the skf group · central gear . hybrid pinion units . wheel end ... © skf group slide 16 ......
TRANSCRIPT
The SKF Group
SKF Investor Relations January 2014
© SKF Group Slide 1
SKF - A truly global company
Established: 1907
Sales 2013: SEK 63,597 million
Employees 2013: 48,401
Production sites: around 165 in 28 countries
SKF presence: in over 130 countries
Distributors/dealers: 15,000 locations
Global certificates: ISO 14001 OHSAS 18001 certification
© SKF Group Slide 2
7%3%
35%
5%
3%24% 24%
Vehicle aftermarket
6%4%3%
5%
11%10%5%
11%
29%
2%
14%
Net sales - 2013
Aerospace Railway Off-highway
Trucks Two-wheelers and Electrical
Industrial, general
Cars and light trucks
Industrial, heavy and
special
Industrial distribution
Energy 9%
Asia/Pacific
Latin America
North America
Middle East & Africa
Western Europe
Eastern Europe
Sweden
* Previously published shares have been restated in February 2013
© SKF Group Slide 3
North America
Latin America
Western Europe
Eastern Europe
Middle East and Africa
Asia/Pacific
Net sales Average number of employees Tangible asset
% of group total SKF 2013
(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)
© SKF Group Slide 4
Operating margin as reported
0
2
4
6
8
10
12
14
16
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
%
© SKF Group Slide 5
Return on capital employed
0
5
10
15
20
25
30
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
%
© SKF Group Slide 6
Growth in local currencies
-25
-20
-15
-10
-5
0
5
10
15
20
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
%
© SKF Group Slide 7
Long-term financial targets
20% Return on capital
employed
15% Operating
margin, level
-20-15-10
-505
101520
07 08 09 10 11 12 130
5
10
15
07 08 09 10 11 12 13
0
5
10
15
20
25
30
07 08 09 10 11 12 13
8% Changes in sales in local currency,
incl. structure
© SKF Group Slide 8
SKF’s priorities
Sustainable profitable growth • Expand the platform concept • Exploit the asset life cycle approach • Develop new products and grow SKF BeyondZero portfolio • Extend and grow second brands • Acquisitions
Capital efficiency • Fixed capital • Net working capital
Cost reduction • Business Excellence • Consolidation of manufacturing • Optimization and productivity improvements • Reduction in purchasing costs
Investments & Innovation • New and existing facilities • Research and development • IT systems and mobility
28 January 2014
© SKF Group 15 October 2013 Slide 9
To equip the world with SKF knowledge
SKF Group Vision
© SKF Group Slide 10
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
Opened Planned
Tianjin
Taiwan
Shanghai
Pune
Istanbul
Johannesburg Brasil “IXION”
Colombia
Moscow
Houston Monterrey Mexico
Edmonton
Nordic (Gothenburg)
UK
Germany Italy
France
Perth
Rumania
Cleveland Spain
Poland Toronto
Urumqui The Netherlands
Abu Dhabi
Manesar
Slide 11
27 SKF Solution Factories 2013
© SKF Group Slide 12
SKF Solution Factory
Segments & Application Knowledge Platforms & Technology Competence
Capabilities Sealing Solutions Mechanical Services Lubrication Solutions
Training Center Bearing Service Workshop Condition Monitoring Services Remote Monitoring Center
MaPro/CoMo Product Repair A & MC
SKF Solution Factory
© SKF Group Slide 13
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 Slide 14
Wheel-loader – Construction
Central gear Hybrid pinion units
Wheel end • Integrated smart wheel bearing units with sensors • SKF Mudblock cassette seals
Motor hood Electromechanical actuators
Chassis lubrication Centralized lubrication systems
© SKF Group Slide 15
New pitch bearing design with improved corrosion protection
DRTRB-unit SKF Nautilus with segmented cage for minimized friction
New CRB-design with extra-high carrying capacity for wind-gearboxes.
XL Hybrid bearings with ceramic balls for superior insulation
SKF WindCon 3.0/Webcon Intranet supervised condition monitoring
Automatic centralized lubrication kits for reduced maintenance cost
Wind turbine - Energy
© SKF Group Slide 16
SKF’s environmentally positive customer solutions
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
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 Slide 17
SKF energy efficient (E2) bearings
Peru Industria Textil Piura • 60,000 E2 deep
groove ball bearing
India Sangam Group
China Conveyors used in mining industry. 130,000 E2 bearing
Indonesia Leuwijaya Textile • 30,000 E2 bearing • potential 325,000 for
3 different customers
© SKF Group Slide 18
What is SKF knowledge?
