SKF First-quarter results 2013
Tom Johnstone, President and CEO
Highlights Q1 2013
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
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.
© SKF Group
Slide 1
17 April 2013
Henrik Lange
Rakesh Makhija
Tore Bertilsson
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 Group
Slide 2
17 April 2013
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
• Lower total costs with higher reliability and machinery uptime
• Wirelessly communication of the condition of the bearing and machinery at any time
Pilot projects in progress within wind energy,
railways and metals industries.
© SKF Group
Slide 3
17 April 2013
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
Slide 4
17 April 2013
SKF Group – Q1 2013
Financial performance
Net sales, SEKm
Operating profit, SEKm
Operating margin, %
Operating margin excl. restructuring, %
Profit before tax, SEKm
Cash flow, SEKm
Cash flow excl. acquisitions, SEKm
2013
15,152
1,480
9.8
11.4
1,237
-892
-69
2012
16,931
2,136
12.6
12.6
1,956
696
715
Organic sales growth in local currency:
SKF Group:
Industrial market,
Strategic Industries:
Regional Sales and Service:
Automotive:
Key points
Sales volumes down by 8.7% y-o-y
Manufacturing lower y-o-y
Inventories 20.3% of sales
© SKF Group
Slide 5
17 April 2013
-8.0%
-12.2%
-7.7%
-3.7%
Europe:
North America:
Asia:
Latin America:
-10%
-10%
-7%
8%
Organic sales growth in local currency
% change
y-o-y
25
20
15
10
5
0
-5
- 10
2011
© SKF Group
Slide 6
17 April 2013
2012
2013
Growth development by geography
Organic growth in local currency Q1 2013 vs Q1 2012
Europe
-10%
North
America
-10%
Asia/Pacific
-7%
Latin
America
8%
© SKF Group
Slide 7
17 April 2013
Middle East
& Africa
-6%
Components in net sales
2011
Percent y-o-y
2013
2012
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
Structure
5.0
4.4
5.1
4.8
-0.1
0.0
0.8
1.0
1.5
Price/mix
1.3
1.6
2.0
2.8
1.9
2.0
0.5
0.7
0.7
18.6 13.3
7.6
1.0
-0.8
-3.7
-4.2
-6.5
-6.3
-2.1
0.4
3.6
-2.7
-3.6
-4.0
7.0
5.5
1.4
2.8
-6.4
-7.8
-10.5
Volume
Sales in local
currency
Currency
-10.8 -12.2
Net sales
© SKF Group
Slide 8
26.4
15.6
17 April 2013
6.4
Growth in local currency, including structure
% y-o-y
20
16.3%
15
10
5
0
-2.1%
-5
-6.5%
- 10
2011
© SKF Group
Slide 9
17 April 2013
2012
Structure in 2011:
4.8%
Structure in 2012:
0.4%
Structure in Q1 2013: 1.5%
Q1 2013
Operating profit
SEKm
2 700
2 400
2 100
1 800
1 500
1 200
900
600
300
0
2011
One-time items
© SKF Group
Slide 10
17 April 2013
2012
2013
Operating margin
%
16
14
12
10
8
6
4
2
0
2011
One-time items
© SKF Group
Slide 11
17 April 2013
2012
2013
Operating margin
%
16
14
12
14.7*
14.5
12.0*
11.4*
11.4
10
9.8
8
6
4
2
0
2011
One-time items
* Excluding one-time items
© SKF Group
Slide 12
17 April 2013
2012
Q1 2013
Operating margin per business area
%
18
15
Regional Sales
and Service
Strategic
Industries
12
9
6
Automotive
3
0
-3
Q1
Q2
2011
Q3
Q4
Q1
Q2
Q3
2012
Excluding one-off items
© SKF Group
Slide 13
17 April 2013
(eg. restructuring, impairments, capital gains)
Q4
Q1
2013
Inventories as % of annual sales
%
25
24
23
22
21
20
19
18
2011
© SKF Group
Slide 14
17 April 2013
2012
2013
Return on capital employed
One-off costs
* Excluding one-off costs
%
30
25
23.9*
20
23.6
15
17.2*
16.2
10
16.0*
14.5
5
0
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.
© SKF Group
Slide 15
17 April 2013
Cash flow, after investments before financing
SEKm
2 500
2 000
*
1 500
1 000
500
0
**
- 500
- 1 000
2011
2012
2013
* SEK 1,707 million, excluding acquisitions and divestments.
** SEK -69 million, excluding acquisitions and divestments.
© SKF Group
Slide 16
17 April 2013
Net debt
SEKm
0
AB SKF,
dividend paid (SEKm):
2011 Q2
2,277
2012 Q2
2,504
- 2 000
- 4 000
- 6 000
- 8 000
- 10 000
Cash out from
acquisitions (SEKm):
2012 Q3
829
2013 Q1
823
- 12 000
- 14 000
- 16 000
- 18 000
- 20 000
2011
2012
2013
Net debt: Loans and net provisions for post-employment benefits
less short-term financial assets excluding derivatives.
© SKF Group
Slide 17
17 April 2013
Debt structure, maturity years
EURm
600
500
500
500
2018
2019
400
300
265
200
100
100
100
100
110
2014
2015
2016
2017
0
2013
• Available credit facilities:
EUR 500 million 2017
SEK 3,000 million 2017
© SKF Group
Slide 18
17 April 2013
•
No financial covenants nor material
adverse change clause
First quarter 2013
2013
2012
15,152
16,931
1,480
2,136
9,8
12.6
11.4
12.6
1,237
1,956
Net profit
818
1,326
Basic earnings per share, SEK
1.74
2.81
-892*
696
SEKm
Net sales
Operating profit
Operating margin, %
Operating margin excl. one-offs, %
Profit before taxes
Cash flow, after investments before financing
* excluding acquisitions and divestments, SEK -69 million
© SKF Group
Slide 19
17 April 2013
April 2013: SKF demand outlook Q2 2013
Demand compared to the second quarter 2012
The 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 2013
The 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.
Manufacturing
Manufacturing is expected to be lower year over year and relatively unchanged
compared to the first quarter.
© SKF Group
Slide 20
17 April 2013
SKF demand outlook Q2 2013, regions
Share of net sales*
2012
Sequential trend
for Q2 2013
Q2 2013
vs Q2 2012
Europe
43%
--
Asia Pacific
24%
=
North America
23%
=
Latin America
7%
+
--
Total
* Previously published percent of sales have been restated.
© SKF Group
Slide 21
17 April 2013
SKF demand outlook Q2 2013, business areas
Share of net sales
2012
Sequential trend
for Q2 2013
Q2 2013
vs Q2 2012
Strategic
Industries
31%
--
Regional Sales
and Service
39%
--
Automotive
27%
-
--
Total
© SKF Group
Slide 22
17 April 2013
SKF sequential volume trend Q2 2013, main segments
Share of net
sales 2012*
6% Aerospace
6% Energy
2% Two-wheelers and Electrical
29% Industrial distribution
13% Industrial, heavy, special and
off-highway
13% Cars and light vehicles
12% Industrial, general
10% Vehicle service market
5% Trucks
4% Railway
* Previously published percent of sales have been restated.
© SKF Group
Slide 23
17 April 2013
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 million
Full year:
SEK -550 million
• Additions to PPE: Around SEK 1.7 billion for 2013
Guidance is approximate and based on current assumptions
and exchange rates
© SKF Group
Slide 24
17 April 2013
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
© SKF Group
Slide 25
17 April 2013
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
Slide 26
17 April 2013
© SKF Group
Slide 27
17 April 2013