The SKF Group
SKF Investor Relations
October 2012
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
Slide 1
25 July 2016
Net sales by customer segment 2011
Cars and
light vehicles
Industrial
distribution
13%
28%
5%
Aerospace
Railway
4%
4%
5%
Vehicle Service
Market
3%
10%
5%
Energy
8%
Industrial, heavy
and special
15%
Trucks
Two-wheeler
and Electrical
Industrial,
general
2
25 July 2016
PreviouslySlide
published
shares have been restated to reflect the new business structure from 2012.
© SKF Group
Off-highway
SKF 2011
(1998)
(2002)
% of group total
(48)(44)(53)
Net sales*
(47)(46)(53)
Average number of
employees
Tangible asset
42
37
38
(10)(12) (9)
(13) (14) (8)
24
(26)(13)(18)
(5)(14)(12)
19
(6) (5) (4)
13
(5) (12)(15)
(4) (4) (3)
8
8 8
Western
Europe
Sweden
Slide published
3
25 July 2016
* Previously
shares have been restated to reflect customer delivery locations.
© SKF Group
(3) (9) (3)
9
7
6
Latin
America
(3) (9) (3)
10
3
North
America
28
28
(25)(14)(19)
4
6
(3) (2) (0)
(2) (2) (0)
1 1
Eastern
Europe
0
Middle East Asia/Pacifi
and Africa
c
SKF Group Vision
To equip the world
with SKF knowledge
© SKF Group
Slide 4
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 5
25 July 2016
20 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 6
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 7
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 8
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 9
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 10
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 11
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 12
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 13
25 July,
July 2016
2016
SKF technology platforms
Bearings
and units
© SKF Group
Slide 14
25 July,
July 2016
2016
SKF technology platforms
Seals
© SKF Group
Slide 15
25 July,
July 2016
2016
SKF technology platforms
Mechatronics
© SKF Group
Slide 16
25 July,
July 2016
2016
SKF technology platforms
Lubrication
systems
© SKF Group
Slide 17
25 July,
July 2016
2016
SKF technology platforms
Services
© SKF Group
Slide 18
25 July,
July 2016
2016
Acquisition 2003-2012
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)
Lubrication
systems
Safematic
Scandrive
(2003)
PMCI
(2007)
ALS
PB&A
(2006)
Sommers
Monitek
Segments
© SKF Group
Slide 19
25 July 2016
Peer
(2008)
GBC
(2012)
(2005)
(2004)
Lincoln
Industrial
(2008)
(2007)
(2009)
Vogel
QPM
ABBA
Jaeger
Technologies
Geographies
(2006)
Mechatronics
(2006)
(2010)
TCM (2003)
(2007)
Cirval
(2005)
(2008)
SKF Nine-month results 2012
Tom Johnstone, President and CEO
17 October 2012
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
Slide 21
25 July 2016
Highlights Q3 2012
• 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
© SKF Group
Slide 22
25 July 2016
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
Slide 23
25 July 2016
New products Q3 2012
New temperature
monitoring
system for
railway
Self powered
wireless
sensor for
railway
Device for monitoring freight
car mileage and maintenance
history
New range of
freight bearings,
tapered roller
bearing units
© SKF Group
Slide 24
25 July 2016
SKF ChainLube oil
projection system
for food processing
New low friction
bearing seal
for railway
SKF Group – Q3 2012
Financial performance
Net sales, SEKm
Operating profit, SEKm
Operating margin, %
Profit before tax, SEKm
Cash flow, SEKm
Q3 2012
15,486
1,913
12.4
1,734
1,097
Q3 2011
16,545
2,479
15.0
2,345
1,323
Organic sales growth in local currency:
SKF Group:
Industrial market,
Strategic Industries:
Regional Sales and Service:
Automotive:
-4.5%
-5.6%
-4.7%
-3.5%
Key points
Sales volumes down by 5.0% y-o-y
Manufacturing significantly lower y-o-y
Inventories down to 20% of sales
© SKF Group
Slide 25
25 July 2016
Europe:
North America:
Asia:
Latin America:
-7%
+5%
-11%
+8%
Organic sales growth in local currency
% change
y-o-y
25
20
15
10
5
0
-5
2010
© SKF Group
Slide 26
25 July 2016
2011
2012
Growth development by geography
Organic growth in local currency Q3 2012 vs Q3 2011
Europe
-7%
North
America
5%
Asia/Pacific
-11%
Latin
America
8%
© SKF Group
Slide 27
25 July 2016
Middle East
& Africa
-4%
Growth development by geography
Organic growth in local currency YTD 2012 vs YTD 2011
Europe
-4%
North
America
8%
Asia/Pacific
-9%
Latin
America
12%
© SKF Group
Slide 28
25 July 2016
Middle East
& Africa 0%
Components in net sales
2010
2011
Percent y-o-y
Q1
Volume
5.3
Structure
0.0
0.0
0.0
Price/mix
-0.3
-0.5
0.3
Sales in local
currency
5.0
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
16.6 19.0 16.3
20.1
12.6
6.2
0.0
-0.8
-2.8
-5.0
0.0
5.0
4.4
5.1
4.8
-0.1
0.0
0.8
0.9
1.3
1.6
2.0
2.8
1.9
2.0
0.5
16.1 19.3 17.2
26.4
18.6
13.3
7.6
1.0
-0.8
-3.7
-10.8 -12.2
-6.3
-2.1
