1 / 40

The SKF Group

The SKF Group. Tom Johnstone, President and CEO 1 February 2011. Key points, Q4 report. Strong performance Operating profit: SEK 2,202 m (1,004). Operating margin: 14.3% (7.2) Profit before tax: SEK 2,048 m (765) Cash flow: SEK -5,966 m (1,445),

rigel-pennington
Download Presentation

The SKF Group

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The SKF Group Tom Johnstone, President and CEO 1 February 2011

  2. Key points, Q4 report • Strong performance • Operating profit:SEK 2,202 m (1,004). Operating margin:14.3% (7.2) • Profit before tax: SEK 2,048 m (765) • Cash flow: SEK -5,966 m (1,445), • Cash flow excl. acquisition of Lincoln Industrial SEK 798 m • Strong organic sales development in local currency: • SKF Group: +17.2% • All divisions and regions showed very good growth • Completed acquisition of Lincoln Industrial • Outlook for Q1 for SKF Group • Demand • Significantly higher compared to Q1 2010 • Slightly higher sequentially compared to Q4 2010, adjusted for normal seasonality • Manufacturing level • Significantly higher year over year • Slightly higher compared to Q4 2010, adjusted for normal seasonality

  3. Acquisition of Lincoln Industrial, Q4 2010 • A leading supplier of lubrication systems and tools • Headquarter in St. Louis, Missouri, USA • Sales of around USD 400 m in 2010 • About 2,000 employees • Total purchase price net: around SEK 6.8 bn • Financing: around SEK 3.2 bn cash (net) and SEK 3.6 bn debt

  4. Tver, Russia Haridwar, India Ahmedabad, India 1 Global Technical Centre in Shanghai New facilities opened in 2010 • 3 • factories 9 Solution Factories - in total 17

  5. Examples of new product launches in 2010 Low friction X-Tracker Four-row tapered roller bearing SKF Engineering Simulation Services SKF Commutation Sensor-Bearing Unit SKF Overrunning Alternator Pulley Unit SKF Hydraulic driven lubricator SKF Crane Asset Management SKF MetroCon – CBM for elevators and escalators SKF Drum Support Unit SKF Cam Follower Unit SKF solutions for special pumps SKF SPEEDI-SLEEVE High performance seal SKF Low Friction Engine Seal SKF One Way Clutch 2010: 251 first filings of patent applications

  6. 2010 status: 463 Black Belts 2,059 Green Belts 1,155 projects closed Six Sigma Hard savings 2005: SEK 150 m 2006: SEK 200 m 2007: SEK 302 m 2008: SEK 462 m 2009: SEK 430 m 2010: SEK 468 m 4 dimensions: ”Standard” Six Sigma, Design for Six Sigma, Lean Six Sigma and Six Sigma for Growth

  7. Sales volume % change y-o-y 2008 2009 2010

  8. Sales in local currencies (excl. structural changes) % change y-o-y 2010 2009 2008

  9. Growth in local currency(Organic growth + acquisition/divestments) % y-o-y 14.2% 7.1% -19.0% Organic growth Acquisitions/Divestments

  10. Growth development by geography Local currency Q4 2010 vs Q4 2009 Europe+17% North America +17% Asia/Pacific +20% Latin America +16% Middle East & Africa +8%

  11. Growth development by geography Local currency 2010 vs 2009 Europe+7% North America +13% Asia/Pacific +31% Latin America +20% Middle East & Africa +10%

  12. Components in net sales 2009 2008 2010 Percent y-o-y

  13. Operating profit SEKm 2010 2009 2008 Restructuring and one-time items

  14. Operating margin % 2009 2008 2010 Restructuring and one-time items

  15. Operating margin % 14.2* 12.7* 13.8 12.2 8.0* 5.7 Restructuring and one-time items * Excluding restructuring and one-time items

  16. Operating margin per division % Service Industrial Automotive 2010 2009 2008 Excluding one-off items(eg. restructuring, impairments, capital gains)

  17. Fourth quarter 2010 *after investments before financing

  18. Full year 2010 *after investments before financing

  19. Inventories as % of annual sales Long-term target level: 18% % Excluding acquisition of Lincoln Industrial X 2008 2009 2010

  20. Cash flow, after investments before financial items SEKm Excluding acquisition of Lincoln Industrial X Cash out from acquisitions (SEKm): 2008 1,284 2009 241 2010 6,799 2008 2010 2009

  21. Return on capital employed % 24.0 24.0 9.1 ROCE: Operating profit plus interest income, as a percentage of twelve months average of total assets less the average of non-interest bearing liabilities.

