the skf group skf investor relations april 2011. 1 skf - a truly global company established: 1907...
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![Page 1: The SKF Group SKF Investor Relations April 2011. 1 SKF - A truly global company Established: 1907 Sales 2010: SEK 61,029 million Employees: 44,742 Production](https://reader036.vdocuments.mx/reader036/viewer/2022062422/56649eb35503460f94bba666/html5/thumbnails/1.jpg)
The SKF Group
SKF Investor Relations
April 2011
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2SKF - 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
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3
Aerospace
RailwayOff-highwayTrucks
Two-wheeler and Electrical
General industry
Heavy industry
Special industrial
equipment
Vehicle Service Market
Industrial distribution
Cars and light trucks
Commercial
transport
Industrial business
Net sales by customer segment 2010
Energy
14%
5%
4%
3%
3%
13%
7%5%5%
12%
25%
4%
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4
63
53
79
1
10
5
10
6
0
27
38
18
24
7
11
41
26
43
North America
Latin Americ
a
WesternEurope
Eastern Europe
Middle East and
Africa
Asia/Pacific
Net sales
Average number of employees Tangible asset
% of group total
SKF 2010
(18)
(8)(13)
(26)(13)
(14)
(2002)(1998)
(25)(14)(19)
(10)(12)(9)
Sweden
(4) (4) (3)(5)(12)(15) (3) (9) (3)
(2)(2) (0)
(47)(46)(53)
(6) (5) (4)(5)(14)(12)
(3) (9) (3)
(3)(2) (0)
(48)(44)(53)
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5
To equip the worldwith SKF
knowledge
SKF Group Vision
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6New facilities opened in 2010
3factories
9 Solution Factories - in total 17
Haridwar, India Ahmedabad, IndiaTver, Russia
1 Global Technical Centre in
Shanghai
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7
Opened
Planned
Tianjin
Taiwan
Shanghai
Pune
Istanbul
JohannesburgBrasil “IXION”
Colombia
Moscow
HoustonMonterreyMexico
Edmonton
Nordic (Gothenburg)
UK
Germany
Italy
France
17 SKF Solution Factories 2010
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8SKF Solution Factory
Segments & Application KnowledgePlatforms & Technology Competence
Capabilities
Sealing Solutions Mechanical Services Lubrication Solutions
Training Center
Bearing Service WorkshopCondition Monitoring ServicesRemote Monitoring Center
MaPro/CoMo Product Repair A & MC
SKFSolution Factory
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9LEED standard in new building constructions
SKF USA Inc. head office
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)
SKF Jinan Factory, China
SKF Tver Factory, Russia
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10
New pitch bearingdesign with improvedcorrosion protection
DRTRB-unit “Nautilus” with segmented cagefor minimized friction
New CRB-design withextra-high carrying capacityfor wind-gearboxes.
XL Hybrid bearingswith ceramic ballsfor superior insulation
SKF WindCon 3.0/WebconIntranet supervisedcondition monitoring
Automatic centralizedlubrication kits for reduced maintenance cost
SKF wind energy industry
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11What is SKF knowledge?
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12
Bearingsand units
SKF’s platforms
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13
Seals
SKF’s platforms
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14
Mechatronics
SKF’s platforms
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15SKF’s platforms
Lubrication systems
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16SKF’s platforms
Services
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17Acquisition 2003-2011Identifying gaps and opportunities in all platforms
SealsBearingsand units
Lubrication systemsServices Mechatronics
Products
Technologies
Geographies
Segments
SNFA (2006)
S2M (2007)
QPM (2008)
Economos (2006)Macrotech (2006)
Macrotech (2009) Baker (2007)
PMCI (2007)
PB&A (2006)
Monitek (2006)
Safematic (2006)
Vogel (2004)
ALS (2007)
Sommers (2005)
ABBA (2007)
Jaeger (2005)
Peer (2008)
GLO (2008)
TCM (2003)
Scandrive (2003)
Cirval (2008)
Lincoln Industrial (2010)
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18
~20% Raw material (example: bars, tubes and rings)
~50% Components (example: forged and turned rings)
~30% Other (shop supplies and traded products etc.)
Cost split, % of total expenses (2010: SEK 52,438 m)
Employees
~35%
Other ~27%
Material ~34%
~4%
Depreciation &
amortization
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The SKF Group
Tom Johnstone, President and CEO
19 April 2011
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20Key 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% Automotive Division: +19.8%Latin America: +18%
• Lincoln integration is going according to plan.
Outlook for Q2 for SKF Group• Demand
Significantly higher compared to Q2 2010Slightly higher sequentially compared to Q1 2011
• Manufacturing levelSignificantly higher year over yearRelatively unchanged compared to Q1 2011
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21
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 three-year 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.
Highlights Q1 2011
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22
• 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.
Highlights Q1 2011
Jinan
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23Divestments 2011
• 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.
