The SKF Group SKF Investor Relations October 2012
Jan 05, 2016
The SKF Group
SKF Investor Relations
October 2012
© SKF Group April 20, 2023Slide 2
SKF - A truly global company
Established: 1907
Sales 2011: SEK 66,216 million
Employees 2011: 46,039
Production sites: around 130 in 32 countries
SKF presence: in over 130 countries
Distributors/dealers: 15,000 locations
Global certificates: ISO 14001
OHSAS 18001 certification
© SKF Group April 20, 2023Slide 3
5%
4%
4%
5%
15%8%
5%
10%
28%
3%
13%
Net sales by customer segment 2011
Aerospace
Railway
Off-highway
Trucks
Two-wheeler and Electrical
Industrial, general
Cars and light
vehicles
Industrial, heavy and
special
Vehicle Service Market
Industrial distribution
Energy
Previously published shares have been restated to reflect the new business structure from 2012.
© SKF Group April 20, 2023Slide 4
8
3 4
1
8 9
1
86
10
6
0
28
37
19
24
7
13
38
28
42
North America
Latin Americ
a
WesternEurope
Eastern Europe
Middle East and
Africa
Asia/Pacific
Net sales*
Average number of employees Tangible asset
% of group total SKF 2011
(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)
* Previously published shares have been restated to reflect customer delivery locations.
© SKF Group April 20, 2023Slide 5
Operating margin
%
© SKF Group April 20, 2023Slide 6
Return on capital employed
%
© SKF Group April 20, 2023Slide 7
Growth in local currencies
%
© SKF Group April 20, 2023Slide 8
To equip the worldwith SKF
knowledge
SKF Group Vision
© SKF Group April 20, 2023Slide 9
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 April 20, 2023Slide 10
Opened
Planned
Tianjin
Taiwan
Shanghai
Pune
Istanbul
JohannesburgBrasil “IXION”
Colombia
Moscow
HoustonMonterreyMexico
Edmonton
Nordic (Gothenburg)
UK
Germany
Italy
France
Perth
Rumania
Cleveland
20 SKF Solution Factories 2012
© SKF Group April 20, 2023Slide 11
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 April 20, 2023Slide 12
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 April 20, 2023Slide 13
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 April 20, 2023Slide 14
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 April 20, 2023Slide 15
SKF’s environmentally positive customer solutions
Designed for environmentDesigned 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 environmentApplied 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 April 20, 2023Slide 16
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
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What is SKF knowledge?
© SKF Group April 20, 2023Slide 18 20 April 2023Slide 18
SKF technology platforms
Bearingsand units
© SKF Group April 20, 2023Slide 19 20 April 2023Slide 19
SKF technology platforms
Seals
© SKF Group April 20, 2023Slide 20 20 April 2023Slide 20
SKF technology platforms
Mechatronics
© SKF Group April 20, 2023Slide 21 20 April 2023Slide 21
SKF technology platforms
Lubrication systems
© SKF Group April 20, 2023Slide 22 20 April 2023Slide 22
SKF technology platforms
Services
© SKF Group April 20, 2023Slide 23
Acquisition 2003-2012Identifying gaps and opportunities in all platforms
Products
Technologies
Geographies
Segments
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
SKF Nine-month results 2012
Tom Johnstone, President and CEO
17 October 2012
© SKF Group April 20, 2023Slide 25
Strong performance in a challenging market
• Weaker sales during the quarter, impacted by overall economy
• Significantly lower manufacturing and inventories reduced
• Good operating margin
• Strong cash flow
• Further investments to support long-term growth and profitability
© SKF Group April 20, 2023Slide 26
• Acquisition and divestments completed
- acquisition of General Bearing Corporation (GBC)
- divestment of the SKF distributor businesses in Australia and New Zealand
• New businesses - magnetic bearings to two new major gas projects in Australia - five-year contract with LKAB for maintenance services - third strategic partnership agreement with Baosteel Group Corporation - SKF Bus Door Actuator to Volvo Buses - SKF’s bonded piston seals to Mazda Motor Corporation
• Three new SKF Solution Factories - USA, Romania and Italy
• SKF Distributor College - awarded its 160,000th certificate
Highlights Q3 2012
© SKF Group April 20, 2023Slide 27
Highlights Q3 2012
• SKF celebrated 100 years of business in China