© SKF Group Slide 19
SKF technology platforms
Bearings and units
© SKF Group Slide 20
SKF technology platforms
Seals
© SKF Group Slide 21
SKF technology platforms
Mechatronic
© SKF Group Slide 22
SKF technology platforms
Lubrication systems
© SKF Group Slide 23
SKF technology platforms
Service
© SKF Group Slide 24
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)
BVI (2013)
Kaydon (2013)
Seals Bearings and units
Lubrication systems Services Mechatronics
SKF Year-end results 2013 Tom Johnstone, President and CEO
© SKF Group
Key achievements 2013
28 January 2014 Slide 26
Bearing
Acquisitions and divestments: • acquisition of German-based ship components provider Blohm + Voss Industries (BVI) • acquisition of US-based Kaydon Corporation • divestment of the aerospace metallic rods business
New facilities: • lubrication systems laboratory in SKF Global Technical Centre, India • manufacturing unit in Pune in India for producing housings for bearings • gearbox remanufacturing centre in Tianjin, China • SKF opened six new SKF Solution Factories: in Toronto, Canada, in Manesar, India, in Urumqi, China and in Abu Dhabi, United Arab Emirates. There are now 27 SKF Solution Factories worldwide.
© SKF Group Slide 27
Key achievements 2013
• In 2013, SKF provided around SEK 4 billion in verified savings for customers and since 2003 the accumulated figure is over SEK 27 billion.
• SKF Distributor College awarded its 200,000th certificate. The recipient is Yang Chunxiao, an employee of Shandong Jiarui Industry Develop Co, Ltd, one of SKF’s Certified Maintenance Partners in China, who completed a course on ”selling value”.
28 January 2014
SKF was included in the FTSE4Good Index Series for the 13th successive year
SKF was included in the Dow Jones Sustainability Indexes for the 14th successive year
• SKF’s factories in Ahmedabad, India and in Dalian, China was awarded LEED Gold certification.
© SKF Group
Examples of new business in Q4 2013
• SKF is providing bearings, lubrication systems and engineering support for a US-based pump producer for London’s Lee Tunnel Project is building its largest-ever waste water pump, which will contribute to London’s storm water and sewage overflow issues.
• SKF received an order for compact tapered bearing unit from Tikhvin Freight Car Building Plant, affiliated to United Wagon Company LLC. The value of the order is around SEK 120 million.
• SKF was awarded by CSR ZHUZHOU ELECTRIC CO., LTD in China a contract for locomotive bearings for a value of SEK 76 million.
• SKF gained lubrication business worth SEK 38 million from a heavy industry customer in Peru.
Slide 28 28 January 2014
• SKF started deliveries of wheel hub bearing units and MacPherson suspension bearing units to Volvo Car Corporation in their new factory in Chengdu, China for the delivery of the newly launched Volvo S60L car model.
• SKF received an order from Hyundai Motors as a supplier of the recently launched robust MacPherson suspension bearing unit. The value of the order is around SEK 370 million.
© SKF Group
Examples of new business in Q1 – Q3 2013
New business
• with Pratt & Whitney, to supply engine main shaft bearings
• with Nordex for delivery of main shaft bearings and lubrication systems
• for automated lubrication systems installed in the MSC Home Terminal cranes in Belgium’s Port of Antwerp
• with Turbomeca a 10-year contract worth SEK 900 million
• with Fiat for the delivery of wheel hub bearing units, worth SEK 1 billion
• with Great Wall Motors in China for high pressure valve stem seals, hub bearing units and bearing retainers. SKF and Great Wall Motors also signed a strategic partnership for developing sustainable solutions in energy efficient vehicles.
• with Goldwind for SKF Nautilus bearing units, worth SEK 100 million
• with Tangshan Loco and Changchun Railway Co for wheel set bearings for high speed trains
• with Wuhan Iron & Steel Heavy Industry Group Co, Ltd (WISCO Heavy) to establish a remanufacturing centre in Wuhan, China.