SKF completed two agreements in line with its strategy to divest non-core component manufacturing:
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24Sales volume
-35-30-25-20-15-10-505
10152025
% change y-o-y
2009 2010 2011
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25Organic growth in local currencies
-30-25-20-15-10-505
10152025
% change y-o-y
2009 2010 2011
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26
Europe+22%
Asia/Pacific +22%
Latin America +18% Middle
East & Africa +4%
North America +25%
Growth development by geography Organic growth Q1 2011 vs Q1 2010
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27
-20,0
14,2
21,4
1,0 0,05,0
-25-20-15-10-505
10152025
2009 2010 YTD March2011
Growth in local currency
% y-o-y
Acquisitions/DivestmentsOrganic growth
-19.0% 14.2% 26.4%
Long-term target: 8% per annum
Total growth
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28Components in net sales
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
1.4 1.1 1.2 0.4 0.0 0.0 0.0 0.0 5.0
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
13.6 12.2 6.6 -1.4 -7.7 -5.2 -3.2 -6.2 -10.8
-4.8 -11.9 -13.4 -14.8 -2.7 10.9 16.1 11.0 15.6
Percent y-o-y
Volume
Structure
Price / Mix
Sales in local currency
Currency
Net sales
2009 2010 2011
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29Operating profit
0200400600800
1 0001 2001 4001 6001 8002 0002 2002 4002 600
SEKm
2009
Restructuring and one-time items
2010 2011
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30Operating margin
%
0
2
4
6
8
10
12
14
16
2009
Restructuring and one-time items
2010
Long-term target level: 15%
2011
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31Operating margin
0
2
4
6
8
10
12
14
16
2009 2010 YTD March2011
%
5.7
8.0*
Restructuring and one-time items* Excluding restructuring and one-time
items
15.0
Long-term target level: 15%
14.2*
13.8
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32
-12-10-8-6-4-202468
1012141618
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Operating margin per division
IndustrialService
Automotive
%
Excluding one-off items(eg. restructuring, impairments, capital gains)
2009 2010 2011
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33
SEKm 2011 2010
Net sales 16,702 14,446
Operating profit 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
First quarter 2011
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34
18
19
20
21
22
23
24
25
Inventories as % of annual sales
% Long-term target level: 18%
2009 2010 2011
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35Cash flow, after investments before financing
-6 000-5 500-5 000-4 500-4 000-3 500-3 000-2 500-2 000-1 500-1 000
-5000
5001 0001 5002 0002 500
SEKm
2009 2010
Cash out fromacquisitions (SEKm):
2009 2412010 6,799
2011
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36Return on capital employed
0
5
10
15
20
25
30
2009 2010 YTD March 2011
ROCE: Operating profit plus interest income, as a percentage of twelve months average of total assets less the average of non-interest bearing liabilities.
%
9.1
24.0
Long-term target: 27%
25.6
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37Net debt (Short-term financial assets minus loans and post-employment benefits)
-18 000
-16 000
-14 000
-12 000
-10 000
-8 000
-6 000
-4 000
-2 000
0SEKm AB SKF,
dividend paid (SEKm):2009 Q2 1,5942010 Q2 1,594Proposal to the Board to be decided in April:2011 Q2 2,277
2009 2010
Cash out fromacquisitions (SEKm):
2009 2412010 6,799
2011
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38
0
100
200
300
400
500
600
2011 2012 2013 2014 2015 2016
Debt structure
Maturity years, EURm
55
446
530
100100
• Credit facilities:EUR 500 m 2014, whereof EUR 400* m
utilizedSEK 3,000 m 2017, unutilized
• No financial covenants nor material adverse change clause
400*
130
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39March 2011: Outlook for the second quarter 2011
Demand compared to the second quarter last yearThe 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 2011The 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 levelThe manufacturing level will be significantly higher year on year and relatively unchanged compared to the first quarter.
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40Volume trends, regions(based on current assumptions and adjusted for seasonality)
Daily volume trends for: Q1 2011 Q2 2011
Net sales2010
Europe46%
North America
18%
Asia Pacific27%
Latin America
6%
Total
Outlook Q22011 vs
2010
+++
+++
+++
+++
+++
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41Volume trends, divisions(based on current assumptions and adjusted for seasonality)
Daily volume trends for Q2
2011
Net sales2010
Industrial32%
Service36%
Automotive30%
Total
Outlook Q22011 vs
2010
+++
+++
+++
+++
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42
14%
12%
5%
25%
18%
10%
5%
4%
4%
3%
Cars
Vehicle Service Market
Energy
Industrial distribution
Industrial OEM,
General+Special
Industrial OEM, Heavy + Off-
highway
Aerospace
Railway
Trucks
Electrical and two-wheeler
Sequential volume trend main segments Q2 2011(based on current assumptions)
Net sales 2010
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43Guidance for the second quarter 2011
• Tax level: around 30%
• Financial net for the second quarter:Around SEK -175 m
• Exchange rates on operating profit versus 2010Q2: SEK -400 mFull 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.
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44Key focus areas ahead 2011
• 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
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45Cautionary 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”.
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46Welcome to the IR website – www.skf.com > Investors
Investor Relations function:
Head:Marita BjörkTel: +46 31 3371994Mobile: +46 705 181994E-mail: [email protected]
Investor Relations:Anna AlteTel: +46 31 3371988Mobile: +46 705 271988E-mail: [email protected]
Event coordinator and secretary:Monica SvenssonTel: +46 31 3372452Fax: +46 31 3371722E-mail: [email protected]
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