SKF Group
Tore Bertilsson, Executive Vice President and CFO
September 2012
Agenda
• SKF Group overview
• Strategic direction and initiatives
• Business update
© SKF Group
Slide 1
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 2
Net sales 2011
Eastern
Europe 4%
Sweden
3%
Asia/Pacific
28%
Western Europe
37%
Latin America
8%
Middle East
& Africa 1%
North America
19%
3
PreviouslySlide
published
shares have been restated to reflect the new business structure from 2012.
© SKF Group
Net sales by customer segment 2011
Cars and
light vehicles
13%
Industrial
distribution
28%
5%
Aerospace
Railway
4%
4%
5%
Vehicle Service
Market
3%
10%
5%
Energy
8%
Industrial, heavy
and special
13%
Trucks
Two-wheeler
and Electrical
Industrial,
general
4
PreviouslySlide
published
shares have been restated to reflect the new business structure from 2012.
© SKF Group
Off-highway
SKF platforms
Managing and reducing friction/energy
© SKF Group
Slide 5
Long-term financial targets
8%
15%
15
- 20
© SKF Group
Slide 6
H1
/1
2
11
H1
/1
2
10
09
- 10
- 15
08
0
-5
07
H1
/1
2
11
10
09
08
07
0
11
5
10
5
09
15
10
07
30
25
20
15
10
5
0
20
10
Return on capital
employed
Changes in sales
in local currency
08
Operating
margin, level
27%
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
1
20 1
12
H1
SKF Group – operating margin development
%
16
14
12
10
8
6
4
2
0
-2
-4
-6
© SKF Group
Slide 7
How did we get there?
SKF today – more robust, more diverse
• Divesting and outsourcing component manufacturing,
reducing fixed cost and invested capital
• Manufacturing footprint in best cost countries
• Reducing working capital
• Customized solutions, value added products, technology platforms
• Diversifying growth, faster growing segments and geographies
• Acquisitions supporting growth and profitability
© SKF Group
Slide 8
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 9
R&D – investments and main areas
© SKF Group
Slide 10
Investments
Main areas
2008
+30%
2009
Same
2010
+10%
2011
+20%
•
•
•
•
Patents
+30%
2012
+10%
Environment
Core technologies
New products
Strengthen R&D activities
in fast growing regions
• Strengthen links with
universities and high
schools
Examples of new products launched in 2012
Servo Actuator for
industrial
applications
A hand-held,
18-volt,
lithium-ion
grease gun
SKF Thruster
Monitoring
SKF Bus Door
Actuator
Next generation
SNL, SE housings
SKF Solar Hub
SKF Speed
Sensor Unit
SKF
Compact
Wire
Steering
Bearing
Integrated monotube
seal
SKF
Nautilus
range
extensions
© SKF Group
Slide 11
Investing for the future
Dalian, China
Mysore, India
© SKF Group
Slide 12
Jinan, China
Bengaluru, India
Acquisition strategy for profitable growth
• Acquisitions are seen as one important driver for growth and value
creation.
• Lincoln integration is going well so SKF is able to make additional
larger acquisitions
• SKF has the financial means and acquisition project resources in
place to continue to pursue relevant acquisitions.
• Increasing activity and opportunities in M&A market
© SKF Group
Slide 13
Acquisitions 2003-2012
Identifying gaps and opportunities in all platforms
Bearings
and units
Technologies
/ Products
Seals
SNFA (2006)
Economos (2006)
GLO
Macrotech (2006)
(2008)
Services
Baker
(2007)
Segments
Safematic (2006)
Jaeger (2005)
(2010)
ALS (2007)
Scandrive (2003)
PB&A (2006)
Sommers (2005)
Monitek (2006)
Cirval (2008)
Focus on industrial and aftermarket business.
Slide 14
ABBA (2007)
PMCI (2007)
GBC (2012)
© SKF Group
Vogel (2004)
QPM (2008)
PEER (2008)
Mechatronics
Lincoln Industrial
S2M (2007)
Geographies
Lubrication
systems
TCM (2003)
Branding strategy – to address the market
• Knowledge engineering
• Documented value
• Cost reduction
• Brand
High
Middle
• Application specific products
Low
Second brands
•Strong cost focus
• Peer/General/Hyatt brands
• Capture mid market growth - lower cost manufacturing
© SKF Group
Slide 15
BeyondZeroTM
+
Reduce the negative environmental
impact from our own operations and
those of our suppliers.
Customers:
SKF BeyondZero portfolio
BeyondZero
0
Suppliers
SKF
Manufacturing
Transportation
Scope 2
© SKF Group
Slide 16
Scope 1
Scope 3
Innovate and offer our customers
new technologies, products and
services with enhanced environmental
performance characteristics.
BeyondZero portfolio – how it works
DESIGNED FOR
Criteria
• Life cycle trade off’s
• Base line comparison
• CO2 / environmental savings
• Total direct CO2 savings
• Total revenue
APPLIED FOR
• Total enabled CO2 savings
• Total revenue
© SKF Group
Slide 17
BeyondZero portfolio, examples
SKF ConRo reduced CO2 emissions
with 1.5 tonne per unit and year.
If SKF were to equip all new motors ranging
from sizes 1-50 HP with its current SKF E2
bearing range, a yearly 290,000 tonnes of CO2
emissions would be avoided.
A light commercial vehicle with four SKF
Low Weight Hub Bearing Units reduces
CO2 by 5.0 kg CO2 per year.
© SKF Group
Slide 18
Operating margin
Long-term target level: 15%
%
16
14.2*
14
12
13.8
14.7*
14.5
12.7*
12.3
10
8
6
4
2
0
2010
One-time items
* Excluding one-time items
© SKF Group
Slide 19
2011
YTD 2012
SKF demand outlook Q3 2012, regions
Share of net sales
2011*
Sequential trends for:
Q2 2012
Q3 2012
Q3 2012
vs Q3 2011
Europe
44%
-
Asia Pacific
28%
+/-
North America 19%
++
Latin America
8%
Total
© SKF Group
* Previously published shares have been restated to reflect
the
total Group business and customer delivery locations.
Slide
20
+
+/-
SKF sequential demand trend Q3 2012
Share of net
sales 2011*
5% Energy
5% Aerospace
28% Industrial distribution
13% Industrial, general
12% Industrial, heavy, special and off-highway
10% Vehicle service market
4% Railway
3% Two-wheelers and electrical
13% Cars and light vehicles
5% Trucks
© SKF Group
* Previously published shares have been restated to reflect
the
total Group business and customer delivery locations.
Slide
21
Debt structure, maturity years
EURm
600
500
500
396
400
300
200
130
100
0
2013
2014
• Credit facilities:
EUR 500 million 2017
SEK 3,000 million 2017
Slide 22
100
110
2015
2016
2017
0
2012
© SKF Group
100
2018
• No financial covenants nor material
adverse change clause
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
© SKF Group
Slide 23
© SKF Group
Slide 24