Skf q4 2011_presentation
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Transcript of Skf q4 2011_presentation
26 January 2012
SKF Year-end results 2011
Tom Johnstone, President and CEO
26 January 2012
26 January 2012
Key focus areas ahead 2011
• Profit and cash flow-
manage currency and material headwinds
• Manufacturing and suppliers to support demand
• Growing segments and geographies
• Initiatives and actions to support long-term targets
• Integration of Lincoln
• Business Excellence and competence development
One SKF and SKF Care as guiding lights
Slide
from January
2011
26 January 2012
2011 – Customer
activites
•
A contract with China National Heavy Duty Truck Group for
SKF truck hub bearing units, tapered roller bearings and seals
•
A contract with Goldwind
for SKF Nautilus bearings
•
An order for bearings to the China Railway Materials
Commercial Corporation for installation in 160 km/h
passenger coaches.
•
A contract with MAN Diesel Turbo for magnetic bearings and related electronic components
.
•
A three-year strategic partnership agreement with Sandvik
Mining
and Construction, including a new global logistic model
•
A strategic partnership agreement with CITIC Pacific Special Steel Co., Ltd,
including cooperating in purchasing, new product and technology development
• SKF provided SEK 3.0 billion in verified savings for customers
26 January 2012
2011 – Investments, some
examples
• The second bearing factory in Dalian, China was inaugurated
• Two new factories under construction in Jinan, China and in Mysore, India
• A new regional distribution centre in Montevideo, Uruguay was opened
• A global technical
centre
in Bengaluru, India
was
opened
• An extention
to the factory
in Cajamar, Brazil
Dalian, China Montevideo, Uruguay
Bengaluru, India
26 January 2012
2011 – some
highlights
• Integration of Lincoln, going according to plan
• Shared SKF knowledge at major SKF Asset management conferences and Distributor conventions
• Awarded the 120,000 certificate from the SKF Distributor College
• Established SKF University Technology Centres:
-with Chalmers University of Technology, focus on sustainability and environment
-with Luleå
University of Technology, focus on condition monitoring and
asset management
• Was selected as a member of:
Dow Jones’
Sustainability World indexes, for the 12th successive year
FTSE4Good Index Series, for the 11th successive year
26 January 2012
Examples of new product
launched
in 2011
SKF Static motor analyzer
SKF Shaft Alignment system
SKF split truck hub unit
SKF Idler sound monitor
SKF Solar Linear actuators
SKF Thermal camera
A range of reinforced all-rubber radial shaft seals
SKF low weight hub bearing
unit
SKF Microlog
inspector
SKF StopGo
SKF’s low friction fork seals
SKF fryer bearing 2011: 325 first filings
of patent applications
SKF DryLubbearings
Upgraded range of SKF Explorer
spherical roller bearings
26 January 2012
Key focus areas ahead 2011
• Profit and cash flow-
manage currency and material headwinds
• Manufacturing and suppliers to support demand
• Growing segments and geographies
• Initiatives and actions to support long-term targets
• Integration of Lincoln
• Business Excellence and competence development
One SKF and SKF Care as guiding lights
26 January 2012
SKF Group Q4 2011
Financial performance 2011
2010Net sales
16,257
15,409Operating profit,
SEKm
2, 006
2,202Operating margin, %
12.3
14.3Profit before tax, SEKm
1,823
2,048Cash flow, SEKm
853 -5,966 (excl. acq. of Lincoln SEK 798m)
Organic sales growth in local currency:SKF Group: +2.8%Europe:
+0.5%
Industrial Division:
+3.5% North America:
+5.6%
Service Division:
+7.6%Asia:
+0.8%
Automotive Division:
-4.4%Latin America:
+11.0%
Key points Sales were lower sequentially Q4 vs. Q3Manufacturing was lower both sequentially and y.o.y.Inventories were reduced to 21.4% of sales
