Year End 2009

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<ul><li> 1. SKF Year-end report 2009 Tom Johnstone, President and CEO: SKF delivered a strong cash flow in the quarter and a record cash flow for the year. Our operating margin was 7.2% in the quarter, supported by the major cost reduction activities in the operations. Demand for the Group improved slightly in the quarter but was still significantly lower than a year ago. Additional steps were taken to further adapt our manufacturing structure and costs towards a lower level of demand. Going forward into 2010 we see a slightly higher demand in the first quarter both sequentially and compared to the first quarter 2009. However, as the demand outlook is still uncertain we will continue to adapt our cost structure while stepping up our activities in the faster growing areas of our business and in developing new environmental offerings. Q4 Q4 YTD YTD 2009 2008 2009 2008 Net sales, SEKm 13,887 16,307 56,227 63,361 Operating profit, SEKm 1,004 1,450 3,203 7,710 Operating margin, % 7.2% 8.9% 5.7% 12.2% Operating margin excl. restructuring, % 10.1% 11.0% 8.0% 12.7% Profit before taxes, SEKm 765 1,107 2,297 6,868 Net profit, SEKm 505 819 1,705 4,741 Basic earnings per share, SEK 1.05 1.75 3.61 10.14 The decrease of 14.8% in net sales for the quarter, in SEK, was attributable to: volume -14.1%, structure 0.4%, price/mix 0.3% and currency effects -1.4%. For the full year, the decrease of 11.3%, in SEK, was attributable to: volume -24.3%, structure 1.0%, price/mix 4.3% and currency effects 7.7%. The quarter included expenses for restructuring activities of around SEK 400 million, of which around SEK 350 million refer to programmes announced in the fourth quarter. For the full year the expenses amount to around SEK 1,275 million, of which around SEK 135 million are write downs and impairments. The Board has decided to propose to the Annual General Meeting a dividend of SEK 3.50 (3.50) per share. Outlook for the first quarter of 2010 Sales development compared to first quarter last year The demand for SKF products and services is expected to be slightly higher for the Group in total. In Europe and North America it is expected to be slightly lower and in Asia and Latin America significantly higher. It is expected to be significantly lower for the Industrial Division, slightly higher for the Service Division and significantly higher for the Automotive Division. Sales development compared to the fourth quarter 2009 The demand is expected to be slightly higher for the SKF Group in total. It is expected to be slightly higher in Europe, Asia and Latin America, and relatively unchanged in North America. For the Industrial Division it is expected to be relatively unchanged, and slightly higher for both the Service Division and Automotive Division. Manufacturing level The manufacturing level will be higher year on year and slightly higher compared to the fourth quarter 2009. </li> <li> 2. Sales performance in the fourth quarter Sales in local currencies were significantly lower for the Group, compared to last year. They were significantly lower in Europe and North America, higher in Asia, significantly higher in Latin America and lower in Middle East and Africa. The manufacturing level was slightly higher than in the third quarter and significantly lower than the same quarter last year. Sales performance for the year Sales in local currencies were significantly lower for the Group, compared to last year. They were significantly lower in Europe and North America, lower in Asia, relatively unchanged in Latin America and slightly higher in Middle East and Africa. The manufacturing level was significantly lower than previous year and lower than sales to reduce inventories. Financial 31 December 30 September 31 December Key figures 2009 2009 2008 Inventories, % of annual sales 20.9 20.6 24.0 ROCE for the 12-month period, % * 9.1 10.2 24.0 ROE for the 12-month period, % * 9.0 10.5 26.3 Equity/assets ratio, % * 35.8 33.5 35.1 Gearing, % * 49.3 52.9 50.1 Net debt/equity, % * 68.9 78.9 84.2 Registered number of employees 41,172 41,756 44,799 * 2008 has been restated for change in accounting principle IAS 19 Employee benefits. Cash flow, after investments and before financing, was SEK 1,445 million (-150) for the fourth quarter and SEK 5,752 million (65) for the full year 2009. The cash flow includes payments for acquisitions and non-controlling interests of SEK 2 million for the quarter and SEK 241 million