1 / 44

Tom Johnstone President and CEO

Tom Johnstone President and CEO. SKF Capital Markets Day ● 10 September 2014. SKF Capital Markets Day 2014 – Main topics. B usiness update - Group and Business Areas

tamekah-bridges
Download Presentation

Tom Johnstone President and CEO

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. Tom JohnstonePresident and CEO SKF Capital Markets Day ● 10 September 2014

  2. SKF Capital Markets Day 2014 – Main topics • Business update - Group and Business Areas • Activities/actions to support strategic priorities and financial targets - growth, operating margin, net working capital, ROCE • Development in Asia and particularly China • Specific industry/area focus - renewable energy, marine and lubrication • Asset life cycle and mobility • Customer view on SKF

  3. Agenda CMD 2014

  4. Alrik Danielson, Designated CEO • New President and CEO • as of 1 January 2015 • Born: 1962 • B.Sc in Business Administration and International Economics from the University of Gothenburg • 1987-2005 Previous positions within SKF: • Financial controller in Gothenburg • President, Industrial Division in Spain and Portugal • President, SKF do Brazil • President, Industrial Division • and several other managerial positions. • 2005-2014 HöganäsAB, President and CEO CMD 2014

  5. Key topics • Half year performance and outlook for Q3 • SKF Group financial targets and priorities • Specific focus- purchasing- inventory reduction- UNITE- Kaydon CMD 2014

  6. Key topics • Half year performance and outlook for Q3 • SKF Group financial targets and priorities • Specific focus - purchasing - inventory reduction - UNITE - Kaydon CMD 2014

  7. SKF Group – Half year 2014 Keypoints Sales volumes up by 5.0% y-o-y. Manufacturing was higher compared to last year. CMD 2014

  8. Sales development by geographyOrganic growth in local currency YTD 2014 vs YTD 2013 Europe 3% North America 3% Asia/Pacific 13% Latin America 1% Middle East & Africa 18% CMD 2014

  9. Components in net sales CMD 2014

  10. SKF demand outlook Q3 2014, main regions CMD 2014

  11. SKF demand outlook Q3 2014, main business areas CMD 2014

  12. Key topics • Half year performance and outlook for Q3 • SKF Group financial targets and priorities • Specific focus - purchasing - inventory reduction - UNITE - Kaydon CMD 2014

  13. Financial targets 8% Changes in sales in local currency incl. structure 20% Return on capital employed 15% Operatingmargin One-time item One-time item for the individual year CMD 2014

  14. SKF’s priorities • Sustainable profitable growth • Expand the platform concept • Exploit the asset life cycle approach • Develop new products and grow SKF BeyondZero portfolio • Extend and grow second brands • Acquisitions • Investments & Innovation • New and existing facilities • Research and development • IT systems • Mobility • Capital efficiency • Fixed capital • Net working capital • Cost reduction • Business Excellence • Consolidation of manufacturing • Optimization and productivity improvements • Reduction in purchasing costs CMD 2014

  15. SKF’s priorities • Sustainable profitable growth • Expand the platform concept • Exploit the asset life cycle approach • Develop new products and grow SKF BeyondZero portfolio • Extend and grow second brands • Acquisitions • Investments & Innovation • New and existing facilities • Research and development • IT systems • Mobility • Capital efficiency • Fixed capital • Net working capital • Cost reduction • Business Excellence • Consolidation of manufacturing • Optimization and productivity improvements • Reduction in purchasing costs CMD 2014

  16. Key topics • Half year performance and outlook for Q3 • SKF Group financial targets and priorities • Specific focus - purchasing - inventory reduction - UNITE - Kaydon CMD 2014

  17. Purchasing in SKF

  18. SKF Global Spend Total SKF spend 2013 Direct Material 18% Steel Raw Material & Rolling Elements Total SKF spend is SEK 36 billion – direct and indirect representing ~ 50% respectively 44% Rings & Subcontracting Components 38% SEK 17.7 billion 19 119 Indirect Material & CAPEX 8% MRO 27% 12% Facility Management Professional Services 13% Logistics 18% IT Total Direct Material Indirect Material 21% CAPEX SEK 15.6 billion CMD 2014 Source: Spend cube

