The SKF Group
SKF Investor Relations
April 2013
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 14001
OHSAS 18001 certification
© SKF Group
Slide 1
25 July 2016
Net sales by customer segment* 2012
Cars and
light trucks
Industrial
distribution
29%
13%
29%
6%
Aerospace
6%
4%
4% Railway
4%
4% Off-highway
5%
2%5%
10%
Vehicle Service
Market
12%
10%6%
9%
6%
Energy
Industrial,
heavy and
special
* Previously published shares have been restated in February 2013
© SKF Group
Slide 2
25 July 2016
9%
2%
12%
Industrial,
general
Trucks
Two-wheelers
and Electrical
Net sales 2012, Geographical distribution*
Middle East
& Africa
Asia/Pacific
North America
3%
23%
24%
7%
Eastern
Europe
5%
3%
35%
Western Europe
* Previously published shares have been restated in February 2013
© SKF Group
Slide 3
25 July 2016
Latin America
Sweden
SKF 2012
(1998)
(2002)
% of group total
Net sales
Average number of
employees
Tangible asset
(48)(44)(53)
(47)(46)(53)
37
39
(10)(12) (9)
35
(13) (14) (8)
30
(25)(14) (19)
(26)(13)(18)
24
23
(5)(14)(12)
(6) (5) (4)
12
(5) (12)(15)
(4) (4) (3)
8
7
8
7
3
North
America
© SKF Group
Slide 4
25 July 2016
Latin
America
(3) (9) (3)
(3) (9) (3)
10
7
Western
Europe
Sweden
26
9
5
6
Eastern
Europe
(3) (2) (0)
(2) (2) (0)
3
1
0
Middle East Asia/Pacifi
and Africa
c
Operating margin
%
16
14
12
10
8
6
4
2
0
2003
© SKF Group
Slide 5
25 July 2016
2004
2005
2006
2007
2008
2009
2010
2011
2012
Return on capital employed
%
30
25
20
15
10
5
0
2003
© SKF Group
Slide 6
25 July 2016
2004
2005
2006
2007
2008
2009
2010
2011
2012
Growth in local currencies
%
20
15
10
5
0
2003
-5
-10
-15
-20
-25
© SKF Group
Slide 7
25 July 2016
2004
2005
2006
2007
2008
2009
2010
2011
2012
SKF Group Vision
To equip the world
with SKF knowledge
© SKF Group
Slide 8
25 July 2016
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
Slide 9
25 July 2016
21 SKF Solution Factories 2012
Nordic
(Gothenburg)
Edmonton
UK
France
Monterrey
Mexico
Rumania
Germany
Italy
Cleveland
Moscow
Istanbul
Tianjin
Shanghai
Houston
Taiwan
Pune
Colombia
Opened
Planned
© SKF Group
Slide 10
25 July 2016
Brasil “IXION”
Johannesburg
Perth
SKF Solution Factory
Segments & Application Knowledge
Platforms & Technology Competence
SKF
Solution Factory
Capabilities
Sealing Solutions
Bearing Service Workshop
MaPro/CoMo Product Repair
© SKF Group
Slide 11
25 July 2016
Mechanical Services
Lubrication Solutions
Condition Monitoring Services Remote Monitoring Center
A & MC
Training Center
Slab continuous caster – metal industry
Telescopic actuators for
mould adjustment
SKF ConRo Compact
roll line units
SKF ConRo Low roll
line units
SKF ConRo Top
roll line units
SKF DryLube Bearings
and SNL Housings for
roll out table
SKF sealed selfaligning bearing
system (CARB and
spherical roller
bearings) and
centralized lubrication
system for roll lines
SKF Caster Analyst
System for roll lines
© SKF Group
Slide 12
25 July 2016
Wheel-loader – Construction
Central gear
Hybrid pinion units
Chassis lubrication
Centralized lubrication systems
Motor hood
Electromechanical actuators
Wheel end
© SKF Group
Slide 13
25 July 2016
• Integrated smart wheel bearing
units with sensors
• SKF Mudblock cassette seals
Wind turbine - Energy
New CRB-design with
extra-high carrying capacity
for wind-gearboxes.
