The SKF Groupinvestor.skf.com/sites/default/files/report/skf_q1_2013_presentation_… · A truly...

The SKF Group

SKF Investor Relations

April 2013

© SKF Group 18 April 2013Slide 1

SKF -

A truly global company

Established: 1907

Sales 2012: SEK 64,575 million

Employees 2012: 46,775

Production sites: around 140 in 28 countries

SKF presence: in over 130 countries

Distributors/dealers:

15,000 locations

Global certificates:

ISO 14001OHSAS 18001 certification


Net sales by customer segment* 2012

* Previously

published

shares

have

been

restated

in February

2013

Aerospace

Railway

Off-highway

Trucks

Two-wheelers and Electrical

Industrial, general

Cars and light trucks

Industrial, heavy and

special

Vehicle Service Market

Industrial distribution

Energy

6%

4%

4%

5%

12%9%

6%

10%

29%

2%

6%

4%4%

5%

12%9%

6%

10%

29%

2%

13%


Net

sales

2012, Geographical

distribution*

Asia/Pacific

Latin America

North America

Middle

East & Africa

Western Europe

Eastern Europe

Sweden

7%

3%

35%

5%

3%

24%23%

* Previously

published

shares

have

been

restated

in February

2013


7

35

3

8 9

1

8 710

6

0

24

35

23

26

7

12

37

30

39

North America

Latin America

Western

Europe

Eastern Europe

Middle East and Africa

Asia/Pacific

Net salesAverage number of employees Tangible asset

% of group total SKF 2012

(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)


Operating margin

0

2

4

6

8

10

12

14

16

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

%


Return on capital employed

0

5

10

15

20

25

30

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

%


Growth in local currencies

-25

-20

-15

-10

-5

0

5

10

15

20

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

%


To equip the worldwith SKF knowledge

SKF Group Vision


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


OpenedPlanned

Tianjin

TaiwanShanghai

Pune

Istanbul

JohannesburgBrasil

“IXION”

Colombia

Moscow

HoustonMonterreyMexico

Edmonton

Nordic (Gothenburg)

UK

GermanyItaly

France

Perth

Rumania

Cleveland

21 SKF Solution Factories 2012


SKF Solution Factory

Segments & Application Knowledge Platforms

& Technology

Competence

CapabilitiesSealing

Solutions Mechanical

Services Lubrication

Solutions

Training

CenterBearing Service Workshop Condition

Monitoring

Services Remote

Monitoring

CenterMaPro/CoMo

Product

Repair A & MC

SKFSolution Factory


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


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


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’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 energy efficient (E2) bearings

PeruIndustria

Textil

Piura•

60,000 E2 deep groove ball bearing

IndiaSangam

GroupChinaConveyors used in mining industry. 130,000 E2 bearing

IndonesiaLeuwijaya

Textile•

30,000 E2 bearing•

potential 325,000 for 3 different customers

© SKF Group 18 April 2013Slide 17 18 April, 2013Slide 17

What is SKF knowledge?


SKF technology platforms

Bearingsand units



Seals



Mechatronics



Lubrication systems



Services


Acquisition

2003-2013

Identifying

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)

SealsBearingsand units

Lubrication systemsServices Mechatronics

BVI

(2013)

SKF First-quarter results 2013Tom Johnstone, President and CEO


Highlights

Q1 2013

Henrik Lange Rakesh

Makhija Tore Bertilsson

Organizational

changes•

Henrik Lange, President SKF Industrial Market, Strategic

Industries was

appointed

Executive

Vice President and CFO succeeding

Tore Bertilsson who is retiring

from SKF.•

Rakesh

Makhija, was

appointed

President Industrial Market, Strategic

Industries.•

Tore Bertilsson continues

as Executive

Vice President, up until

his retirement

later this year.

Acquisitions

and divestments•

completed

acquisition

of German-based

ship

components

provider

Blohm + Voss Industries (BVI)

• agreement

signed

to divest

the aerospace

metallic rods

business

Programme

to improve

efficiency, reduce

cost

and strengthen

profitable

growth

continues• one-off

costs

of around

SEK 250 million• annual

savings

of around

SEK 100 million


Highlights

Q1 2013

Some

examples

of new business•

with Pratt & Whitney, to supply engine main shaft bearings•

with Nordex

for delivery of mainshaft

bearings and lubrication systems•

for automated lubrication systems installed in the MSC Home Terminal cranes in Belgium’s Port of Antwerp

•

with a steel

and mining

company

for industrial

bearings

and units, seals, mechatronics, and services

•

with Öhlins Racing AB for SKF’s

integrated

monotube

seal•

with the Chinese

customer

Great Wall for hub

bearing

units

New facilities

in India•

a new lubrication

systems laboratory

in SKF Global Technical

Centre•

a new manufacturing

unit

in Pune for producing

housings

for bearings

SKF’s

factory

in Ahmedabad, India

was

awarded

the coveted

LEED Gold certification.