- inaugurated a new bearing and truck hub unit factory in Jinan
- broke ground on a new regional distribution centre in Shanghai
- announced the establishment of a new SKF Campus in Jiading, Shanghai, containing a new factory for automotive and the Global Technical Centre China, SKF Solution Factory and SKF College
• Debt structure - new eurobond of 500m with maturity 2019 - revolving credit facility of EUR 500m extended to 2017
• Dow Jones Sustainability Indexes and FTSE4Good - member of DJSI indexes for the 13th successive year - included for the 12th successive year in the FTSE4Good Index Series
© SKF Group April 20, 2023Slide 28
New products Q3 2012
SKF ChainLube oil projection system for food processing
New low friction
bearing seal for railway
New temperature monitoring system for railway
Self powered wireless sensor for railway
New range of freight bearings, tapered roller bearing units
Device for monitoring freight car mileage and
maintenance history
© SKF Group April 20, 2023Slide 29
SKF Group – Q3 2012
Financial performance Q3 2012Q3 2011Net sales, SEKm 15,486 16,545Operating profit, SEKm 1,913 2,479Operating margin, % 12.4 15.0Profit before tax, SEKm 1,734 2,345Cash flow, SEKm 1,097 1,323
Organic sales growth in local currency:
SKF Group: -4.5%Industrial market, Strategic Industries: -5.6% Regional Sales and Service:-4.7% Automotive: -3.5% Key points Sales volumes down by 5.0% y-o-yManufacturing significantly lower y-o-yInventories down to 20% of sales
Europe: -7%North America: +5%Asia: -11%Latin America: +8%
© SKF Group April 20, 2023Slide 30
Organic sales growth in local currency
-5
0
5
10
15
20
25
20122010 2011
% change y-o-y
© SKF Group April 20, 2023Slide 31
Europe-7%
Asia/Pacific -11%
Latin America
8%Middle East & Africa -4%
NorthAmerica
5%
Growth development by geography Organic growth in local currency Q3 2012 vs Q3 2011
© SKF Group April 20, 2023Slide 32
Europe-4%
Asia/Pacific -
9%
Latin America
12%Middle East &
Africa 0%
North America
8%
Growth development by geography Organic growth in local currency YTD 2012 vs YTD 2011
© SKF Group April 20, 2023Slide 33
Components in net sales
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
5.3 16.6 19.0 16.3 20.1 12.6 6.2 0.0 -0.8 -2.8 -5.0
0.0 0.0 0.0 0.0 5.0 4.4 5.1 4.8 -0.1 0.0 0.8
-0.3 -0.5 0.3 0.9 1.3 1.6 2.0 2.8 1.9 2.0 0.5
5.0 16.1 19.3 17.2 26.4 18.6 13.3 7.6 1.0 -0.8 -3.7
-7.7 -5.2 -3.2 -6.2 -10.8 -12.2 -6.3 -2.1 0.4 3.6 -2.7
-2.7 10.9 16.1 11.0 15.6 6.4 7.0 5.5 1.4 2.8 -6.4
Percent y-o-y
Volume
Structure
Price/mix
Sales in local currency
Currency
Net sales
2010 2011 2012
© SKF Group April 20, 2023Slide 34
-5
0
5
10
15
20
2010 2011 YTD 2012
Growth in local currency, including structure
% y-o-y
Structure in 2011: 4.8%Structure in 2012: 0.2%
14.2%
16.3%
-1.4%
© SKF Group April 20, 2023Slide 35
Operating profit
0
300
600
900
1 200
1 500
1 800
2 100
2 400
2 700
SEKm
2010
One-time items
2011 2012
© SKF Group April 20, 2023Slide 36
%
0
2
4
6
8
10
12
14
16
2010
One-time items
2011 2012
Operating margin
© SKF Group April 20, 2023Slide 37
0
2
4
6
8
10
12
14
16
2010 2011 YTD 2012
%
One-time items * Excluding one-time items
14.7*14.2*
13.8 14.5 12.6*
Operating margin
12.3
© SKF Group April 20, 2023Slide 38
0
3
6
9
12
15
18
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Operating margin per business area
Strategic Industries
Regional Sales and Service
Automotive
%
2010 2011 2012
Excluding one-off items(eg. restructuring, impairments, capital gains)
© SKF Group April 20, 2023Slide 39
SEKm 2012 2011
Net sales 15,486 16,545
Operating profit 1,913 2,479
Operating margin, % 12.4 15.0
Profit before taxes 1,734 2,345
Net profit 1,266 1,656
Basic earnings per share, SEK 2.71 3.52
Cash flow, after investments before financing
1,097 1,323
Third quarter 2012
© SKF Group April 20, 2023Slide 40
SEKm 2012 2011
Net sales 49,591 49,959
Operating profit 6,106 7,606
Operating margin, % 12.3 15.2
Profit before taxes 5,516 7,109
Net profit 3,867 5,019
Basic earnings per share, SEK 8.22 10.72
Cash flow, after investments before financing
2,479 2,995
Nine month 2012
© SKF Group April 20, 2023Slide 41
18
19
20
21
22
23
24
25
Inventories as % of annual sales
%
2010 2011 2012
© SKF Group April 20, 2023Slide 42
Return on capital employed
0
5
10
15
20
25
30
2010 2011 YTD 2012
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.