for the year. Inventories versus Q3 2009, in local currencies, were reduced by around SEK 600 million. The financial net in the fourth quarter of 2009 was SEK -239 million (-343). During the quarter SKF reduced its long-term debt by the early repurchase of around SEK 2 billion of outstanding bonds. Costs associated with this impacted the financial net by around SEK 50 million. The financial net for the full year was SEK -906 million (-842), which includes the revaluation of share swaps amounting to SEK -5 million (-20). Exchange rates, including the effects of translation and transaction flows, had a negative effect of SEK 50 million SKFs operating profit in the fourth quarter and positive effect of around SEK 700 million for the full year. Based on current assumptions and exchange rates it is estimated that there will be a negative effect on the first quarter 2010 of SEK 175 million and for the full year a negative effect of SEK 400 million. </li> <li> 3. R&amp;D expenditure was SEK 1,217 million (1,175), corresponding to 2.2% (1.9) of annual sales, excluding developing IT solutions. The number of first filings of patent applications was 218 (179). </li> <li> 4. Page 1 of 20 Restructuring in 2009 During the year, SKF has undertaken restructuring and cost reduction activities to adapt the overall capacity to market conditions. Total restructuring costs expensed in 2009 amount to SEK 1,275 million of which SEK 135 million are write downs and impairments. Of the total costs expensed SEK 915 million refer to the Automotive Division and SEK 310 million to the Industrial Division. Following the dramatic fall in demand which started in the third quarter 2008 about 4,900 people have left the Group, of which about 3,800 people left in 2009. Total savings from these activities will be around SEK 1,050 million, when fully implemented. Around 13,000 people were in short-time working end of December 2009. SKF's Performance Share Programme 2010 In order to continue to link the interests of the participants and the shareholders, the Board proposes that a decision be taken at the Annual General Meeting in April 2010 on SKFs Performance Share Programme 2010. The terms and conditions of the proposed SKFs Performance Share Programme 2010 are in essence the same as the terms and conditions of the programmes for 2008 and 2009. It is proposed that the programme covers a maximum of 310 senior managers and key employees in the SKF Group, including Group Management, with the opportunity of being allotted, free of charge, SKF class B shares. The number of shares that may be allotted must be related to the degree of achievement of financial targets defined by the Board of Directors in accordance with the SKF Groups TVA management model and must pertain to the period commencing 2010 up to and including 2012. Under the programme, no more than 1,000,000 class B shares may be allotted. Highlights from the fourth quarter SKF expanded its range of sealed spherical roller bearings, significantly increasing the number of applications for which they can be used. An agreement was signed with Ricardo to develop energy efficient solutions to better serve the increasing customer demand from the automotive industry for increased fuel economy and reduced CO2. SKF was awarded a new five year condition based maintenance contract by Total E&amp;P UK for providing condition based maintenance services of rotating equipment on Total's North Sea onshore and offshore assets. Two new SKF Solution Factories were opened in Pune (India), and Taichung City (Taiwan). All together SKF now has eight SKF Solution Factories around the world. SKF inaugurated its Global Testing Centre in Bengaluru (Bangalore), India. It will provide testing, laboratory investigations and product development facilities, ensuring greater focus on customer requirements, quality and speed of development for the region. SKF has signed a five year contract with Imperial College Londons Department of Mechanical Engineering to set up the next SKF University Technology Centre on tribology. It will focus on research in the area of modelling in simulation of tribological systems. SKF launched a number of new energy-efficient solutions for car applications. SKF was selected the winner of the 2009 Swedish Innovation Award for its work on the new family of energy-efficient bearings. </li> <li> 5. Page 2 of 20 SKF received top score for its environmental and human rights by Folksam Corporate Responsibility. SKF was placed first for its