New pitch bearing
design with improved
corrosion protection
SKF WindCon 3.0/Webcon
Intranet supervised
condition monitoring
DRTRB-unit SKF
Nautilus with
segmented cage
for minimized friction
Automatic centralized
lubrication kits for
reduced maintenance cost
XL Hybrid bearings
with ceramic balls
for superior insulation
© SKF Group
Slide 14
25 July 2016
SKF’s environmentally positive customer solutions
SKF’s solutions which realize significant environmental benefits
Designed for
environment
Applied for
environment
Stop-start system
E2 - 30% less
energy compared to
a standard bearing
A solution that is primarily designed to
improve environmental performance by itself
© SKF Group
Slide 15
25 July 2016
Up to 15% better
fuel economy of
the car
SKF sensor bearing
A solution that enables improved environmental
performance in a specific application
SKF energy efficient (E2) bearings
China
India
Peru
Indonesia
Conveyors used in
mining industry.
130,000 E2 bearing
Sangam Group
Industria Textil Piura
Leuwijaya Textile
•
•
•
© SKF Group
Slide 16
25 July 2016
60,000 E2 deep
groove ball bearing
30,000 E2 bearing
potential 325,000 for
3 different customers
What is SKF knowledge?
© SKF Group
Slide 17
25 July,
July 2016
2016
SKF technology platforms
Bearings
and units
© SKF Group
Slide 18
25 July,
July 2016
2016
SKF technology platforms
Seals
© SKF Group
Slide 19
25 July,
July 2016
2016
SKF technology platforms
Mechatronics
© SKF Group
Slide 20
25 July,
July 2016
2016
SKF technology platforms
Lubrication
systems
© SKF Group
Slide 21
25 July,
July 2016
2016
SKF technology platforms
Services
© SKF Group
Slide 22
25 July,
July 2016
2016
Acquisition 2003-2013
Identifying gaps and opportunities in all platforms
Bearings
and units
Products
SNFA
(2006)
GLO
(2008)
S2M
(2007)
Seals
Economos
(2006)
Macrotech
Macrotech
(2006)
Services
Baker
(2007)
Slide 23
25 July 2016
ABBA
(2007)
(2005)
(2009)
QPM
(2008)
(2003)
PMCI
(2007)
ALS
PB&A
(2006)
Sommers
Monitek
© SKF Group
(2006)
Vogel (2004)
Lincoln
Industrial (2010)
Scandrive
Industries
Safematic
Mechatronics
Jaeger
Technologies
Geographies
Lubrication
systems
Peer
(2008)
GBC
(2012)
BVI
(2013)
(2006)
TCM (2003)
(2007)
Cirval
(2005)
(2008)
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 25
25 July 2016
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 26
25 July 2016
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 27
25 July 2016
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 28
25 July 2016
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 29
25 July 2016
-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 30
25 July 2016
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 31
25 July 2016
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 32
26.4
15.6
25 July 2016
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 33
25 July 2016
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 34
25 July 2016
2012
2013
Operating margin
%
16
14
12
10
8
6
4
2
0
2011
One-time items
© SKF Group
Slide 35
25 July 2016
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 36
25 July 2016
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 37
25 July 2016
(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 38
25 July 2016
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 39
25 July 2016
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 40
25 July 2016
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 41
25 July 2016
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 42
25 July 2016
•
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 43
25 July 2016
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 44
25 July 2016
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 45
25 July 2016
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 46
25 July 2016
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 47
25 July 2016
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 48
25 July 2016
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 49
25 July 2016
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 50
25 July 2016
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: marita.bjork@skf.com
© SKF Group
Slide 51
25 July 2016
Investor Relations:
Anna Alte
Tel: +46 31 3371988
Mobile: +46 705 271988
E-mail: anna.alte@skf.com
Event coordinator and assistant:
Helena Karlsson
Tel: +46 31 3372142
Mobile: +46 705 642142
E-mail: helena.karlsson@skf.com
© SKF Group
Slide 52
25 July 2016