skf q3 results 2017 · skf simpro quick –an easier and faster bearing evaluation tool for shaft...
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SKF Q3 results 2017
Alrik Danielson, President and CEO
© SKF Group
Digitalisation and connectivity
SKF SimPro Quick – an easier and faster bearing
evaluation tool for shaft analysis
IMx-8 remote condition monitoring solution selected by
Sirius Shipping
Investments
New European aeronautical test centre dedicated to
high-speed aeronautical bearings in France
Investments in increased automation in the US and in
Germany
Structure
Decision to consolidate seals manufacturing in the US
Key events in the third quarter
New line of spherical roller bearings for the wind industry
Sven Wingquist Test CentreBearing being mounted in the test rig
© SKF Group
Sales SEK 18 627 M, organic sales +8.0% compared to Q3 2016
Adjusted operating profit SEK 2 211 M (1 811)
Adjusted operating margin 11.9% (10.1)
Items affecting comparability SEK -246 M (+380)
Cash flow SEK 681 M (1 554)
Profit before tax SEK 1 692 M (2 049)
Continued organic growth and margin improvement in Q3
Q3 Q4 Q1 Q2 Q3 17
Net sales, SEK18.6 bn
17.9 bn
Q3 Q4 Q1 Q2 Q3 17
Operating profit*, SEK2.2 bn
1.8 bn
11.9%Operating margin*
* Adjusted for items affecting
comparability
© SKF Group
Industrial distribution
- price increases implemented in all markets
Industrial Original Equipment Manufacturers and end users
- prices have been increased where contractual terms allow
Automotive vehicle aftermarket
- price increases implemented
Automotive Original Equipment Manufacturers
- relatively unchanged prices
Pricing
© SKF Group
Sales development by geographyOrganic growth in local currency Q3 2017 vs Q3 2016
Europe
+6.3%
Asia/Pacific
+11.8%
Middle East
& Africa
+23.3%
Latin
America
+14.1%
North
America
+3.3%
Q3 results – the detailsChristian Johansson, CFO
© SKF Group
Sales development
Q3 Q4 Q1 Q2 Q3 17
Net sales, SEK bn
18.6
17.9
2016 2017
Percent y-o-y Q3 Q4 Q1 Q2 Q3
Organic -0.6 +1.2 +8.0 +7.5 +8.0
Structure -2.0 -1.8 -2.0 -2.0 -0.7
Currency +0.1 +3.7 +4.9 +4.9 -3.0
Net sales -2.5 +3.1 +10.9 +10.4 4.3
© SKF Group
Organic sales growth
-10
-8
-6
-4
-2
0
2
4
6
8
10
% change
y-o-y
2013 2014 2015 2016 2017
© SKF Group
Adjusted operating profit*
0
2
4
6
8
10
12
0
0,5
1
1,5
2
2,5
3
Th
ou
san
ds
Th
ou
san
ds
2014 2015 2016
2.2
1.82.1
2.0
2017
* Adjusted for items affecting comparability
SEK bnSEK bn, 12m
moving
© SKF Group
Operating profit
0
500
1 000
1 500
2 000
2 500
-641
1 965
+778
-105
-201
-24
2 191
Q3 2016 Q3 2017Items affecting
comparability
at 2016
exchange
rates
ERP
system
Unite
Cost
development
Organic sales
&
manufacturing
volumes
Divested/
acquired
companies
Currency
impact
-33
Operational performance:
+544
SEKm
© SKF Group
Industrial
Net sales SEK 12 960
Organic sales +9.5%
Adjusted operating margin* 13.8%
Automotive
Net sales SEK 5 667 M
Organic sales +4.9%
Adjusted operating margin* 7.6%
Performance by customer groupIndustrialAdjusted operating margin*, %
13.8%
11.7%12.8%
AutomotiveAdjusted operating margin*, %
7.6%
6.6%5.8%
* Adjusted for items affecting comparability
© SKF Group
SKF Group – Q3 2017
Q3 Q4 Q1 Q2 Q3 17
Gross profit margin, excl IAC
25.7%23.7%
Q3 Q4 Q1 Q2 Q3 17
Taxes, SEK
34.6%-660
11.9%Operating margin*
* Adjusted for items affecting
comparability
Financial performance (SEKm) 2017 2016
Net sales 18 627 17 862
Cost of goods sold -14 066 -13 373
Gross profit 4 561 4 489
Gross margin, % 24.5 25.1
Gross margin, excluding IAC, % 25.7% 23.7%
Selling and administrative expenses -2 583 -2 310
Other operating expenses -13 -12
Operating profit 1 965 2 191
Items affecting comparability -246 +380
Adjusted operating profit 2 211 1 811
Operating margin, % 10.5 12.2
Adjusted operating margin, % 11.9 10.1
Financial income and expense, net -273 -142
Profit before taxes 1 692 2 049
Taxes -586 -660
Net profit 1 106 1 389
Basic earnings per share, SEK 2.29 2.97
-586
The fixed cost index was 99 at the end of Q3, adjusted for the costs related to the
implementation of our new ERP system Unite the index was 95.