26 January 2012
SKF Group full-year 2011
Financial performance
2011
2010Net sales
66,216
61,029Operating profit,
SEKm
9,612
8,452Operating margin, %
14.5
13.8Profit before tax, SEKm
8,932
7,549Cash flow, SEKm
3,848 -2,838 (excl. acq. of Lincoln SEK 3,926m)
Organic sales growth in local currency:SKF Group: +11.5%Europe:
+11.4%
Industrial Division:
+12.5% North America:
+13.8%
Service Division:
+14.6%Asia:
+10.7%
Automotive Division:
6.1%Latin America:
+10.4%
Key points Invested in our initiatives
Stepped up R&D
Increased front-line resources
26 January 2012
Organic sales growth in local currency
-35-30-25-20-15-10-505
10152025
% change y-o-y
2009 2010 2011
26 January 2012
Sales volume
-35-30-25-20-15-10-505
10152025
% change y-o-y
2009 2010 2011
26 January 2012
Europe
+0.5%
Asia/Pacific +0.8%
Latin America +11.0%
Middle East & Africa +19.9%
North America +5.6%
Growth development
by geography
Organic
growth
in local
currency
Q4 2011 vs Q4 2010
26 January 2012
Europe
+11.4%
Asia/Pacific +10.7%
Latin America +10.4%
Middle East & Africa +8.8%
North America +13.8%
Growth development
by geography
Organic
growth
in local
currency
2011 vs 2010
26 January 2012
-25
-20
-15
-10
-5
0
5
10
15
20
2009 2010 2011
Growth in local currency
% y-o-y
Acquisitions/DivestmentsOrganic growth
-19.0% 14.2% 16.3%
Long-term target: 8% per annum
Total growth
4.8%
11.5%
0.0%
14.2%
1.0%
-20.0%
26 January 2012
Components in net sales
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
-26.9 -30.8 -24.9 -14.1 5.3 16.6 19.0 16.3 20.1 12.6 6.2 0.0
1.4 1.1 1.2 0.4 0.0 0.0 0.0 0.0 5.0 4.4 5.1 4.8
7.1 5.6 3.7 0.3 -0.3 -0.5 0.3 0.9 1.3 1.6 2.0 2.8
-18.4 -24.1 -20.0 -13.4 5.0 16.1 19.3 17.2 26.4 18.6 13.3 7.6
13.6 12.2 6.6 -1.4 -7.7 -5.2 -3.2 -6.2 -10.8 -12.2 -6.3 -2.1
-4.8 -11.9 -13.4 -14.8 -2.7 10.9 16.1 11.0 15.6 6.4 7.0 5.5
Percent y-o-y
Volume
Structure
Price/mix
Sales in local currency
Currency
Net sales
2009 2010 2011
26 January 2012
Operating profit
0
300
600
900
1 200
1 500
1 800
2 100
2 400
2 700
SEKm
2009
Restructuring
and one-time
items
2010 2011
26 January 2012
Operating margin
%
0
2
4
6
8
10
12
14
16
2009
Restructuring
and one-time
items
2010
Long-term target
level: 15%
2011
26 January 2012
Operating margin
0
2
4
6
8
10
12
14
16
2009 2010 2011
%
5.7
8.0*
Restructuring
and one-time
items
* Excluding
restructuring
and one-time
items
14.7*
Long-term target
level: 15%
14.2*
13.8 14.5
26 January 2012
-12
-9
-6-3
0
3
6
912
15
18
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Operating margin per division
Industrial
Service
Automotive
%
Excluding one-off items
(eg. restructuring, impairments, capital gains)
2009 2010 2011
26 January 2012
SEKm 2011 2010
Net sales 16,257 15,409
Operating profit 2,006 2,202
Operating margin, % 12.3 14.3
Profit before taxes 1,823 2,048
Net profit 1,205 1,350
Basic earnings per share, SEK 2.57 2.87
Cash flow, after investments before financing 853 -5,966*
Fourth quarter 2011
* excluding the acquisition of Lincoln, SEK 798 million
26 January 2012
SEKm 2011 2010
Net sales 66,216 61,029
Operating profit 9,612 8,452
Operating margin, % 14.5 13.8
Profit before taxes 8,932 7,549
Net profit 6,224 5,296
Basic earnings per share, SEK 13.29 11.28
Cash flow, after investments before financing 3,848 -2,838*
Full year 2011
* excluding the acquisition of Lincoln, SEK 3,926 million
26 January 2012
18
19
20
21
22
23
24
25
Inventories as % of annual sales
% Long-term target level: 18%
2009 2010 2011
26 January 2012
Cash flow, after investments before financing
-6 000
-5 000
-4 000
-3 000
-2 000
-1 000
0
1 000
2 000
SEKm
2009 2010
Cash out fromacquisitions (SEKm): 2009
2412010
6,799
2011
* SEK 798 million,
excluding
the acquisition
of Lincoln Industrial.