  22. Net debt(Short-term financial assets minus loans and post-employment benefits) AB SKF, dividend paid (SEKm): 2008 Q2 2,277 2009 Q2 1,594 2010 Q2 1,594 Redemption (SEKm): 2008 Q2 2,277 SEKm Cash out from acquisitions (SEKm): 2008 1,284 2009 241 2010 6,799 2010 2009 2008

  23. Debt structure Maturity years, EURm 530 446 400* 400* 100 100 130 55 130 • Credit facilities: EUR 500 m 2014, whereof EUR 400* m utilized SEK 3,000 m 2017, unutilized • No financial covenants nor material adverse change clause

  24. Key focus areas ahead 2010 • Profit and cash flow • Adjustment of manufacturing output to new demand levels • Growing segments and geographies • Strengthening the platform/segment approach • Competence development SKF Care and Six Sigma as guiding lights

  25. Key focus areas ahead 2010 • . • Profit and cash flow • Adjustment of manufacturing output to new demand levels • Growing segments and geographies • Strengthening the platform/segment approach • Competence development SKF Care and Six Sigma as guiding lights

  26. Dividend proposal AB SKF’s Board proposes the Annual General Meeting an increase in the dividend of 43%, giving a dividend of SEK 5.00 (3.50) per share

  27. December 2010:Outlook for the first quarter 2011 Development compared to the first quarter last year The demand for SKF products and services is expected to be significantly higher for the Group, the divisions and for the different geographical areas. Development compared to the fourth quarter 2010 and adjusted for normal seasonality The demand is expected to be slightly higher for the Group and for the different geographical areas. The Industrial Division and the Service Division are expected to be slightly higher and the Automotive Division higher. Manufacturing level The manufacturing level will be significantly higher year on year and slightly higher compared to the fourth quarter, adjusted for normal seasonality.

  28. Volume trends, regions(based on current assumptions and adjusted for seasonality)

  29. Volume trends, divisions(based on current assumptions and adjusted for seasonality)

  30. Sequential volume trend main segments Q1 2011(based on current assumptions) Net sales 2010

  31. Guidance for the first quarter 2011 • Tax level: around 30% • Financial net for the first quarter:Around SEK -200 m • Exchange rates on operating profit versus 2010 Q1: SEK -150 m • Full year: SEK -900 m • Additions to PPE: Around SEK 2.3 bn for 2011 Guidance is approximate and based on current assumptions and exchange rates.

  32. Long-term financial targets • Targets • Operating margin level 15% • Annual sales growth in local currencies 8% • ROCE 27% • Inventory to sales 18%

  33. Main initiatives going forward • Accelerate profitable growth • Reduce cost and eliminate waste • Invest for growth One SKF and SKF Care as guiding lights

  34. Main actions going forward • Accelerate profitable growth • Continue to strengthen the platform/segment approach • Increase the development, launch and commercialisation of new offerings (green) • Value based selling – using Documented Solutions Programme • Strengthen our service business • Acquisitions to strengthen platform offer • Develop other brands of the SKF Group

  35. Main actions going forward • Reduce cost and eliminate waste • Build on Manufacturing Excellence into other areas - Business Excellence • Increased manufacturing and sourcing in Best Cost Countries • Reduce product cost through ICR* activities * ICR means Integrated Cost Reduction

  36. Main actions going forward • Invest for growth • Increase sales and engineering resources • Additional factories in growth markets • Additional SKF Solution Factories • Increase spending in R&D and improve global network - accelerate plans for India and China

  37. Key focus areas ahead 2011 • Profit and cash flow • - manage currency and material headwinds • Manufacturing and suppliers to support growth • Growing segments and geographies • Initiatives and actions to support long term targets • Integration of Lincoln Industrial • Business Excellence and competence development One SKF and SKF Care as guiding lights

  38. 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”.

More Related