Transcript Slide 0

The SKF Group
SKF Investor Relations
April 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
(48)(44)(53)
Net sales
(47)(46)(53)
41
Average number of
employees
Tangible asset
43
38
(10)(12) (9)
(13) (14) (8)
(25)(14)(19)
27
24
(26)(13)(18)
(5)(14)(12)
18
(6) (5) (4)
11
(5) (12)(15)
(4) (4) (3)
10
(3) (9) (3)
(3) (9) (3)
10
9
7
6 7 5
3
26
5
(3) (2) (0)
(2) (2) (0)
6
3
1 0
North
America
Latin
America
% of group total
Western
Europe
Sweden
Eastern
Europe
Middle East Asia/Pacifi
and Africa
c
SKF Group Vision
To equip the world
with SKF knowledge
4
New facilities opened in 2010
Tver, Russia
Haridwar, India
5
Ahmedabad, India
3
factories
1
Global Technical
Centre in Shanghai
9 Solution Factories - in total 17
17 SKF Solution Factories 2010
Nordic
(Gothenburg)
Edmonton
Moscow
UK
France
Germany
Italy
Monterrey
Mexico
Istanbul
Tianjin
Shangh
ai
Houston
Pune
Colombia
Opened
Planned
6
Brasil “IXION”
Johannesburg
Taiwan
SKF Solution Factory
Segments & Application Knowledge
7
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
LEED standard in new building constructions
SKF USA Inc. head office
SKF Tver Factory, Russia
SKF Jinan Factory, China
New factories will be built according to the
Leadership in Energy and Environmental Design
(LEED) standard:
• Jinan, China (tapered roller bearings)
• Dalian, China (mainly medium-sized bearings)
• Mysore, India (seals)
8
SKF wind energy industry
New CRB-design with
extra-high carrying capacity
for wind-gearboxes.
9
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?
10
SKF’s platforms
11
Bearings
and units
SKF’s platforms
12
Seals
SKF’s platforms
13
Mechatronics
SKF’s platforms
14
Lubrication
systems
SKF’s platforms
15
Services
Acquisition 2003-2011
Identifying gaps and opportunities in all platforms
Bearings
and units
Products
SNFA
(2006)
Seals
Services
Lubrication
systems
Safematic
Economos
(2006)
16
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)
17
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, Q1 report
• Strong performance
Operating profit:
SEK 2,504 m (1,702)
Operating margin: 15.0% (11.8)
Profit before tax: SEK 2,318 m (1,504)
Cash flow:
SEK 372 m (32)
• Strong organic sales growth in local currency:
SKF Group:
+21.4%
Europe:
+22% Industrial Division: +20.8%
North America: +25% Service Division:
+22.5%
Asia:
+22%
Latin America: +18%
Automotive Division: +19.8%
• Lincoln integration is going according to plan.
Outlook for Q2 for SKF Group
• Demand
Significantly higher compared to Q2 2010
Slightly higher sequentially compared to Q1 2011
• Manufacturing level
Significantly higher year over year
Relatively unchanged compared to Q1 2011
19
Highlights Q1 2011
New businesses:
• SKF was awarded a contract, worth around SEK 500 million,
with Goldwind for SKF Nautilus bearings for their new 2.5 MW
direct drive turbine.
• SKF signed a three-year strategic partnership, worth SEK 335
million, with Sandvik Mining and Construction.
• SKF and Konkola Copper Mines Plc in Zambia signed a threeyear contract, worth USD 2 million, covering a Predictive
Maintenance solution.
• SKF signed a strategic partnership agreement with CITIC Pacific
Special Steel Co., Ltd, for cooperation in purchasing, new
product and technology development and human resources
development.
20
Highlights Q1 2011
• SKF is building a new factory in Jinan, in the
Shandong Province, China. The investment
amounts to around SEK 590 million and the
factory will initially employ about 500 people.
• SKF signed an agreement to remain as the main
partner to the Gothia Cup for an additional three
years.
SKF will also continue to run the "Meet The
World" qualifying tournaments held in around 20
countries globally.
21
Jina
n
Divestments 2011
SKF completed two agreements in line with its strategy to divest
non-core component manufacturing:
•
On 1 February 2011, the forging business OMVP, in
Villar Perosa, Italy to the German based company
Neumayer Tekfor Holding GmbH. OMVP has about
550 employees and net sales of around EUR 100
million, mainly to SKF.
•
At the beginning of the second quarter the cage
factory in Gothenburg to the Japanese component
manufacturer Nakanishi Metal Works CO., Ltd. The
factory has 130 employees and will continue to
supply SKF.
