SKF First-quarter results 2015 · · 2015-04-17SKF First-quarter results 2015 Alrik Danielson,...

1

SKF First-quarter results 2015 Alrik Danielson, President and CEO

17 April 2015

© SKF Group 17 April 2015

2

Examples of new business in Q1 2015

• Chongqing General Industry (Group) Co and JiangSu High-speed permanent magnetic

Jin Tong Ling Fluid Machinery Technology Co, China blower solutions

• Volvo Car Corporation, Sweden Wheel hub bearing units with

low friction grease

• Autopartes NAPA, Mexico Agreement to market SKF’s

product range

• Citroen C4 Cactus, Peugeot 2008 and Fiat 500X Products and solutions

Slide 2


3

Highlights

Slide 3

• SKF has worked closely with Scuderia Ferrari to produce bearing sets manufactured from specially developed tool steel

• Re-signed the contract as a Ducati Corse Official Technical partner

• Achieved the energy management ISO 50001 certification on a global scale

• SKF will invest SEK 190 million to modernize its spherical roller bearing factory in Gothenburg, Sweden


4

SKF Generalized Bearing Life Model

Surface vs sub-surface failure modes

Slide 4

internal geometry

load rating

limiting speed

steel composition

surface finish

heat treatment

contamination resistance

wear resistance

coatings

lubrication

reduced vibration

longer service life

lower noise

reduced friction

reduced vibration

corrosion resistance

Slide 4


5

Slide 5

Innovations at Hannover Fair

• Two new oil-free bearing solutions for centrifugal compressors in chillers

• A solution to improve the reliability, safety and performance

of jack-up gearboxes used in the offshore oil and gas

industry and in the renewable energy industry

• A new shaft alignment tool, specifically designed for usage

with smartphones or tablets

• A new magnetic bearing control cabinet for turbo-machinery,

for onshore, offshore and subsea turbo-machinery

• SKF Enlight, combines a powerful new mobile app with a special

Bluetooth-enabled sensor

• SKF Data Collect, a cloud-based solution to record and manage data


6

Slide 6

Construction of a large-size bearing test centre in Schweinfurt, Germany

The test center will have two large size test rigs, one for wind turbines

and one for other industries. The investment will total SEK 360 million,

and is expected to be completed during the first half of 2017.


7

Christian Johansson, new Senior Vice President and CFO

Slide 7

• Bachelor of Science in Business

Administration, Stockholm University

• Currently CFO at Gunnebo AB

• Christian has solid executive experience

managing global business services.

Before joining Gunnebo:

-Vice President Region Americas and EMEA

for Volvo Business Services

-SVP and CFO for Volvo Trucks

-Regional Director, Central Eastern Europe

within ABB Service World Wide.

• Christian will start his new position in

SKF no later than October 2015.


8

SKF Group – Q1 2015

Slide 8

Financial performance (SEKm) 2015 2014

Net sales 19 454 16 734

Operating profit 1 721 2 024

Operating margin, % 8.8 12.1

Operating margin excl. one-time items, % 12.2 11.4

Profit before taxes 1 592 1 787

Basic earnings per share, SEK 2.46 2.72

Cash flow after investments before financing 988 -63*

Organic sales change y-o-y:

SKF Group 1.4% Europe 1.0%

Industrial Market 1.8% North America -2.4%

Automotive Market 0.6% Asia 5.6%

Specialty Business 0.7% Latin America 0.4%

Middle East and Africa 14.2%

Manufacturing was higher y-o-y and compared to last year.

* Previously published cash flow information is restated


9

Organic sales growth in local currency

Slide 9

-10

-8

-6

-4

-2

0

2

4

6

8

% change

y-o-y

2013 2014 2015


10

Organic sales growth in local currency

Slide 10

-4

-2

0

2

4

6

2013 2014 Q1 2015

% y-o-y

Structure in 2013: 2.5%

Structure in 2014: 3.7%

Structure in 2015: 0%

1.4%

3.9%

-0.7%


11 Sales development by geography Organic growth in local currency Q1 2015 vs Q1 2014

Slide 11

Europe

1.0%

Asia/Pacific

5.6%

Middle East

& Africa

14.2%

Latin

America

0.4%

North

America

-2.4%


12

Components in net sales

Slide 12

2013 2014 2015

Percent y-o-y Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Organic -8.0 -2.2 2.0 6.9 5.8 4.6 3.2 2.8 1.4