Slide 29 28 January 2014
© SKF Group 28 January 2014 Slide 30
Examples of new technologies, products and solutions 2013
High pressure valve stem seal with lower friction
SKF Extended Life spherical plain bearing
An energy efficient high speed permanent magnet solution
Sealed SKF single row angular contact ball
bearings
Reinforced all-rubber HSS seals
Super precisions bearings for
wood-working applications
SKF Axial excluder seal
SKF Condition Based Lubrication
SKF extreme temperature bearings
SKF Telescopic pillars series CPMA and CPMB for medical equipment
Robust angular steering column bearing
SKF InsightTM Internally powered sensors and data acquisition electronics sensing directly on the bearing
© SKF Group Slide 31
SKF Group – Q4 2013
Financial performance 2013 2012 Net sales, SEKm 16,430 14,984 Operating profit, SEKm -1,547 1,221 Operating margin, % -9.4 8.1 Operating margin excl. one-time costs,% 11.0 10.2 Profit before tax, SEKm -1,760 969 Cash flow, SEKm -6,732 1,076 Organic sales growth in local currency: SKF Group: 6.9% Strategic Industries: 6.5% Regional Sales and Service: 4.6% Automotive: 10.8% Key points Sales volumes up by 7.1% y-o-y Manufacturing higher compared to last year Inventories 21.5% of sales (20.9% excluding Kaydon)
Europe: 3% North America: 4% Asia: 15% Latin America: 11%
28 January 2014
© SKF Group 6 February 2014 Slide 32
SKF Group – 2013
Financial performance 2013 2012 Net sales, SEKm 63,597 64,575 Operating profit, SEKm 3,693 7,314 Operating margin, % 5.8 11.3 Operating margin excl. one-time costs,% 11.9 12.0 Profit before tax, SEKm 2,821 6,408 Cash flow, SEKm -5,342 3,555 Organic sales growth in local currency: SKF Group: -0.7% Strategic Industries: -4.1% Regional Sales and Service: -2.1% Automotive: 5.3% Key points Sales volumes down by -0.7% y-o-y Manufacturing relatively unchanged compared to last year Inventories 21.5% of sales (20.9% excluding Kaydon)
Europe: -3% North America: -3% Asia: 2% Latin America: 10%
28 January 2014
© SKF Group
Operating profit excluding one-time costs
SEKm Q4 2013 2013
Reported operating loss/profit -1,547 3,693
Reported operating margin -9.4% 5.8% One-time costs:
European Commission provision -3,000 -3,000
Kaydon -260 -260
Other -90 -615
Total one-time costs -3,350 -3,875
Operating profit excl. one-time costs 1,803 7,568
Operating margin excl. one-time costs 11.0% 11.9%
Slide 33 28 January 2014
© SKF Group
Adjusted 2013 key figures
% Reported
2013 Excl. EC
provision Excl.
Kaydon
Inventories of annual sales 21.5 - 20.9
Net working capital of sales 31.7 - 30.6
ROCE 7.5 13.4 -
ROE 4.6 17.7 -
Equity/assets ratio 29.8 34.0 -
Gearing 52.9 56.0 -
Net debt/equity 117.3 102.7 -
Slide 34 28 January 2014
© SKF Group Slide 35
Organic sales growth in local currency
2013 2011 2012
% change y-o-y
28 January 2014
© SKF Group Slide 36
Europe 3%
Asia/Pacific 15%
Latin America
11% Middle East
& Africa 16%
North America
4%
Growth development by geography Organic growth in local currency Q4 2013 vs Q4 2012
28 January 2014
© SKF Group Slide 37
Europe -3%
Asia/Pacific 2%
Latin America
10% Middle East
& Africa 3%
North America
-3%
Growth development by geography Organic growth in local currency 2013 vs 2012
28 January 2014
© SKF Group Slide 38
Components in net sales
Percent y-o-y Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Volume 20.1 12.6 6.2 0.0 -0.8 -2.8 -5.0 -5.9 -8.7 -1.6 2.2 7.1
Structure 5.0 4.4 5.1 4.8 -0.1 0.0 0.8 1.0 1.5 2.6 1.1 4.8
Price/mix 1.3 1.6 2.0 2.8 1.9 2.0 0.5 0.7 0.7 -0.6 -0.2 -0.2
Sales in local currency 26.4 18.6 13.3 7.6 1.0 -0.8 -3.7 -4.2 -6.5 0.4 3.1 11.7
Currency -10.8 -12.2 -6.3 -2.1 0.4 3.6 -2.7 -3.6 -4.0 -5.0 -2.2 -2.1
Net sales 15.6 6.4 7.0 5.5 1.4 2.8 -6.4 -7.8 -10.5 -4.6 0.9 9.6
2011 2012 2013
28 January 2014
© SKF Group Slide 39
Growth in local currency, including structure
% y-o-y
Structure in 2011: 4.8% Structure in 2012: 0.4% Structure in 2013: 2.5%
1.8%
16.3%
-2.1%
28 January 2014
© SKF Group Slide 40
Operating profit as reported
SEKm
2011 2012 2013
28 January 2014
© SKF Group Slide 41
Operating profit excluding one-time items
SEKm
2011 2012 2013
28 January 2014
© SKF Group Slide 42
0
2
4
6
8
10
12
14
16
2011 2012 2013
%
One-time items * Excluding one-time items
14.7*
11.9*
5.8
14.5 12.0*
Operating margin
11.4
28 January 2014
© SKF Group Slide 43
Operating margin per business area
Strategic Industries
Regional Sales and Service
Automotive
%
2011 2012 2013
Excluding one-time items (eg. restructuring, impairments, capital gains)
28 January 2014
© SKF Group Slide 44
Inventories as % of annual sales
%
2011 2012 2013
28 January 2014
excl. Kaydon
© SKF Group Slide 45
Return on capital employed
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.
