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16 April 2008
The SKF Group
First-quarter results 2008
Tom Johnstone, President and CEO
Highlights during the first quarter 2008
• Acquisition of QPM
Aerospace’s metallic
rod business.
• Opened the first machine
tool competence centre in
Stuttgart, Germany.
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• New contract with:
- Siemens Transportation Systems
to deliver axleboxes and tapered
roller bearing units for new long
distance Railjet trains.
- British Petroleum to provide
proactive reliability maintenance
services in the North Sea over a
five year period.
- Goldwin Science and Technologies
Co. Ltd. in China to supply the main
shaft seals for their new 1.5 MW
wind turbine.
First quarter 2008
SEKm
3
2008
2007
15,596
14,371
Operating profit
2,040
1,886
Operating margin
13.1%
13.1%
Profit before taxes
1,924
1,825
Net profit
1,296
1,214
2.77
2.57
-131
-653
-77
-439
Net sales
Basic earnings per share, SEK
Cash flow after operating investments before
financial items
Cash flow after operating investments before
financial items, excluding acquisitions
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Operating margin
4
Long-term target level: 12%
%
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
2006
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2007
2008
Operating margin
%
14
5
Long-term target level: 12%
12.6
12.9
13.1
2007
2008 Q1
12
10
11.3*
8
6
4
2
0
2006
* excluding income from the jointly
controlled company Oy Ovako Ab
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Operating margin per division
%
16
14
Service
Industrial
12
10
8
Automotive
6
4
2
0
Q1
2006
Q2
Q3
Q4
Q1
Q2
2007
Excluding one-time items (eg. restructuring,
impairments, capital gains)
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Q3
Q4
Q1
2008
Sales in local currencies (excl. structural changes)
% change y-o-y
16
14
12
10
8
6
4
2
0
2006
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2007
2008
7
Growth development in local currency
Acquisitions/Divestments
Organic growth
% Y-o-Y
14
12
10
8
6
4
2
0
Long-term target level: 6-8% per annum
13.2
9.7
7.5*
2006
2007
* Excluding effect from Ovako: 2006 10.1%
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2008 Q1
9
Net sales development per quarter
2007
2006
2008
Percent y-o-y
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Volume
6.0
2.5
3.3
8.8
7.9
6.9
9.0
6.3
4.9
Structure
-4.9
-0.5
1.1
4.6
4.0
4.6
3.7
1.0
1.0
Price / Mix
2.9
2.0
2.0
2.3
1.8
2.7
2.0
3.2
3.8
Sales in local
currency
4.0
4.0
6.4
15.7
13.7
14.2
14.7
10.5
9.7
Currency
8.0
1.0
-2.1
-5.8
-5.6
-2.3
-1.9
-2.0
-1.2
Net sales
12.0
5.0
4.3
9.9
8.1
11.9
12.8
8.5
8.5
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Cash flow, after operating investments before financial items
10
SEKm
1 700
1 500
1 300
1 100
900
700
500
300
100
-100
-300
-500
-700
Cash out from
acquisitions (SEKm):
2006
2,129
2007
1,209
2008 Q1
54
Cash in from Ovako
(SEKm):
2006 Q4
1,217
2007 Q2
46
2006
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2007
2008
Net debt
11
(Short-term financial assets minus loans and post-employment benefits)
SEKm
0
AB SKF,
dividend paid (SEKm):
2006 Q2
1,821
2007 Q2
2,049
-2 000
-4 000
-6 000
2007 Q2,
redemption
-8 000
-10 000
-12 000
2006
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2007
2008
4,554
12
Inventories as % of annual sales
Long-term target level: 18%
%
23
22
21
20
19
18
2006
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2007
2008
13
Return on capital employed
Long-term target level: 24%
%
27
26
25
24
23
2006
2007
ROCE: Operating profit plus interest income, as a
percentage of twelve months average of total assets
less the average of non interest bearing liabilities.
16 April 2008
2008 Q1
April 2008: Outlook for the second quarter 2008
(compared to the first quarter 2008)
The market demand for SKF’s products and services in the second
quarter of 2008 is expected to be higher for the Group. The
demand is expected to be higher in Europe, relatively unchanged in
North America and significantly higher in both Asia and Latin
America. The demand is expected to be higher in the Industrial
Division and the Service Division and slightly higher for the
Automotive Division.
The manufacturing level for the second quarter 2008 will be
slightly higher compared to the first quarter 2008, and higher than
the second quarter 2007.
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Volume development
Net sales
2007
Daily volume trend for:
Q1 2008
Q2 2008
Outlook Q2
2008 vs 2007
Europe
56%
++
North America
18%
=
Asia Pacific
18%
+++
Latin America
5%
+++
Total
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Key focus areas ahead
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• Strengthen the platform/segment approach
• Maintain a positive price/mix
• Focus on fast growing segments and geographies
• Drive operational efficiency and Six Sigma
• Manage material costs and supply
• Attract and retain the best people
Use sustainability as a guiding light
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SKF Corporate Sustainability
Employee Care
Business Care
14
12
10
8
6
4
2
0
2003
2004
2005
2006
2007 YTD
Q3
Operating margin
BeyondZero
TM
Environment Care
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SKF Care
Community Care
SKF Group Vision
To equip the world
with SKF knowledge
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16 April 2008