skf first-quarter results 2014
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SKF First-quarter results 2014. Tom Johnstone, President and CEO. 15 April 2014. Highlights Q1 2014. Examples of new business Hindustan Aeronautics Ltd, India: customized bearings for helicopter transmission and main rotor Bell Helicopter Textron Inc .,USA: elastomeric bearings - PowerPoint PPT PresentationTRANSCRIPT
SKF First-quarter results 2014Tom Johnstone, President and CEO
15 April 2014
© SKF Group 15 April 2014
Highlights Q1 2014
Examples of new business
•Hindustan Aeronautics Ltd, India: customized bearings for helicopter transmission and main rotor
•Bell Helicopter Textron Inc.,USA: elastomeric bearings
•Turbogaz, Ukraina: magnetic bearings
•SCA, BillerudKorsnäs, Vattenfall, Sweden: condition monitoring solutions
•Geely Automobile, China: transmission seals
•Volkswagen, Germany: energy efficient tapered roller and ball bearings
•One of the largest cement producers major service contractin Latin America:
Slide 2
Examples of new products:
•Extended range of infrared thermometers
© SKF Group 15 April 2014
Awards received in Q1 2014
Customer awards
•Technical Cooperation Award, Goldwind
•Supplier of the Year Award, Varian Medical Systems
•Volvo Cars Quality Excellence (VQE) Award
•Excellent Supplier Award, Geely
•Excellent Quality Supplier Award, Hino Motors
•Supplier of the Year Award, General Motors
Slide 3
Golden Mousetrap Awards
Best Product of the Yearfor Electronics & Test, Editors of Design News
© SKF Group 15 April 2014
SKF Group – Q1 2014
Slide 4
Financial performance 2014 2013
Net sales, SEKm 16,734 15,152Operating profit, SEKm 2,024 1,480Operating margin, % 12.1 9.8Operating margin excl. one-time items, % 11.4 11.4Profit before tax, SEKm 1,787 1,237
Cash flow after investments before financing, SEKm -259 -892
Cash flow from operations, SEKm 314 403
Organic sales growth in local currency:
SKF Group: 5.8% Europe: 4%
Strategic Industries: 6.5% North America: 3%Regional Sales and Service: 3.0% Asia: 11%
Automotive: 8.1% Latin America: 4%
Key pointsSales volumes up by 6.2% y-o-yManufacturing higher compared to last year
© SKF Group 15 April 2014
Organic sales growth in local currency
Slide 5
% changey-o-y
2012 2013 2014
© SKF Group 15 April 2014
Organic sales growth in local currency
Slide 6
% y-o-y
Structure in 2012: 0.4%Structure in 2013: 2.5%Structure in 2014: 4.7%
-2.5%
-0.7%
5.8%
© SKF Group 15 April 2014
Growth development by geographyOrganic growth in local currency Q1 2014 vs Q1 2013
Slide 7
Europe4%
Asia/Pacific11%
Middle East& Africa
21%
LatinAmerica
4%
NorthAmerica
3%
© SKF Group 15 April 2014
Components in net sales
Slide 8
2012 2013 2014
Percent y-o-y Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Volume -0.8 -2.8 -5.0 -5.9 -8.7 -1.6 2.2 7.1 6.2
Structure -0.1 0.0 0.8 1.0 1.5 2.6 1.1 4.8 4.7
Price/mix 1.9 2.0 0.5 0.7 0.7 -0.6 -0.2 -0.2 -0.4
Sales in local currency
1.0 -0.8 -3.7 -4.2 -6.5 0.4 3.1 11.7 10.5
Currency 0.4 3.6 -2.7 -3.6 -4.0 -5.0 -2.2 -2.1 -0.1
Net sales 1.4 2.8 -6.4 -7.8 -10.5 -4.6 0.9 9.6 10.4
© SKF Group 15 April 2014
Operating profit as reported
Slide 9
SEKm
2012 2013 2014
© SKF Group 15 April 2014
Operating profit excluding one-time items
Slide 10
SEKm
2012 2013 2014
© SKF Group 15 April 2014
Operating margin
Slide 11
%
5.8
11.3
12.0* 11.9*
One-time items
* Excluding one-time items
12.1
11.4*
© SKF Group 15 April 2014Slide 12
Regional Salesand Service
Specialty Business
Automotive
%
2012 2013 2014
Excluding one-time items(eg. restructuring, impairments, capital gains)
Operating margin per business area
Strategic Industries
© SKF Group 15 April 2014
Net working capital as % of annual sales
Slide 13
%
2012 2013 2014
© SKF Group 15 April 2014
Return on capital employed
Slide 14
%
14.6*
7.5 8.4
16.2
17.1*15.1*
One-time items * Excluding one-time items
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 15 April 2014
Cash flow, after investments before financing
Slide 15
SEKm
2012 2013 2014
Excl. acquisitions and divestments:* Q3 2012 SEK 1,707 million** Q1 2013 SEK -69 million*** Q3 2013 SEK 871 million**** Q4 2013 SEK 1,170 million
****
© SKF Group 15 April 2014
Net debt
Slide 16
SEKm
2012 2013 2014
AB SKF, dividend paid (SEKm):2012 Q2 2,5042013 Q2 2,530
Cash out fromacquisitions (SEKm):
2012 Q3 8292013 Q1 8232013 Q4 7,900
Net debt: Loans and net provisions for post-employment benefits less short-term financial assets excluding derivatives.