Structure 1.5 2.6 1.1 4.8 4.7 3.8 5.4 0.9 0

Sales in local

currency -6.5 0.4 3.1 11.7 10.5 8.4 8.6 3.7 1.4

Currency -4.0 -5.0 -2.2 -2.1 -0.1 1.1 5.3 8.9 14.9

Net sales -10.5 -4.6 0.9 9.6 10.4 9.5 13.9 12.6 16.3


13

Operating profit as reported

Slide 13

-2 000

-1 500

-1 000

-500

0

500

1 000

1 500

2 000

2 500

SEKm

2013 2014 2015


14

Operating profit excluding one-time items

Slide 14

0

500

1000

1500

2000

2500

SEKm

2013 2014 2015


15

Operating margin

Slide 15

0

2

4

6

8

10

12

14

16

2013 2014 Q1 2015

%

5.8

11.9*

One-time items

* Excluding one-time items

8.8

12.2* 11.7*

11.0


16

Slide 16

-3

0

3

6

9

12

15

18

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Specialty Business*

Automotive Market

%

2012 2013 2014

Operating margin per business area as reported

Industrial Market

* Q4 2013, impacted by cost related to Kaydon acquisition


17

Slide 17

-3

0

3

6

9

12

15

18

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Specialty Business

Automotive Market

%

2012 2013 2014

Operating margin per business area excl. one-time items

Industrial Market


18

Operating profit bridge, Q1 2015

Slide 18

0

500

1000

1500

2000

2500

-1 547

-700

+1 721

+120 0

+450 -173

SEKm

Q1 2014 Q1 2015 One-time

items at

2014

exchange

rates

Acquisitions/

divestments

Currency

impact

Other* Organic sales

growth in local

currencies

* Includes general inflation, manufacturing and purchasing

impacts, IT project and running costs, and R&D..

+2 024 0

Savings

from

restructuring

programme


19

Restructuring programme

• Main activities:

- merging the two industrial businesses

- streamlining of supporting country organisations in all main countries

- general staff optimization and productivity improvements

• Reduction of annual cost by SEK 1.2 billion by the end of 2016.

Total cost for the programme around SEK 1.4 billion, covering 1 500 people.

Major part of the programme expected to be implemented within 2015

• After first quarter 2015 around 40% of planned activities are in progress

Q1 2015

Cost, SEKm 535

People affected 575

Cost savings in Q1 -

Annual cost savings, SEKm: 460 effective beginning 2016

Slide 19


20

Net working capital as % of annual sales

Slide 20

25

26

27

28

29

30

31

32

33

34

35

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

%

2013 2014 2015

Target: 27%


21

Return on capital employed

Slide 21

0

5

10

15

20

2013 2014 YTD 2015

%

12.6

7.5

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.

14.5* 14.8*

13.9


22

-7 000

-6 000

-5 000

-4 000

-3 000

-2 000

-1 000

0

1 000

2 000

3 000

Cash flow, after investments before financing*

Slide 22

SEKm

2013 2014 2015

Excl. acq. and div.: 1) Q1 2013 SEK -69 million

2) Q3 2013 SEK 871 million

3) Q4 2013 SEK 1 122 million

Excl. EU payment 4) Q2 2014 SEK 1 423 million

3)

4)

2)

1)

* 2013 and 2014 are restated


23

Net debt

Slide 23

-35 000

-30 000

-25 000

-20 000

-15 000

-10 000

-5 000

0

SEKm

2013 2014 2015

AB SKF,

dividend paid (SEKm):

2013 Q2 2 530

2014 Q2 2 530

Cash out from major acquisitions (SEKm):

2013 Q1 823

2013 Q4 7 900

Net debt: Loans and net provisions for post-employment benefits less short-term financial assets excluding derivatives.

EU payment (SEKm):

2014 Q2 2 825


24

Debt structure, maturity years

Slide 24

0

100

200

300

400

500

600

700

800

900

2015 2016 2017 2018 2019 2020 2021

EURm

• Available credit facilities:

EUR 500 million 2019

SEK 3 000 million 2018

EUR 150 million 2017

• No financial covenants nor material

adverse change clause

200

100 100 110

500 500

850


25

April 2015: SKF demand outlook Q2 2015

Slide 25

Demand compared to the second quarter 2014

The demand for SKF’s products and services is expected to be relatively

unchanged for the Group and for Europe. For Asia it is expected to be

higher and for North and Latin America slightly lower. Per business area, for

both Industrial Market and Automotive Market it is expected to be relatively

unchanged, and for Specialty Business to be slightly higher.

Demand compared to the first quarter 2015

The demand for SKF’s products and services is expected to be relatively

unchanged for the Group, Europe and North America. For Asia it is

expected to be higher and for Latin America slightly lower. Per business

area, for both Industrial Market and Automotive Market it is expected to be

relatively unchanged, and for Specialty Business to be slightly higher.

Manufacturing

Manufacturing is expected to be relatively unchanged year over year and

compared to the first quarter.


26

Guidance for 2015*

Slide 26

Q2 2015:

• Financial net: around SEK -230 million

• Currency impact on operating profit vs 2014

Q2: SEK +800 million

2015:

• Tax level: below 30% for 2015

• Additions to PPE: around SEK 1 700 million for 2015

* Guidance is approximate and based on current assumptions and exchange rates.


27

Cautionary statement

Slide 27

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 First-quarter results 2015 · · 2015-04-17SKF First-quarter results 2015 Alrik Danielson,...

Documents

Transcript of SKF First-quarter results 2015 · · 2015-04-17SKF First-quarter results 2015 Alrik Danielson,...