  19. The foundation is in place New process framework New competence framework Current state & opportunity assessment Vision, strategy & future state How are we performing today? What should purchasing be doing? Which processes are necessary to execute the role? Which competencies are required to execute the processes? New job roles New organizational design New governance model Operational set-up What titles and job roles do we need to perform the processes? What organizational design best ensure we match processes, competencies and roles? What is the most efficient way of delivering the processes with minimum cost? Who is responsible for what decision in the processes?

  20. Our global presence • Sourcing centres in • Chicago • Gothenburg • Pune • Shanghai • International purchasing offices in • Japan • Korea • Turkey • Russia • Ukraine • Slovakia • Mexico CMD 2014

  21. Responsible sourcing SKF Care in action – integrated part of purchasing strategy CMD 2014

  22. Purchasing Strategic Direction AGILE – ADAPTIVE & ALIGNED Regional supplier base Supplier Rationalization Strategic supplier relationships Supply Chain Agility Peopledevelopment UNITE TCO – Q C D I M – Cash CMD 2014

  23. Supplierrelationship Management - Consolidation Strategic Suppliers Preferred Suppliers DIRECT MATERIAL Target 14 -1,000 suppliers Developing Suppliers INDIRECT & SERVICES Target 14 -5,000 suppliers Transactional Suppliers CMD 2014

  24. Supplier relationship management – Localization 77%  80% 90% 85%  85% 90% 80%  85% 90% 75%  80% 90% 13%  15% 25% 70%  75% 75% 10%  10% Sourcing localization 2012  2013 Target 2014 CMD 2014

  25. Strategic Sourcing projects – Components Potential savings • Strategic sourcing projects are addressing a purchasing spend of ~ SEK 1,275 million • Potential annual reduction of TCO (Total Cost of Ownership) of >15% • Supplier consolidation potential estimated to ~ 250 suppliers Sheet Metal Parts Started Q3 2014 Castings Started Q2 2014 Fasteners Started Q1 2014 Electronics Started Q2 2014 Ease of Implementation CMD 2014

  26. Strategic Sourcing projects – Indirect material • Strategic sourcing projects 2014 addressing a spend of SEK 1.3 billion Potential savings 115.000 110.000 • Under implementation • Packaging / Lubrication / Printing/Car Lease • Addressable spend SEK 550 million with >230 suppliers 105.000 100.000 95.000 90.000 • RFx ongoing • Office Supply /Tool to drawing/ Metal Cutting tools / Abrasives / Gifts and Sales promotion • Addressable spend SEK 703 million with >900 suppliers 85.000 80.000 75.000 70.000 65.000 60.000 55.000 50.000 45.000 40.000 Lubricants 35.000 30.000 25.000 Packaging Plastics Packaging Corrugated 20.000 15.000 10.000 M&S Printing project Company cars Sweden 5.000 0 Ease of Implementation 0 1 2 3 4 5 6 7 8 9 10 CMD 2014

  27. Strategic sourcing projects bringing down TCO •  TCO down 15 % on total spend for lubricants •  no of suppliers from 215 to 16 •  TCO down 10% on total spend for plastic & corrugated packaging no of suppliers from 160 to 30 CMD 2014