%
16.2
7.5
23.6 17.2*
15.1*
23.9*
One-time costs * Excluding one-time costs
28 January 2014
© SKF Group
New ROCE and Net working capital targets
28 January 2014 Slide 46
SKF financial targets Previous targets New targets Operating margin level 15% 15%
Annual sales growth in local currencies 8% 8%
ROCE 27% 20% Net working capital of sales - 27% Inventories of sales 18% -
© SKF Group
Key elements of capital efficiency
18
20
22
24
26
28
30
02 03 04 05 06 07 08 09 10 11 12 13 *
-8 percentage points in 11 years
25
26
27
28
29
30
31
32
33
34
35
02 03 04 05 06 07 08 09 10 11 12 13 *
Flat over 11 years
Plant and property as % of sales Net working capital as % of sales
Main actions
• Continue PPE and sales ratio going forward • Step-up activities to: - work with flexibility in our factories to reduce inventory - improve collection of accounts receivables - get effects on A/P from new purchasing activities
* Excluding Kaydon * Excluding Kaydon
28 January 2014 Slide 47
© SKF Group Slide 48
Cash flow, after investments before financing
SEKm
2011 2012 2013
Excl. acquisitions and divestments: * Q3 2012 SEK 1,707 million ** Q1 2013 SEK -69 million *** Q3 2013 SEK 871 million **** Q4 2013 SEK 1,170 million
*
**
***
28 January 2014
****
© SKF Group Slide 49
Net debt
SEKm
AB SKF, dividend paid (SEKm): 2011 Q2 2,277 2012 Q2 2,504 2013 Q2 2,530
2011 2012 2013
Net debt: Loans and net provisions for post-employment benefits less short-term financial assets excluding derivatives.
Cash out from acquisitions (SEKm): 2012 Q3 829 2013 Q1 823 2014 Q4 7,900
28 January 2014
© SKF Group
Debt structure, maturity years
28 January 2014 Slide 50
EURm
100 100 100
500
110
500
850
• Available credit facilities: EUR 500 million 2017 SEK 3,000 million 2016 SEK 3,000 million 2017
• No financial covenants nor material adverse change clause
© SKF Group Slide 51
SEKm 2013 2012
Net sales 16,430 14,984
Operating loss/profit -1,547 1,221
Operating profit excl. one-time costs 1,803 1,521
Operating margin, % -9.4 8.1
Operating margin excl. one-time costs, % 11.0 10.2
Loss/profit before taxes -1,760 969
Net loss/profit -2,043 995
Basic earnings per share, SEK -4.57 2.12
Cash flow, after investments before financing -6,732 1,076
Fourth quarter 2013
28 January 2014
© SKF Group Slide 52
SEKm 2013 2012
Net sales 63,597 64,575
Operating profit 3,693 7,314
Operating profit excl. one-time costs 7,568 7,754
Operating margin, % 5.8 11.3
Operating margin excl. one-time costs, % 11.9 12.0
Profit before taxes 2,821 6,408
Net profit 1,044 4,816
Basic earnings per share, SEK 2.00 10.23
Cash flow, after investments before financing -5,342* 3,555*
Full year 2013
* excluding acquisitions and divestments, SEK 3,117 million (4,188). 28 January 2014
© SKF Group Slide 53
January 2014: SKF demand outlook Q1 2014
Demand compared to the first quarter 2013 The demand for SKF’s products and services is expected to be slightly higher for the Group, Europe and North America. It is expected to be slightly lower in Latin America and higher in Asia Pacific. For Strategic Industries it is expected to be relatively unchanged, for Regional Sales and Service slightly higher and for Automotive higher. Demand compared to the fourth quarter 2013 The demand for SKF’s products and services is expected to be slightly higher for the Group, Europe and North America. It is expected to be relatively unchanged in Asia Pacific and slightly lower in Latin America. For Regional Sales and Service and Automotive it is expected to be slightly higher and for Strategic Industries relatively unchanged. Manufacturing Manufacturing is expected to be higher year over year and slightly higher compared to the fourth quarter.