© SKF Group 15 April 2014
Debt structure, maturity years
Slide 17
• Available credit facilities:EUR 500 million 2017SEK 3,000 million 2016
SEK 3,000 million 2017
• No financial covenants nor material adverse change clause
200
100 100 110
500 500
850
© SKF Group 15 April 2014
First quarter 2014
Slide 18
SEKm 2014 2013
Net sales 16,734 15,152
Operating profit 2,024 1,480
Operating margin, % 12.1 9.8
Operating margin excl. one-time items % 11.4 11.4
Profit before taxes 1,787 1,237
Net profit 1,275 818
Basic earnings per share, SEK 2.72 1.74
Cash flow, after investments before financing -259 -892
Cash flow from operations 314 403
© SKF Group 15 April 2014
April 2014: SKF demand outlook Q2 2014
Slide 19
Demand compared to the second quarter 2013
The demand for SKF’s products and services is expected to be slightly higher for
the Group, North America and Asia. It is expected to be relatively unchanged for
Europe and slightly lower for Latin America. For Strategic Industries and
Automotive it is expected to be slightly higher and for Regional Sales and Service
relatively unchanged.
Demand compared to the first quarter 2014
The demand for SKF’s products and services is expected to be slightly higher for
the Group, for North America and Asia. It is expected to be relatively unchanged
for Latin America. For Strategic Industries and Automotive it is expected to be
slightly higher and for Regional Sales and Service relatively unchanged.
Manufacturing
Manufacturing is expected to be higher year over year and slightly higher
compared to the first quarter.
© SKF Group 15 April 2014
SKF demand outlook Q2 2014, main regions
Share of net sales 2013
Europe 42%
Asia Pacific 24%
North America 24%
Latin America 7%
Total
Q2 2014 vs Q2 2013
+/-
+
+
-
+
Slide 20
Sequential trend for Q2 2014
© SKF Group 15 April 2014
SKF demand outlook Q2 2014, main business areas
Share of net sales 2013
StrategicIndustries
29%
Regional Sales and Service
39%
Automotive 27%
Total
Q2 2014 vs Q2 2013
+
+/-
+
+
Slide 21
Sequential trend for Q2 2014
© SKF Group 15 April 2014
SKF sequential volume trend Q2 2014, Industries
Slide 22
5% Energy
14% Cars and light vehicles
11% Vehicle service market
6% Aerospace
4% Railway
2% Two-wheelers and Electrical
29% Industrial distribution
13% Industrial, heavy, special and off-highway
11% Industrial, general
5% Trucks
Share of net sales 2013
© SKF Group 15 April 2014
Guidance for the second quarter 2014*
Slide 23
• Tax level: around 30%
• Financial net for the second quarter:Around SEK -230 million
• Currency impact on operating profit versus 2013Q2: SEK -125 millionFull year: SEK -350 million
• Additions to PPE: Around SEK 1.6 billion for 2014
* Guidance is approximate and based on current assumptions and exchange rates.
© SKF Group 15 April 2014
SKF’s priorities
Slide 24
Sustainable profitable growth• Expand the platform concept• Exploit the asset life cycle approach• Develop new products and grow SKF BeyondZero portfolio• Extend and grow second brands• Acquisitions
Investments & Innovation • New and existing facilities• Research and development• IT systems and mobility
Cost reduction• Business Excellence• Consolidation of manufacturing• Optimization and productivity improvements• Reduction in purchasing costs
Capital efficiency• Fixed capital• Net working capital
© SKF Group 15 April 2014
Cautionary statement
Slide 25
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”.