*
26 January 2012
Return on capital employed
0
5
10
15
20
25
30
2009 2010 2011
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.
%
9.1
24.0
Long-term target: 27%
23.6
26 January 2012
Net 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
0
SEKm
AB SKF, dividend paid (SEKm):2009 Q2
1,5942010 Q2
1,5942011 Q2
2,277
2009 2010
Cash out fromacquisitions (SEKm): 2009
2412010
6,799
2011
26 January 2012
0
100
200
300
400
500
600
2012 2013 2014 2015 2016 2017 2018
Debt structure
Maturity years, EURm
396
100100
•
Credit
facilities:
EUR 500 million 2014 SEK 3,000 million 2017
•
No financial
covenants
nor
material adverse
change
clause
130
500
110
0
26 January 2012
Financial performance
0
2
4
6
8
10
12
14
2005 2006 2007 2008 2009 2010 2011
Operating margin%
10.8
12.9 12.2
5.7
02468
101214161820222426
2005 2006 2007 2008 2009 2010 2011
21.9 23.024.9 24.0
9.1
Return on capital employed%
24.014.5
23.612.6
13.8
26 January 2012
Investing in the future, 2005 - 2011
Organic
* 7 new factories (2 under development)
* Significant investment in existing operations
Acquisitions
* 18 acquisitions – all platforms
* Established a leading position in lubrication systems
R&D&E
* New energy efficient bearings and solutions* New market offers/products
~SEK 34 billion invested
26 January 2012
Dividend proposal
AB SKF’s Board proposes the Annual General Meeting
an increase in the dividend of 10%, giving a dividend
of SEK 5.50 (5.00) per share
26 January 2012
January 2012:
Outlook for the first quarter 2012
Demand
compared
to the first quarter
last yearThe demand
for SKF’s
products
and services is expected
to be slightly
lower
for the Group. It is expected
to be lower
in Europe, higher
in North America, relatively
unchanged
in Asia
and slightly
higher
in Latin America. The demand
is expected
to be relatively
unchanged
for the Industrial Division and the Service Division and significantly
lower
for the Automotive
Division.
Demand
compared
to the fourth
quarter
2011The demand
for SKF’s
products
and services is expected
to be relatively
unchanged
for the Group. It is expected
to be slightly
lower
for Europe, relatively
unchanged
for Asia
and Latin America, and higher
for North America. The demand
is expected
to be relatively
unchanged
for all divisions.
Manufacturing
levelThe manufacturing
level
is expected
to be significantly
lower
year
on year
and relatively
unchanged
compared
to the fourth
quarter.
