reduce cost and eliminate waste
• Build on Manufacturing Excellence into other
areas - Business Excellence
• Increased manufacturing and sourcing in
Best Cost Countries
• Reduce product cost through ICR* activities
* ICR means Integrated Cost Reduction
51
Main actions going forward
Invest for growth
• Increase sales and engineering resources
• Additional factories in growth markets
• Additional SKF Solution Factories
• Increase spending in R&D and improve global
network
- accelerate plans for India and China
52
Key focus areas ahead 2011
53
• Profit and cash flow
- manage currency and material headwinds
• Manufacturing and suppliers to support growth
• Growing segments and geographies
• Initiatives and actions to support long term
targets
• Integration of Lincoln Industrial
• Business Excellence and competence
development
One SKF and SKF Care as guiding lights
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”.
54
Welcome to the IR website – www.skf.com >
Investors
Investor Relations
function:
Head:
Marita Björk
Tel: +46 31 3371994
Mobile: +46 705 181994
E-mail: [email protected]
Assistant:
Anna Alte
Tel: +46 31 3371988
Mobile: +46 705 271988
E-mail:
[email protected]
Event coordinator and
secretary:
Helena Karlsson
Tel: +46 31 3372142
Mobile: +46 705 642142
E-mail: [email protected]
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