environmental efforts and this year also received the highest score when the index for environment and human rights are combined. The index was introduced in 2006 and is a summary of how all companies listed on the NASDAQ OMX Stockholm AB present their work within environmental issues and human rights. Industrial Division The operating profit for the fourth quarter amounted to SEK 238 million (1,001), resulting in an operating margin of 3.6% (11.2) on sales including intra-Group sales. The quarter included expenses for restructuring activities of around SEK 210 million (80). The operating profit for the full year amounted to SEK 1,551 million (4,043), resulting in an operating margin of 5.5% (12.0) on sales including intra-Group sales. The year included expenses for restructuring activities of around SEK 310 million (80). Sales including intra-Group sales for the quarter were SEK 6,710 million (8,940), and for the full year SEK 28,368 million (33,730). Net sales for the fourth quarter amounted to SEK 4,448 million (6,151) and for the full year SEK 19,301 million (22,862). The decrease of 27.7% for the quarter was attributable to: organic growth -26.4%, structure 0.0%, and currency effects -1.3%. For the full year the decrease of 15.6% was attributable to: organic growth -23.9%, structure 0.0%, and currency effects 8.3%. Sales in local currency for the fourth quarter as well as for the full year were significantly lower in Europe and North America. In Asia they were slightly higher in the fourth quarter and lower for the full year. Sales to the aerospace industry and to the heavy industry such as pulp and paper, mining and construction continued to decline. Sales to general industry and energy as well as to the passenger railway industry stabilized. Service Division The operating profit for the fourth quarter amounted to SEK 739 million (1,045), resulting in an operating margin of 14.3% (17.2). The quarter included expenses for restructuring activities of around SEK 15 million (0). The operating profit for the full year amounted to SEK 2,610 million (3,326), resulting in an operating margin of 12.9% (14.9). The year included expenses for restructuring activities of around SEK 40 million (0). Sales including intra-Group sales for the quarter were SEK 5,158 million (6,092), and for the full year SEK 20,190 million (22,318). Net sales for the fourth quarter amounted to SEK 5,069 million (5,998) and for the full year SEK 19,832 million (21,907). The decrease of 15.5% for the quarter was attributable to: organic growth -13.4%, structure 0.0%, and currency effects -2.1%. For the full year the decrease of 9.5% was attributable to: organic growth -16.2%, structure 0.0%, and currency effects 6.7%. Sales in local currencies for the fourth quarter as well as for the full year were significantly lower in Europe and North America. In Asia they were relatively unchanged in the fourth quarter and significantly lower for the full year. Sales in Latin America were slightly higher in the fourth quarter and slightly lower for the full year. In Middle East and Africa sales were lower in the fourth quarter and slightly higher for the full year. </li> <li> 6. Page 3 of 20 Automotive Division The operating result for the fourth quarter amounted to SEK 83 million (-544), resulting in an operating margin of 1.7% (-11.6). The quarter included expenses for restructuring activities of around SEK 170 million (250). The operating result for the full year amounted to SEK -809 million (546), resulting in an operating margin of -4.2% (2.5). The year included expenses for restructuring activities of around SEK 915 million (250). Sales including intra-Group sales for the quarter were SEK 4,921 million (4,699), and for the full year SEK 19,279 million (21,850). Net sales for the fourth quarter amounted to SEK 4,110 million (3,779) and for the full year SEK 16,051 million (17,886). The increase of 8.8% for the quarter was attributable to: organic growth 8.9%, structure 0.3%, and currency effects -0.4%. For the full year the decrease of 10.3% was attributable to: organic growth -18.3%, structure 0.4%, and currency effects 7.6%. Sales in local currencies for to the car and light truck industries in Europe were higher for the quarter and significantly lower for the full year. In North America sales were lower in the quarter and significantly lower for the full year. Sales to the heavy truck industries in Europe were significantly lower both for the quarter and the full yea...</li></ul>