SKF Group
Tom Johnstone, President and CEO
September 2012
SKF - A truly global company
Established:
1907
Sales 2011:
SEK 66,216 million, (~ USD 10 bn)
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
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
2
* 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
and Africa
Asia/
Pacific
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
3
PreviouslySlide
published
shares have been restated to reflect the new business structure from 2012.
© SKF Group
Off-highway
Long-term financial targets
8%
15%
15
- 20
© SKF Group
Slide 4
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 5
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 6
Growth development by geography
Local currencies H1 2012 vs H1 2011
Europe
-2.3%
North
America
+11.6%
Asia/Pacific
-8.0%
Latin
America
+13.8%
© SKF Group
Slide 7
Middle East
& Africa
+2.2%
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
8
+
+/-
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
9
Main initiatives going forward
• Accelerate profitable growth
• Reduce cost and eliminate waste
• Invest in Growth
© SKF Group
Slide 10
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 11
SKF platforms – managing and reducing friction/energy
Market SEK 75 bn
~ USD 12 bn
Market SEK 320 bn
~ USD 50 bn
Market SEK 30 bn
~ USD 5 bn
PT
Market SEK 70 bn
~ USD 11 bn
Market > SEK 40 bn
~ USD 6 bn
Market SEK 100 bn
~ USD 16 bn
© SKF Group
Slide 12
SKF platforms – managing and reducing friction/energy
Market SEK 75 bn
~ USD 12 bn
Market SEK 320 bn
~ USD 50 bn
Market SEK 30 bn
~ USD 5 bn
PT
Market SEK 70 bn
~ USD 11 bn
Market > SEK 40 bn
~ USD 6 bn
Market SEK 100 bn
~ USD 16 bn
© SKF Group
Slide 13
R&D – investments and main areas
© SKF Group
Slide 14
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 15
Investing for the future
Dalian, China
Mysore, India
© SKF Group
Slide 16
Jinan, China
Bengaluru, India
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 17
ABBA (2007)
PMCI (2007)
GBC (2012)
© SKF Group
Vogel (2004)
QPM (2008)
PEER (2008)
Mechatronics
Lincoln Industrial
S2M (2007)
Geographies
Lubrication
systems
TCM (2003)
General Bearing Corporation
• Established in 1955, headquarter in West Nyack, NY, USA.
• Four factories in China, one ball bearing factory,
two tapered roller bearing factories and
one precision roller factory.
• 1,750 employees, 140 are located in USA and 1,610 in China.
• Sales in 2011: around USD 155 million
• Focused to serve OEM and end-user customers within the
transportation markets: Truck, Trailer, Automotive, and Industrial.
• Brands:
© SKF Group
Slide 18
Strategy for second brands
• Capture mid-market growth
• Lower cost manufacturing
• Global market approach
• Segment focus
- PEER, Industrial segments
- GBC, Auto, HD segments
© SKF Group
Slide 19
Branding strategy – to address the market
High
• Knowledge engineering
• Documented value
• Cost reduction
• Brand
Middle
• Application specific products
Low
Second brands
• Strong cost focus
• Peer/General/Hyatt brands
© SKF Group
Slide 20
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 21
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 22
BeyondZero portfolio - Industrial
SKF Energy Monitoring Service for pump
systems helped reduce 1,700 tonnes of
CO2 emission per year.
SKF ConRo reduced CO2 emissions
with 1.5 tonne per unit and year.
SKF Solar Linear Actuator contributes to
increasing the energy production from one
solar panel which 4.4 tonnes CO2 /year
© SKF Group
Slide 23
BeyondZero portfolio - Industrial
Replacement of hydraulic lifts with two
SKF CASM electric cylinders produced
a CO2 savings of 4.9 tonnes per year for
one machine.
SKF products and solutions for
renewable energy help display CO2
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.
© SKF Group
Slide 24
BeyondZero portfolio - Automotive
SKF bus door actuator saves 1,900 kg
CO2/year compared using pressurized
air for operating the doors.
SKF Rotor Positioning bearing reduces
fuel consumption and CO2 emissions
up to 15%.
SKF StopGo for two-wheelers
Reduces CO2 emissions by 5 g per kilometre.
© SKF Group
Slide 25
BeyondZero portfolio - Automotive
SKF Low Friction Seal reduces friction
by up to 55%, which provides a CO2
savings of over 1 g per kilometre.
A light commercial vehicle with four SKF
Low Weight Hub Bearing Units reduces
CO2 by 5.0 kg CO2 per year.
SKF products and solutions for
electric vehicles
© SKF Group
Slide 26
Climate strategy – BeyondZero – Targets
Customer
solutions
SKF’s own
operations
Transport and
distribution
Raw material and
components
© SKF Group
Slide 27
• Quadruple (x4) the revenue from the BeyondZero portfolio from 2.5
Billion SEK in 2011 to 10 Billion SEK by 2016.
• Reduce the total annual energy use of the SKF Group by 5 %
below the
2006 level by 2016.
• Reduce the energy use per production output (value added) by 5%
yearover-year CO2
during
the periodtonne-kilometre
(2012-2016). for all transports
• Reducing
emissions/
managed
by SKF Logistics Services by 30% compared to 2011 by the end
of
2016.
• 100% of SKF's energy intensive suppliers certified according to ISO
50001
Energy Management Standard by 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 28
© SKF Group
Slide 29