SKF was

included

in the FTSE4Good Index Series for the 13th successive year.


SKF InsightTM

-

The brain, as well

as the heart of rotating

machinery

SKF InsightTM

–

internally

powered

sensors and data acquisition

electronics sensing

directly

on the bearing

• Control over the life cycle

of the machinery

• Wirelessly

communication

of the condition

of the bearing

and machinery

at any

time• Lower

total costs

with higher

reliability

and machinery

uptime

Pilot projects

in progress within

wind

energy, railways

and metals

industries.


New products

included

in the SKF BeyondZero

portfolio

SKF Extended

Life spherical

plain

bearing

An energy efficient high speed permanent magnet solution

SKF extreme temperature

bearings


SKF Group –

Q1 2013

Financial performance

2013

2012Net sales, SEKm

15,152

16,931Operating profit, SEKm

1,480 2,136Operating margin, %

9.8

12.6Operating margin excl. restructuring, %

11.4

12.6Profit before tax, SEKm

1,237 1,956Cash flow, SEKm

-892 696Cash flow excl. acquisitions, SEKm

-69

715

Organic sales growth in local currency:SKF Group: -8.0%Industrial market, Strategic Industries:

-12.2% Regional Sales

and Service:

-7.7% Automotive:

-3.7%

Key points Sales volumes down by 8.7% y-o-yManufacturing lower y-o-yInventories 20.3% of sales

Europe:

-10%North America:

-10%Asia:

-7%Latin America:

8%


Organic sales growth in local currency

-10

-5

0

5

10

15

20

25

20132011 2012

% change y-o-y


Europe

-10%

Asia/Pacific -7%

Latin America

8%Middle East

& Africa -6%

NorthAmerica

-10%

Growth

development

by geography

Organic

growth

in local

currency

Q1 2013 vs Q1 2012


Components in net sales

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

20.1 12.6 6.2 0.0 -0.8 -2.8 -5.0 -5.9 -8.7

5.0 4.4 5.1 4.8 -0.1 0.0 0.8 1.0 1.5

1.3 1.6 2.0 2.8 1.9 2.0 0.5 0.7 0.7

26.4 18.6 13.3 7.6 1.0 -0.8 -3.7 -4.2 -6.5

-10.8 -12.2 -6.3 -2.1 0.4 3.6 -2.7 -3.6 -4.0

15.6 6.4 7.0 5.5 1.4 2.8 -6.4 -7.8 -10.5

Percent y-o-y

Volume

Structure

Price/mix

Sales in local currency

Currency

Net sales

2011 2012 2013


-10

-5

0

5

10

15

20

2011 2012 Q1 2013

Growth in local currency, including structure

% y-o-y

Structure in 2011:

4.8%Structure in 2012:

0.4%Structure in Q1 2013:

1.5%

-6.5%

16.3%

-2.1%


Operating profit

0

300

600

900

1 200

1 500

1 800

2 100

2 400

2 700

SEKm

2011One-time

items

2012 2013


%

0

2

4

6

8

10

12

14

16

2011

One-time

items

2012 2013

Operating margin


0

2

4

6

8

10

12

14

16

2011 2012 Q1 2013

%

One-time

items* Excluding

one-time

items

14.7*

11.4*

9.8

14.5 12.0*

Operating margin

11.4


-3

0

3

6

9

12

15

18

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Operating margin per business area

Strategic Industries

Regional Sales and Service

Automotive

%

2011 2012 2013

Excluding one-off items

(eg. restructuring, impairments, capital gains)


18

19

20

21

22

23

24

25

Inventories as % of annual sales

%

2011 2012 2013


Return on capital employed

0

5

10

15

20

25

30

2011 2012 Q1 2013

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.