0.4
3.6
-2.7
7.0
5.5
1.4
2.8
-6.4
Currency
-7.7
-5.2
Net sales
-2.7
10.9 16.1 11.0
© SKF Group
Slide 29
25 July 2016
2012
-3.2
-6.2
15.6
6.4
Growth in local currency, including structure
% y-o-y
20
16.3%
14.2%
15
10
5
-1.4%
0
-5
2010
2011
Structure in 2011: 4.8%
Structure in 2012: 0.2%
© SKF Group
Slide 30
25 July 2016
YTD 2012
Operating profit
SEKm
2 700
2 400
2 100
1 800
1 500
1 200
900
600
300
0
2010
One-time items
© SKF Group
Slide 31
25 July 2016
2011
2012
Operating margin
%
16
14
12
10
8
6
4
2
0
2010
One-time items
© SKF Group
Slide 32
25 July 2016
2011
2012
Operating margin
%
16
14.2*
14
12
13.8
14.7*
14.5
12.6*
12.3
10
8
6
4
2
0
2010
One-time items
* Excluding one-time items
© SKF Group
Slide 33
25 July 2016
2011
YTD 2012
Operating margin per business area
%
18
Regional Sales
and Service
15
12
Strategic Industries
9
6
Automotive
3
0
Q1
Q2
2010
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2011
Excluding one-off items
© SKF Group
Slide 34
25 July 2016
(eg. restructuring, impairments, capital gains)
Q2
Q3
2012
Third quarter 2012
2012
2011
15,486
16,545
1,913
2,479
12.4
15.0
Profit before taxes
1,734
2,345
Net profit
1,266
1,656
2.71
3.52
1,097
1,323
SEKm
Net sales
Operating profit
Operating margin, %
Basic earnings per share, SEK
Cash flow, after investments before financing
© SKF Group
Slide 35
25 July 2016
Nine month 2012
2012
2011
49,591
49,959
6,106
7,606
12.3
15.2
Profit before taxes
5,516
7,109
Net profit
3,867
5,019
8.22
10.72
2,479
2,995
SEKm
Net sales
Operating profit
Operating margin, %
Basic earnings per share, SEK
Cash flow, after investments before financing
© SKF Group
Slide 36
25 July 2016
Inventories as % of annual sales
%
25
24
23
22
21
20
19
18
2010
© SKF Group
Slide 37
25 July 2016
2011
2012
Return on capital employed
%
30
24.0
25
23.6
18.4
20
15
10
5
0
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.
© SKF Group
Slide 38
25 July 2016
Cash flow, after investments before financing
SEKm
2 000
**
1 000
*
0
- 1 000
- 2 000
- 3 000
- 4 000
- 5 000
- 6 000
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
Slide 39
25 July 2016
Net debt
SEKm
0
AB SKF,
dividend paid (SEKm):
2010 Q2
1,594
2011 Q2
2,277
2012 Q2
2,504
- 2 000
- 4 000
- 6 000
- 8 000
- 10 000
- 12 000
- 14 000
- 16 000
- 18 000
- 20 000
2010
2011
2012
Net debt: Loans and net provisions for post-employment benefits
less short-term financial assets excluding derivatives.
© SKF Group
Slide 40
25 July 2016
Debt structure on 30 September, maturity years
EURm
600
500
500
500
2018
2019
396
400
300
200
130
100
100
100
110
2015
2016
2017
0
0
2012
2013
2014
• Available credit facilities:
EUR 500 million 2017
SEK 3,000 million 2017
© SKF Group
Slide 41
25 July 2016
•
No financial covenants nor material
adverse change clause
October 2012: SKF demand outlook Q4 2012
Demand compared to the fourth quarter last year
The 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
Slide 42
25 July 2016
SKF demand outlook Q4 2012, regions
(based on current assumptions)
Share of net sales
2011*
Sequential trend
for Q4 2012
Q4 2012
vs Q4 2011
Europe
44%
--
Asia Pacific
28%
-
North America
19%
+/-
Latin America
8%
+/--
Total
* Previously published shares have been restated to reflect
the total Group business and customer delivery locations.
© SKF Group
Slide 43
25 July 2016
SKF demand outlook Q4 2012, business areas
(based on current assumptions)
Share of net sales
2011
Sequential trend
for Q4 2012
Q4 2012
vs Q4 2011
Strategic
Industries
31%
--
Regional Sales
and Service
39%
--
Automotive
27%
+/-
--
Total
© SKF Group
Slide 44
25 July 2016
SKF sequential volume trend Q4 2012, main segments
(based on current assumptions)
Share of net
sales 2011*
5% Aerospace
13% Cars and light vehicles
4% Railway
28% Industrial distribution
13% Industrial, general
12% Industrial, heavy, special and
off-highway
10% Vehicle service market
5% Energy
5% Trucks
3% Two-wheelers and electrical
© SKF Group
Slide 45
25 July 2016
* Previously published shares have been restated to reflect
the total Group business and customer delivery locations.
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 2011
Q4:
SEK -50 million
Full year:
SEK 200 million
• Additions to PPE: Around SEK 2.0 billion for 2012
Guidance is approximate and based on current assumptions
and exchange rates
© SKF Group
Slide 46
25 July 2016
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
Slide 47
25 July 2016
Long-term financial targets
15%
8%
27%
© SKF Group
Slide 48
25 July 2016
Operating margin, level
Annual sales growth in local currencies
Return on capital employed
Main initiatives going forward
• 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
© 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