22
Sales volume
23
% change y-o-y
25
20
15
10
5
0
-5
- 10
- 15
- 20
- 25
- 30
- 35
2009
2010
2011
Organic growth in local currencies
24
% change y-o-y
25
20
15
10
5
0
-5
- 10
- 15
- 20
- 25
- 30
2009
2010
2011
Growth development by geography
25
Organic growth Q1 2011 vs Q1 2010
Europe
+22%
North
America
+25%
Asia/Pacific
+22%
Latin
America
+18%
Middle East
& Africa
+4%
Growth in local currency
26
Long-term target: 8% per annum
Total growth
% y-o-y
25
20
15
10
5
0
-5
- 10
- 15
- 20
- 25
-19.0%
14.2%
26.4%
21,4
14,2
5,0
1,0
0,0
- 20,0
2009
2010
Organic growth
Acquisitions/Divestments
YTD March
2011
Components in net sales
2009
Percent y-o-y
27
2010
2011
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
-26.9
-30.8
-24.9
-14.1
5.3
16.6
19.0
16.3
20.1
Structure
1.4
1.1
1.2
0.4
0.0
0.0
0.0
0.0
5.0
Price / Mix
7.1
5.6
3.7
0.3
-0.3
-0.5
0.3
0.9
1.3
-18.4
-24.1
-20.0
-13.4
5.0
16.1
19.3
17.2
26.4
Currency
13.6
12.2
6.6
-1.4
-7.7
-5.2
-3.2
-6.2
-10.8
Net sales
-4.8
-11.9
-13.4
-14.8
-2.7
10.9
16.1
11.0
15.6
Volume
Sales in
local
currency
Operating profit
28
SEKm
2 600
2 400
2 200
2 000
1 800
1 600
1 400
1 200
1 000
800
600
400
200
0
2009
2010
Restructuring and one-time items
2011
Operating margin
29
Long-term target level:
15%
%
16
14
12
10
8
6
4
2
0
2009
2010
Restructuring and one-time items
2011
Operating margin
30
Long-term target level:
15%
%
16
14.2*
15.0
14
13.8
12
10
8.0*
8
6
4
5.7
2
0
2009
2010
Restructuring and one-time items
*
Excluding restructuring and one-time items
YTD March
2011
Operating margin per division
31
%
18
16
14
12
10
8
6
4
2
0
-2
-4
-6
-8
- 10
- 12
Service
Industrial
Automotive
Q1
Q2
Q3
Q4
Q1
2010
2009
Excluding one-off items
(eg. restructuring, impairments, capital gains)
Q2
Q3
Q4
Q1
2011
First quarter 2011
32
2011
2010
16,702
14,446
2,504
1,702
Operating margin, %
15.0
11.8
Operating margin excl. restructuring, %
15.0
12.4
Profit before taxes
2,318
1,504
Net profit
1,620
1,070
Basic earnings per share, SEK
3.44
2.27
Cash flow, after investments before
financing
372
32
SEKm
Net sales
Operating profit
Inventories as % of annual sales
33
Long-term target level: 18%
%
25
24
23
22
21
20
19
18
2009
2010
2011
Cash flow, after investments before financing
34
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
Cash out from
acquisitions (SEKm):
2009
2010
2009
2010
2011
241
6,799
Return on capital employed
35
Long-term target: 27%
%
30
24.0
25
25.6
20
15
10
9.1
5
0
2009
2010
ROCE: Operating profit plus interest income, as a
percentage of twelve months average of total assets less the
average of non-interest bearing liabilities.
YTD March 2011
Net debt
36
(Short-term financial assets minus loans and post-employment benefits)
SEKm
AB SKF,
dividend paid (SEKm):
2009 Q2
1,594
2010 Q2
1,594
0
- 2 000
- 4 000
- 6 000
Proposal to the Board
to be decided in April:
- 8 000
2011 Q2
- 10 000
- 12 000
2,277
Cash out from
acquisitions (SEKm):
2009
241
2010
6,799
- 14 000
- 16 000
- 18 000
2009
2010
2011
Debt structure
37
Maturity years, EURm
600
530
500
446
400*
400
300
200
100
55
100
100
2015
2016
130
0
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
March 2011:
Outlook for the second quarter 2011
Demand compared to the second quarter last year
The demand for SKF products and services is expected to be significantly higher
for the Group and all geographical regions. It will be significantly higher for
Industrial Division and the Service Division and slightly higher for Automotive
Division.
Demand compared to the first quarter 2011
The demand is expected to be slightly higher for the Group, higher in Asia and
Latin America, slightly higher in North America and relatively unchanged in
Europe. The Industrial Division and the Service Division are expected to be
slightly higher and the Automotive Division relatively unchanged.
Manufacturing level
The manufacturing level will be significantly higher year on year and relatively
unchanged compared to the first quarter.
38
Volume trends, regions
39
(based on current assumptions and adjusted for seasonality)
Net sales
2010
Daily volume trends for:
Q1 2011
Q2 2011
Outlook Q2
2011 vs 2010
46%
+++
North America 18%
+++
Asia Pacific
27%
+++
Latin America
6%
+++
Europe
Total
+++
Volume trends, divisions
40
(based on current assumptions and adjusted for seasonality)
Net sales
2010
Daily volume trends
for Q2 2011
Outlook Q2
2011 vs 2010
Industrial
32%
+++
Service
36%
+++
Automotive
30%
+++
Total
+++
41
Sequential volume trend main segments Q2 2011
(based on current assumptions)
Net sales 2010
14% Cars
12% Vehicle Service Market
5% Energy
25% Industrial distribution
18% Industrial OEM, General+Special
10% Industrial OEM, Heavy + Off5% highway
4% Aerospace
4% Railway
3% Trucks
Electrical and two-wheeler
Guidance for the second quarter
2011
42
• Tax level: around 30%
• Financial net for the second quarter:
Around SEK -175 m
• Exchange rates on operating profit versus 2010
Q2:
SEK -400 m
Full year: SEK -1.2 bn
• Additions to PPE: Around SEK 2.3 bn for 2011
Guidance is approximate and based on current assumptions and exchange rates.
Key focus areas ahead 2011
43
• 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”.
44
Welcome to the IR website – www.skf.com >
Investors
Investor Relations
function:
Investor Relations:
Anna Alte
Head:
Tel: +46 31 3371988
Marita Björk
Mobile: +46 705 271988
Tel: +46 31 3371994
E-mail:
Mobile: +46 705 181994
E-mail: [email protected] [email protected]
Event coordinator and
secretary:
Monica Svensson
Tel: +46 31 3372452
Fax: +46 31 3371722
E-mail:
[email protected]
45
46