The number of employees increased by 680 in the quarter, adjusted for the divestment of
Reelcraft, – of which 538 permanent employees, and 142 temporary employees including
agency personnel.
Activity-based cost reductions continue with high focus
Cost management
80
85
90
95
100
105
110Fixed cost index
4042444648505254
Th
ou
san
ds
Employees, including agency and temporary personnel
51,72949,721
© SKF Group
Cash flow after investments before financing*
-4 000
-2 000
0
2 000
4 000
6 000
8 000
10 000
12 000
-1 000
0
1 000
2 000
3 000
SEKm
2013 2014 2015
* After investments before financing (excluding acquisitions and divestments and EU payment in Q2 2014.)
2013 and 2014 are restated
2016 2017
© SKF Group
Net working capital 29.4% of annual sales
0
5
10
15
20
25
30
35
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2014 2015 2016
Target: 25%
Total NWC 29.4%
Inventories 21.6%
Trade receivables 17.5%
Trade payables 9.7%
30.3%
21.0%
18.3%
9.0%
2017
%
© SKF Group
Net debt, SEK bn Net debt/equity, %
Net debt decreased by 1.3 billion in the quarter
-35
-30
-25
-20
-15
-10
-5
0
Net fin debt Post-empl. benefits
2013 2014 2015 2016
0%
20%
40%
60%
80%
100%
120%
140%
160%
Net debt/equity
Net debt, excl post empl.benefits/equity
79%
2013 2014 2015 2016
37%
2017 2017
© SKF Group
Q4 2017:
Financial net: around -225 million
Currency impact on the operating profit is expected to around 300 million negative
compared with 2016, based on exchange rates per September 30, 2017.
2017:
Tax level: around 30% for 2017, excluding effects from divestments
Additions to property, plant and equipment: around 2,200 million for
2017
Guidance for 2017*
* Guidance is approximate and based on current assumptions and exchange rates.
© SKF Group
Demand compared to the fourth quarter 2016
The demand for SKF’s products and services is expected to be higher for the Group,
including Industrial and Automotive. Demand is expected to be higher in Europe, North
America and in Asia and significantly higher in Latin America.
Demand compared to the third quarter 2017
The demand for SKF’s products and services is expected to be relatively unchanged for the
Group including Industrial and Automotive. Demand is expected to be slightly higher in
Europe and relatively unchanged in North America, Asia and in Latin America.
October 2017: SKF demand outlook Q4 2017
© SKF Group
Financial calendar
Q3 report 31 October
London-Paris Roadshow 7-8 November
Goldman Sachs Conference London 27 November
Roadshow Asia 29-30 November
SKF in China 1 December
Q4 report 1 February, 2018
SKF Q3 results 2017Q & A
© SKF Group
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;
“Risk management at SKF" and "Sensitivity analysis”.
Cautionary statement