26 January 2012
Demand outlook, regions
(based
on current
assumptions)
Sequential
trends for: Q4 2011 Q1 2012
Share
of net
sales2011
Europe 46%
Asia
Pacific 26%
North America 19%
Latin America 6%
Total
Q1 2012 vs Q1 2011
--
+/-
++
+
-
26 January 2012
Demand outlook, divisions
(based
on current
assumptions)
Sequential
trends for Q1 2012
Share
of net
sales2011
Industrial 36%
Service 35%
Automotive 27%
Total
Q1 2012 vs Q1 2011
+/-
+/-
---
-
26 January 2012
5%
26%
18%
13%
10%
10%
4%
3%
6%
5%
Trucks
Industrial distribution
Industrial OEM, General+Special
Cars
Vehicle
Service Market
Industrial OEM, Heavy
+ Off-highway
Railway
Electrical
and two-wheeler
Energy
Aerospace
Sequential volume
trend main
segments Q1 2012
(based
on current
assumptions)
Share
of net
sales
2011*
* excluding
Lincoln
26 January 2012
SKF today – managing the mixed demand picture
Activities underway•
The SKF 3C programme Customers:
-
increase customer and distributor contacts-
ensure a very good service level-
utilise opportunities from our platform/segment approach-
maintain strong commitment to R&D –
especially energy efficiency Cost:
-
strict cost control (which has no customer impact)-
review further permanent changes to the cost structureCash:
-
strong cash flow focus
•
Adjustment of manufacturing output to demand situationuse flexibility in the working hours through:
- time banks-
temporary workers-
government supported schemes-
short-time working agreements
•
Review of investment plan and timing
maintain investment plan for faster growing areas
•
Strong focus on faster growing regions and segments is maintained
26 January 2012
Guidance for the first quarter 2012
• Tax level: around 30%
•
Financial net for the first quarter:
Around SEK -175 million
•
Exchange rates on operating profit versus 2011
Q1: SEK 75 millionFull year: SEK 400 million
•
Additions to PPE: Around SEK 2.0 billion for 2012
Guidance is approximate and based on current assumptions and exchange rates
26 January 2012
Key focus areas ahead 2012
•
Managing the uncertain and different demand environment
-regions and segments
•
Profit and cash flow-
inventory management
• Initiatives and actions to support long-term financial targets
• Continue the integration of Lincoln
• Business Excellence and competence development
• Implement the new organization for the Industrial market
One SKF and SKF Care as guiding lights
26 January 2012
Main initiatives going
forward
•
Accelerate profitable growth
-
Platform/segment approach
-
New offerings,
green
-
Value based selling, DSP
-
Strengthen service business
-
Faster growing regions/segments-
Develop other brands
•
Reduce cost and eliminate waste
-
Business excellence
-
BCC manufacturing and sourcing
-
Integrated cost reduction, ICR, activities
•
Invest for growth
-
Sales and engineering resources
-
Factories in growth markets
- Solution factories
- R&D
-
Acquisitions
26 January 2012
Industry specialist and partner to many industries
Energy• Renewable • Traditional
Commercial transport• Aerospace• Railways• Off-highway
Special industrial machinery• Food & Beverage• Machine Tools• Marine• Healthcare• Medical • Printing • Textile
Heavy Industry• Metal-working• Mining• Pulp & Paper
General Industry• Industrial gearboxes• Fluid power• Material handling• Industrial Electrical
26 January 2012
What we
are aiming
for
IndustryOil platforms
Paper millsSteel plants
RailwaysMines
...
Industry ApplicationsGearboxesMachinesConveyers
PumpsFans...
OEM End userStrengthen aftermarket sales
Create OEM sales pull
The assetThe asset
life cyclelife cycle
26 January 2012
New organizational structure
to serve Industrial Market
Industrial Division
and
Service Division
Industrial Market, Strategic Industries
and
Industrial Market, Regional Sales and Service
26 January 2012
Targeted improvements
Step up to the next level of customer satisfaction and become a leading and respected industry player/specialist in each segment
Internal perspective
•
Increase
focus and industry
expertise in our
industrial
market
organisations
•
Ensure
Business Excellence, reduce
waste and drive profitability
through
a leaner
structure
Internal perspective
•
Become
faster, more clear
and simple
for
our
industrial
customers
to do business with
•
Offer products, solutions
and services supporting
industries’
total
life
cycle
Customer perspective
26 January 2012
Industrial market responsibility
Industrial Market
Strategic
Industries
Industrial Market
Regional Sales
and ServiceAerospace Metals
Renewable
Energy Pulp and Paper
Industrial Drives
(Industrial Electrical, Fluid, Transmission and Material Handling)
Mining and Cement
Off
Highway Food and Beverage
Traditional
Energy Marine
Precision
(Medical, Machine
Tool
and Automation)
Advanced
services and solutions
Railways SKF distributors
Lubrication Channel partners
26 January 2012
SKF’s new organization
effective
from 1 January
Three business areas:
• SKF Industrial Market, Strategic
Industries
• SKF Industrial Market, Regional Sales
and Service
• SKF Automotive
26 January 2012
Cautionary 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”.
26 January 2012
