Post on 26-Dec-2015
The SKF Group
SKF Investor Relations
April 2014
© SKF Group Slide 2
SKF - A truly global company
Established: 1907
Sales 2013: SEK 63,597 million
Employees 2013: 48,401
Production sites: around 165 in 28 countries
SKF presence: in over 130 countries
Distributors/dealers: 15,000 locations
Global certificates: ISO 14001
OHSAS 18001 certification
© SKF Group Slide 3
7%3%
35%
5%
3%
24% 24%
Vehicle aftermark
et
6%4%3%
5%
11%10%
5%
11%
29%
2%
14%
Net sales - 2013
Aerospace Railway
Off-highwayTrucks
Two-wheelers and Electrical
Industrial, general
Cars and light
trucks
Industrial, heavy and
special
Industrial distributio
n
Energy
9%
Asia/Pacific
Latin America
North America
Middle East & Africa
Western Europe
Eastern Europe
Sweden
* Previously published shares have been restated in February 2013
© SKF Group Slide 4
North America
Latin America
WesternEurope
Eastern Europe
Middle East and Africa
Asia/Pacific
Net salesAverage number of employees Tangible asset
% of group total SKF 2013
(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)
© SKF Group Slide 5
Operating margin as reported
%
© SKF Group Slide 6
Return on capital employed
%
© SKF Group Slide 7
Growth in local currencies
%
© SKF Group Slide 8
Long-term financial targets
20%Return on capital
employed
15%Operating
margin, level
-20
-15
-10
-5
0
5
10
15
20
07 08 09 10 11 12 130
5
10
15
07 08 09 10 11 12 13
0
5
10
15
20
25
30
07 08 09 10 11 12 13
8%Changes in sales in local currency,
incl. structure
© SKF Group Slide 9
SKF’s priorities
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
Capital efficiency• Fixed capital• Net working capital
Cost reduction• Business Excellence• Consolidation of manufacturing• Optimization and productivity improvements• Reduction in purchasing costs
Investments & Innovation • New and existing facilities• Research and development• IT systems and mobility
© SKF Group 15 October 2013Slide 10
To equip the worldwith SKF knowledge
SKF Group Vision
© SKF Group Slide 11
SKF BeyondZero
• SKF launched the BeyondZeroTM portfolio with products and solutions, which will both improve energy efficiency and reduce the environmental impact.
• SKF revised targets for its climate strategy and also partnered with the WWF in their Climate Savers Programme.
SKF’s climate strategy targets:
• Increase revenue from SKF BeyondZero portfolio from SEK 2.5 bn to SEK 10 bn by 2016
• Reduce total annual energy use by 5% below the 2006 level by 2016
• Reduce energy use per production output by 5% y-o-y from 2012 to 2016
• Reduce CO2 emissions per tonne-kilometre by 30% 2016 vs 2011 for transports managed by SKF Logistics Services
• Major suppliers certified according to ISO 50001 by 2016
© SKF Group
Opened
Planned
Tianjin
Taiwan
Shanghai
Pune
Istanbul
JohannesburgBrasil “IXION”
Colombia
Moscow
HoustonMonterreyMexico
Edmonton
Nordic (Gothenburg)
UK
Germany
ItalyFrance
Perth
Rumania
Cleveland Spain
PolandToronto
UrumquiThe Netherlands
Abu Dhabi
Manesar
Slide 12
27 SKF Solution Factories 2013
© SKF Group Slide 13
SKF 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
© SKF Group Slide 14
Slab continuous caster – metal industry
Telescopic actuators for mould adjustment
SKF DryLube Bearings and SNL Housings for roll out table
SKF ConRo Top roll line units
SKF ConRo Low roll line units
SKF sealed self-aligning bearing system (CARB and spherical roller bearings) and centralized lubrication system for roll lines
SKF ConRo Compact roll line units
SKF Caster Analyst System for roll lines
© SKF Group Slide 15
Wheel-loader – Construction
Central gearHybrid pinion units
Wheel end• Integrated smart wheel bearing units with sensors• SKF Mudblock cassette seals
Motor hoodElectromechanical actuators
Chassis lubricationCentralized lubrication systems
© SKF Group Slide 16
New pitch bearingdesign with improvedcorrosion protection
DRTRB-unit SKF 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
Wind turbine - Energy
© SKF Group Slide 17
SKF’s environmentally positive customer solutions
Designed for environment
Designed for environment
A solution that is primarily designed to improve environmental performance by itself
E2 - 30% less energy compared to a standard bearing
SKF’s solutions which realize significant environmental benefits
Applied for environment
Applied for environment
A solution that enables improved environmental performance in a specific application
SKF sensor bearing
Stop-start system
Up to 15% better fuel economy of the car
© SKF Group Slide 18
SKF energy efficient (E2) bearings
PeruIndustria Textil Piura• 60,000 E2 deep
groove ball bearing
IndiaSangam Group
ChinaConveyors used in mining industry. 130,000 E2 bearing
IndonesiaLeuwijaya Textile• 30,000 E2 bearing
• potential 325,000 for 3 different customers
© SKF Group Slide 19
What is SKF knowledge?
© SKF Group Slide 20
SKF technology platforms
Bearingsand units
© SKF Group Slide 21
SKF technology platforms
Seals
© SKF Group Slide 22
SKF technology platforms
Mechatronic
© SKF Group Slide 23
SKF technology platforms
Lubrication systems
© SKF Group Slide 24
SKF technology platforms
Service
© SKF Group Slide 25
Acquisition 2003-2013Identifying gaps and opportunities in all platforms
Products
Technologies
Geographies
Industries
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)
GBC (2012)
BVI (2013)
Kaydon (2013)
SealsBearingsand units
Lubrication systemsServices Mechatronics
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 27
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 28
Golden Mousetrap Awards
Best Product of the Yearfor Electronics & Test, Editors of Design News
© SKF Group 15 April 2014
SKF Group – Q1 2014
Slide 29
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 30
% changey-o-y
2012 2013 2014
© SKF Group 15 April 2014
Organic sales growth in local currency
Slide 31
% 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 32
Europe4%
Asia/Pacific11%
Middle East& Africa
21%
LatinAmerica
4%
NorthAmerica
3%
© SKF Group 15 April 2014
Components in net sales
Slide 33
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 34
SEKm
2012 2013 2014
© SKF Group 15 April 2014
Operating profit excluding one-time items
Slide 35
SEKm
2012 2013 2014
© SKF Group 15 April 2014
Operating margin
Slide 36
%
5.8
11.3
12.0* 11.9*
One-time items
* Excluding one-time items
12.1
11.4*
© SKF Group 15 April 2014Slide 37
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 38
%
2012 2013 2014
© SKF Group 15 April 2014
Return on capital employed
Slide 39
%
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 40
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 41
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 42
• 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 43
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 44
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 45
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 46
Sequential trend for Q2 2014
© SKF Group 15 April 2014
SKF sequential volume trend Q2 2014, Industries
Slide 47
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 48
• 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 49
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 50
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”.
© SKF Group 15 October 2013Slide 51
© SKF Group 15 October 2013Slide 52
Welcome to the IR website – www.skf.com > Investors
Investor Relations function:
Head:Marita BjörkTel: +46 31 3371994Mobile: +46 705 181994E-mail: marita.bjork@skf.com
Investor Relations:Anna AlteTel: +46 31 3371988Mobile: +46 705 271988E-mail: anna.alte@skf.com
Event and road shows coordinator:Helena KarlssonTel: +46 31 3372142Mobile: +46 705 642142E-mail: helena.karlsson@skf.com