%

16.214.5

23.617.2* 16.0*

23.9*

One-off

costs* Excluding

one-off

costs


Cash flow, after investments before financing

-1 000

-500

0

500

1 000

1 500

2 000

2 500SEKm

2011 2012 2013

*

SEK 1,707 million,

excluding

acquisitions

and divestments.**

SEK -69 million, excluding

acquisitions

and divestments.

*

**


Net debt

-20 000

-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):2011 Q2

2,2772012 Q2

2,504

2011 2012 2013

Net debt:

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

Cash out fromacquisitions (SEKm): 2012 Q3

8292013 Q1

823


0

100

200

300

400

500

600

2013 2014 2015 2016 2017 2018 2019

EURm

265

100100100

500

110

500

• Available

credit

facilities:EUR 500 million 2017 SEK 3,000 million 2017

•

No financial

covenants

nor

material adverse

change

clause

Debt structure,

maturity years


SEKm 2013 2012

Net sales 15,152 16,931

Operating profit 1,480 2,136

Operating margin, % 9,8 12.6

Operating margin excl. one-offs, % 11.4 12.6

Profit before taxes 1,237 1,956

Net profit 818 1,326

Basic earnings per share, SEK 1.74 2.81

Cash flow, after investments before financing -892* 696

First quarter 2013

*

excluding acquisitions and divestments, SEK -69 million


April 2013:

SKF demand outlook Q2 2013

Demand compared to the second quarter 2012The demand for SKF’s

products and services is expected to be lower for the Group and for Europe. It is expected to be relatively unchanged for Asia and North America and slightly higher for Latin America. The demand is expected to be lower for Industrial Market, Strategic Industries and Industrial Market Regional, Sales and Service and slightly lower for SKF Automotive.

Demand compared to the first quarter 2013The demand for SKF’s

products and services is expected to be relatively unchanged for the Group, for Europe, Asia and North America. It is expected to be slightly higher for Latin America. The demand is expected to be relatively unchanged for the business areas.

ManufacturingManufacturing is expected to be lower year over year and relatively unchanged compared to the first quarter.


Share

of net

sales*2012

Europe 43%

Asia

Pacific 24%

North America 23%

Latin America 7%

Total

Q2 2013 vs Q2 2012

--

=

=

+

--

Sequential

trend for Q2 2013

SKF demand

outlook

Q2 2013, regions

* Previously published percent of sales have been restated.


Sequential

trend for Q2 2013

Share

of net

sales2012

Strategic

Industries 31%

Regional Sales

and Service 39%

Automotive 27%

Total

Q2 2013 vs Q2 2012

--

--

-

--

SKF demand

outlook

Q2 2013, business areas


6%

6%

2%

29%

13%

13%

12%

10%

5%

4%

Aerospace

Energy

Two-wheelers

and Electrical

Industrial distribution

Industrial, heavy, special and off-highwayCars and light

vehicles

Industrial, general

Vehicle

service market

Trucks

Railway

Share

of net

sales

2012*

SKF sequential

volume

trend Q2 2013, main

segments

* Previously published percent of sales have been restated.


Guidance for the second quarter 2013

•

Tax level: around 30%

•

Financial net for the second quarter:

Around SEK -200 million

•

Exchange rates on operating profit versus 2012

Q2: SEK -200 millionFull year: SEK -550 million

•

Additions to PPE: Around SEK 1.7 billion for 2013

Guidance is approximate and based on current assumptionsand exchange rates


Key focus areas 2013

• Managing the uncertain and different demand environment-

Profit and cash flow

•

Initiatives and actions to support long-term financial targets

-

New factories in Mysore and Bengaluru

in India

-

New warehouse in Shanghai, China

-

SKF Campus in Shanghai, China, including:

‣

New factory for automotive

‣

Global Technical Centre China

‣

SKF Solution Factory

‣

SKF College

-

Integration of new acquisitions, GBC and BVI

-

Cost reduction and efficiency programme

-

New IT systems

•

Business Excellence and competence development

One SKF and SKF Care as guiding lights


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”.


Welcome

to the IR website

–

www.skf.com

> Investors

Investor Relations function:Head:Marita

BjörkTel: +46 31 3371994Mobile: +46 705 181994E-mail: [email protected]

Investor Relations:Anna AlteTel: +46 31 3371988Mobile: +46 705 271988E-mail: [email protected]

Event coordinator and assistant:Helena KarlssonTel: +46 31 3372142Mobile: +46 705 642142E-mail: [email protected]

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