28 January 2014
© SKF Group Slide 54
Share of net sales 2013
Europe 42%
Asia Pacific 24%
North America 24%
Latin America 7%
Total
Q1 2014 vs Q1 2013
+
++
+
-
+
Sequential trend for Q1 2014
SKF demand outlook Q1 2014, regions
28 January 2014
© SKF Group Slide 55
Sequential trend for Q1 2014
Share of net sales 2013
Strategic Industries 29%
Regional Sales and Service 39%
Automotive 27%
Total
Q1 2014 vs Q1 2013
+/-
+
++
+
SKF demand outlook Q1 2014, business areas
28 January 2014
© SKF Group Slide 56
29%
14%
11%
11%
12%
5%
5%
3%
5%
5%
Industrial distribution
Cars and light vehicles
Vehicle service market
Industrial, general
Industrial, heavy, special and off-highway
Energy
Aerospace
Two-wheelers and Electrical
Railway
Trucks
Share of net sales 2013
SKF sequential volume trend Q1 2014, main segments
28 January 2014
© SKF Group Slide 57
Guidance for the first quarter 2014*
• Tax level: around 30%
• Financial net for the first quarter: Around SEK -250 million
• Currency impact on operating profit versus 2013 Q1: SEK -90 million
Full year: SEK -300 million
• Additions to PPE: Around SEK 1.6 billion for 2014
* Guidance is approximate and based on current assumptions and exchange rates
28 January 2014
© SKF Group Slide 58
Dividend proposal
AB SKF’s Board proposes an unchanged dividend of
SEK 5.50 per share to the Annual General Meeting
28 January 2014
© SKF Group Slide 59
SKF’s priorities
Sustainable profitable growth • Expand the platform concept • Exploit the asset life cycle approach • Develop new products and grow SKF BeyondZero portfolio • Extend and grow second brands • Acquisitions
Capital efficiency • Fixed capital • Net working capital
Cost reduction • Business Excellence • Consolidation of manufacturing • Optimization and productivity improvements • Reduction in purchasing costs
Investments & Innovation • New and existing facilities • Research and development • IT systems and mobility
28 January 2014
© SKF Group Slide 60
Cost reduction – specific programme 2012-2015
Main activities: • Consolidation of manufacturing - merger between sites - transfer to faster growing markets with more local production • Optimization and productivity improvements - in the manufacturing and demand chain processes - in administration and support functions • Reduction in purchasing cost - mainly through standardization and rationalization of the supplier base. Reduction of annual cost by SEK 3 billion by the end of 2015 - Total cost for the programme around SEK 1.5 billion - 2,500 people impacted,
28 January 2014
© SKF Group
SKF cost reduction programme - restructuring status
SEKm
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
2013
Total
Cost 200 250 190 15 50 505 705
Full year saving 150 100 80 5 40 225 375
People 530 410 320 15 130 875 1,405
© SKF Group Slide 62
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”.
28 January 2014
© SKF Group 15 October 2013 Slide 63
© SKF Group 15 October 2013 Slide 64
Welcome to the IR website – www.skf.com > Investors
Investor Relations function: Head: Marita Björk Tel: +46 31 3371994 Mobile: +46 705 181994 E-mail: [email protected]
Investor Relations: Anna Alte Tel: +46 31 3371988 Mobile: +46 705 271988 E-mail: [email protected]
Event and road shows coordinator: Helena Karlsson Tel: +46 31 3372142 Mobile: +46 705 642142 E-mail: [email protected]