  28. Purchasing ramp up and saving plan (vs 2012) 2013 2014 Fcst 2015 • High Performance Purchasing organization • One SKF in Purchasing for full leverage of all spend in SKF • Category and business driven organization fully leveraging SKF’s purchasing power • Global job roles and decision matrix (RAPID) clarifying responsibilities and decision making • GPU supporting the full internal value chain (R&D/PD, After market) • Focus on Total Cost of Ownership (TCO) • Strong alignment with the business through a clear target setting process • Highly competent purchasing professionals • Reduced supply chain risk and costs through top performing suppliers in Q C D I M SEK 800 m SEK 400 m • Separation of strategic tasks from transactional tasks • Sourcing waves and continued Speed Sourcing activities • Supplier Innovation Forums withstrategicsuppliers • Strategic Partnership Agreements • Common purchasing processes • Competence mapping and competence development program • Supplierconsolidationthroughincreasedsourcingleverage • New GPU org. in operation • New process framework • New competence framework, role descriptions and career path model • Sourcing waves 1 / Speed sourcing started to leverage spend across all BUs • Integration of BU Purchasing • Localization of the strategic supplier base

  29. Inventory reduction activities

  30. Focus areas to reduce inventory Customers Suppliers Manufacturing Distribution Forecasting and planning Business mix and demand variations Supply structure and flexibility Inventory Product range and service policies CMD 2014

  31. Program cornerstones and objectives Increase supply flexibility • Reduce lead times from supplier to customer • Reduce manufacturing set up timesand increase frequency • Balance regional manufacturing/ supply/ regional demand Optimize product range and service policies • Review/reduce product assortment • Review numberofstockingpoints and stockingpolicies • Eliminateduplicationofinventoryacrossstockingpoints Improve forecasting and end-to-end planning • Improve forecasting and planning process to drive entire demand chain end-to-end CMD 2014

  32. Program timeplan Increase supply flexibility Pilots in selectedproductlines and regions Rolloutto all productlines and regions Optimize product range and service policies Improve forecasting and end-to-end planning Implementimproved process (global roll out) CMD 2014

  33. UNITE UNITE

  34. Background • Current systems landscape is fragmented and partly based on old mainframe solutions that need to be replaced • Strategytobecome the KnowledgeEngineering Company puts new requirements on ourprocesses and systems support CMD 2014

  35. What we want to achieve Suppliers Customers Purcha- sing Manufac- turing Distri- bution Sales Leverage SKF full global scale in sourcing Improve forecasting and end-to-end planning Streamline processes to reduce waste Easy for customers to do business with SKF – One coherent interface across all platforms Standardizeprocesses and master data globally One modern, integrated systems landscape CMD 2014

  36. UNITE – our approach • A business led program • Dedicateddevelopment and roll outorganization • SAP as main software partner • Scope is sales, supply chain, purchasing and finance processes/systems • Gradual design and testing of new processes/systems in a series of pilots before fullscale rollout CMD 2014

  37. UNITE rollout plan 2013 2014 2015 2016 2017 2018 2019 2020 Rolloutphase AMERICAS ASIA-PACIFIC Italy Design phase Country pilot 3 Germany , France Template EMEA Country pilot 2 Finland pilot Purchasing pilot CMD 2014

  38. Kaydon update

  39. Kaydon Corporation Net sales: around USD 475 million Employees: around 2,180 Headquarter: USA Manufacturing:Friction control products (primarily bearings), velocity control products and specialty products, including environmental services. CMD 2014

  40. Kaydon brands in the SKF Family CMD 2014

  41. Kaydon integration - Synergies • Cost synergies • Finance and legal • Purchasing • Logistics • Target – USD 30 million by end 2016 • Status – USD 12 million fcst for 2014 • Sales synergies: • Renewable energy • Medical • Aerospace • Industrial aftermarket • Target – additional sales of USD 50 million by 2018 • Status – new business agreed, new wind order for USD 200 million (50% synergy?) CMD 2014

  42. Kaydon integration – Financial performance • Sales development • growth is 7% in local currencies • good growth in both velocity control and friction control • Operating margin • Excluding PPA it has improved by approx. 300 basis points • PPA impact is some 500 basis points • Outlook Q3 • Continued good growth • Integration work continues • - increased focus on sales synergies • - continue activities on cost synergies CMD 2014

  43. SKF’s priorities CMD 2014

More Related