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2006-04-25 The SKF Group First-quarter result, 2006 Tom Johnstone, President and CEO.
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Transcript of 2006-04-25 The SKF Group First-quarter result, 2006 Tom Johnstone, President and CEO.
2006-04-25
The SKF Group
First-quarter result, 2006Tom Johnstone, President and CEO
3
2006-04-25
Major events 2006
• It was announced that Rautaruukki, SKF and Wärtsilä are exploring strategic options for the ownership of Ovako.
• Macrotech Polyseal Inc. was acquired, a leader in fluid power seals.Yearly sales, approximately SEK 250 million. 397 employees.
• A memorandum of understanding was signed to buy 100% of the shares of SNFA, a leading french manufacturer of bearings for aerospace and machine tool applications. Sales in 2004, 73,1 million euros. Approximately 700 employees.
• SKF received an order from Alstom for approximately 1 500 axleboxes equipped with compact tapered roller bearing units which incorporate SKF sensors to monitor the bearing temperature as well as speed and train positioning.
4
2006-04-25
MSEK 2006 2005
Net sales 13,289 11,871
Operating profit 1,609 1,207
Operating margin 12.1% 10.2%
Profit before taxes 1,599 1,179
Net profit 1,138 816
Basic earnings per share, SEK 2.45 1.73
Cash flow after investments before
financing 184 144
First quarter 2006
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2006-04-25
Operating margin
%
2003 2004
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2005 2006
6
2006-04-25
Operating marginexcl. income from jointly controlled company OY Ovako Ab
%
2003 2004
0
1
2
3
4
5
6
7
8
9
10
11
12
13
2005 2006
7
2006-04-25
0
2
4
6
8
10
12
14
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Operating margin per division
Industrial
Service
Automotive
%
2004 2005 2006
8
2006-04-25
Sales in local currencies (excl. structural changes)
0
2
4
6
8
10
12
14
16
% change y-o-y
2003 2004 2005 2006
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2006-04-25
Net sales development per quarter
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
4.8 8.9 9.6 10.2 8.3 7.6 5.1 1.3 6.0
0.1 0.0 2.2 2.0 2.3 0.2 -2.9 -3.7 -4.9
1.1 1.8 2.3 4.2 3.6 3.6 2.1 2.6 2.9
6.0 10.7 14.1 16.4 14.2 11.4 4.3 0.2 4.0
-4.6 -2.3 -2.9 -3.8 -3.2 0.2 3.2 9.4 8.0
1.4 8.4 11.2 12.6 11.0 11.6 7.5 9.6 12.0
Percent y-o-y
2004
Volume
Structure
Price / Mix
Sales in local currency Currency
Net sales
2005 2006
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Growth development / local currency6% annual growth rate (whereof 4% organic)
% Y-o-Y
0
2
4
6
8
10
12
2003 2004 2005 2006 Q1
Acquisitions / DivestmentsOrganic growth
(Organic 8.9, Net acq/div -4,9)
7.3
5.2
11.8
4.0
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2006-04-25
Cash flow, after investments before financing
0
200
400
600
800
1 000
1 200
1 400
1 600MSEK
2003 2004 2005 2006
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2006-04-25
Net cash
-1 500
-500
500
1 500
2 500
3 500
4 500
5 500
MSEK
2003
Dividend paid:
2003 Q2, MSEK 911
2004 Q2, MSEK 1 138
2005 Q2, MSEK 1 366Proposal: 2006 Q2, MSEK 1 821
2004 Q2, Pension: MSEK 3 100
2005 Q2, Redemption, MSEK 2 846
2004
(Short-term financial assets - loans)
2005 2006
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Inventories as % of annual sales
%
2003 2004
18
19
20
21
22
23
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2005
Target, end 2007 - 18%
2006
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2006-04-25
April 2006: Outlook for the second quarter 2006
The market demand for SKF's products and services in the second quarter of 2006 is expected to be slightly higher compared to the first quarter 2006. The demand is expected to be slightly higher in Europe and North America, significantly higher in Asia and to remain on a high level in Latin America.
The manufacturing level for the second quarter of 2006 will be unchanged compared to the first quarter 2006.
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2006-04-25
Volume development
Daily volume trend for: Q1 2006 Q2 2006
Net sales2005
Europe55%
North America
20%
Asia Pacific17%
Latin America
5%
Total
Outlook Q22006 vs 2005
=/+
+
+++
++
+
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2006-04-25
SKF Group targets
• 10% Operating margin level
• 6% Growth per annum
• 20% ROCE
• 18% Inventory / sales
2006
2007
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2006-04-25
Guidance 2006
• Underlying tax level: around 32%
• Financial net, annual level: approximately MSEK 200
• Currency, based on current assumptions and exchange rates: a positive MSEK 150 for Q2, 2006 and a positive MSEK 450 for the year
• Additions to property, plant and equipment: in line with depreciations
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2006-04-25
Acquisition - Macrotech Polyseal Inc.
Rod sealsPiston sealsBuffer seals for
large rod applications
Piston seals for rotary manifold
Rod wipers for linear actuators
• Macrotech is a leader in fluid power seals for industrial customers in the US market
• SKF acquired 51% of the shares in April and will, as part of the agreement acquire the remaining 49% within three years
• Yearly sales: approximately USD 33 million
• Factories in Salt Lake City, USA
• 397 employees
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2006-04-25
The new Pendolino train from Alstom
1,500 axleboxes equipped with compact tapered roller bearing units and SKF sensors to monitor temperature, speed and train positioning.
The new Pendolino generation is the fourth generation of trains based on tilting technology, which are equipped with SKF bearing solutions.
20
2006-04-25
SKF electromechanical solution
NIMAK, a German spot welding equipmentmanufacturer, will be using the SKFelectromechanical solution in theirwelding guns.
21
2006-04-25
Spindle service, some recent events
• SKF signed a cooperation agreement covering machine tool spindle services with the Japanese company Niigata Machine Techno Co Ltd. . This means that SKF will provide spindle services for Niigata Machine Techno's customers.
• SKF signed a global service agreement with Alteams Oy in Finland for the reconditioning of machine tool spindles used in their production locations in Finland, Sweden, China, and Russia.
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2006-04-25
Cautionary statement
This report 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 20-F report on file with the SEC (United States Securities and Exchange Commission) under "Forward-Looking Statements" and "Risk Factors".