%
18.4
24.0 23.6
© SKF Group April 20, 2023Slide 43
Cash flow, after investments before financing
-6 000
-5 000
-4 000
-3 000
-2 000
-1 000
0
1 000
2 000
SEKm
2010 2011 2012
* SEK 798 million, excluding SEK 6,799 million for the acquisition of Lincoln.
**SEK 1,707 million, excluding acquisitions and divestments.
*
**
© SKF Group April 20, 2023Slide 44
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):2010 Q2 1,5942011 Q2 2,2772012 Q2 2,504
2010 2011 2012
Net debt: Loans and net provisions for post-employment benefits less short-term financial assets excluding derivatives.
© SKF Group April 20, 2023Slide 45
0
100
200
300
400
500
600
2012 2013 2014 2015 2016 2017 2018 2019
EURm
396
100100130
500
110
0
500
• Available credit facilities:
EUR 500 million 2017 SEK 3,000 million 2017
• No financial covenants nor material adverse change clause
Debt structure on 30 September, maturity years
© SKF Group April 20, 2023Slide 46
October 2012: SKF demand outlook Q4 2012
Demand compared to the fourth quarter last yearThe demand for SKF’s products and services is expected to be lower for the Group and for Europe. For Asia it is expected to be slightly lower and for North America and Latin America relatively unchanged. The demand is expected to be lower for Industrial Strategic Industries and Industrial Regional Sales and Service and relatively unchanged for Automotive.
Demand compared to the third quarter 2012
The demand for SKF’s products and services is expected to be slightly lower for the Group, for all the business areas and for Europe, Asia and North America. For Latin America demand is expected to be relatively unchanged.
Manufacturing
Manufacturing is expected to be lower year on year and slightly lower compared to third quarter.
© SKF Group April 20, 2023Slide 47
SKF demand outlook Q4 2012, regions(based on current assumptions)
Share of net sales2011*
Europe 44%
Asia Pacific 28%
North America
19%
Latin America 8%
Total
Q4 2012 vs Q4 2011
--
-
+/-
+/-
--
* Previously published shares have been restated to reflect the total Group business and customer delivery locations.
Sequential trend for Q4
2012
© SKF Group April 20, 2023Slide 48
Sequential trend for Q4 2012
Share of net sales2011
Strategic Industries
31%
Regional Sales and Service
39%
Automotive 27%
Total
Q4 2012 vs Q4 2011
--
--
+/-
--
SKF demand outlook Q4 2012, business areas(based on current assumptions)
© SKF Group April 20, 2023Slide 49
5%
13%
4%
28%
13%
12%
10%
5%
5%
3%
Aerospace
Cars and light vehicles
Railway
Industrial distribution
Industrial, general
Industrial, heavy, special and off-highway
Vehicle service market
Energy
Trucks
Two-wheelers and electrical
Share of net sales 2011*
* Previously published shares have been restated to reflect the total Group business and customer delivery locations.
SKF sequential volume trend Q4 2012, main segments(based on current assumptions)
© SKF Group April 20, 2023Slide 50
Guidance for the fourth quarter 2012
• Tax level: around 30%
• Financial net for the fourth quarter:Around SEK -200 million
• Exchange rates on operating profit versus 2011Q4: SEK -50 millionFull year: SEK 200 million
• Additions to PPE: Around SEK 2.0 billion for 2012
Guidance is approximate and based on current assumptionsand exchange rates
© SKF Group April 20, 2023Slide 51
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
© SKF Group April 20, 2023Slide 52
Long-term financial targets
27% Return on capital employed
8% Annual sales growth in local
currencies
15% Operating margin, level
© SKF Group April 20, 2023Slide 53
• Accelerate profitable growth- intensify the platform and industry approach- launch more new offerings – green and BZ
portfolio- strengthen the service business- focus on faster growing regions/ industries- develop other brands
• Reduce cost and eliminate waste- Business Excellence throughout the Group- BCC manufcaturing and sourcing- integrated cost reduction activities (ICR)
• Invest in growth- Sales and engineering resources- Factories in growth markets- Solution factories- R&D- Acquisitions- New IT systems
Main initiatives going forward
© SKF Group April 20, 2023Slide 54
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”.
© SKF Group April 20, 2023Slide 55
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]
© SKF Group April 20, 2023Slide 56