Presentation on theme: "SKF Nine-month results 2014"— Presentation transcript:
1 SKF Nine-month results 2014 Tom Johnstone, President and CEO15 October 201411 April 2017
2 Alrik Danielson, new President and CEO from 1 January 2015 B.Sc in Business Administration and International Economics from the University of GothenburgPrevious positions within SKF:Financial controller in GothenburgPresident, Industrial Division in Spain and PortugalPresident, SKF do BrazilPresident, Industrial Divisionand several other managerial positions.Höganäs AB, President and CEO
3 Examples of new business Doosan Heavy Industries and Construction, SKF Supergrip Bolts South Korea SKF Nautilus bearingA leading Chinese locomotive manufacturer Traction motor bearingsHSD SpA, Italy Super precision bearings and engineering supportA major Australian customer Maintenance contract in the agriculture industryMedical device manufacturer in California, Slewing ring bearings USA
4 Examples of new business Tesla Motors Bearing for the gearbox, e-motor and wheelsVolvo Cars Wheel hub bearing unitsScania Wheel bearing units and high pressure valve stem seals
5 Customer awardsSupplier Performance Award – Snecma, Safran Group, FranceBest Supplier Award – Weg Electric Motor Manufacturing Co., Ltd, ChinaBest Supplier Award – Shanghai Hanbell Precise Machinery Co. Ltd., ChinaExcellent Engineering Development Award – Shanghai Automobile Gear Works (SAGW), ChinaFiat Qualitas Award – Fiat, ArgentinaCertificate of Appreciation for quality and delivery performance – Honda, India
6 Highlights New Kaydon factory at the SKF Campus in Cajamar, Brazil. New Global Technical Center in the greater Chicago area, US.For the 15th year in a row, one of the world’s most sustainable companies by the Dow Jones Sustainability World Index (DJSI).For the 14th consecutive year, a constituent of the FTSE4Good Index Series.
7 Examples of new products and solutions SKF Multilog Online System IMx-BTapered roller bearing unit for passenger railway applicationsCompact tapered roller bearing unit for heavy freightSKF Mudblock cassette seals, MUD 11SKF Machine Tool Observer MTxSKF Multilog On-line System IMx-MSKF Static Motor Analyzer Baker AWA-IVPuraBreeze 100
8 SKF Group – Q3 2014 Financial performance (SEKm) 2014 2013 Net sales 17,78715,623Operating profit2,0731,923Operating margin, %11.712.3Operating margin excl. one-time items, %11.812.9Profit before tax1,8271,717Basic earnings per share, SEK3.012.47Cash flow after investments before financing excl. EU payment1,4761,135Cash flow after investments before financingOrganic sales growth in local currency:SKF Group3.3%Europe0%Strategic Industries9.1%North America3%Regional Sales and Service0.8%Asia8%Automotive-0.5%Latin AmericaMiddle East and Africa7%Key pointsSales volumes up by 1.9% y-o-y.Manufacturing was relatively unchanged compared to last year.
9 SKF Group – Nine month 2014 Financial performance (SEKm) 2014 2013 Net sales52,47647,167Operating profit6,1935,240Operating margin, %11.811.1Operating margin excl. one-time items, %12.2Profit before tax5,3754,581Basic earnings per share, SEK8.276.57Cash flow after investments before financing excl. EU payment2,6401,390Cash flow after investments before financing-185Organic sales growth in local currency:SKF Group4.6%Europe2%Strategic Industries8.7%North America3%Regional Sales and Service1.7%Asia11%Automotive2.8%Latin America1%Middle East and Africa14%Key pointsSales volumes up by 3.8% y-o-y.Manufacturing was slightly higher compared to last year.
10 Organic sales growth in local currency % changey-o-y201220132014
11 Organic sales growth in local currency % y-o-y4.5%-0.7%-2.5%Structure in 2012: 0.4%Structure in 2013: 2.5%Structure in 2014: 4.7%
12 Sales development by geography Organic growth in local currency Q3 2014 vs Q3 2013 Europe0%NorthAmerica3%Asia/Pacific8%LatinAmerica0%Middle East& Africa7%
13 Sales development by geography Organic growth in local currency YTD 2014 vs YTD 2013 Europe2%NorthAmerica3%Asia/Pacific11%LatinAmerica1%Middle East& Africa14%
14 Components in net sales 201220132014Percent y-o-yQ1Q2Q3Q4Volume-0.8-2.8-5.0-5.9-8.7-184.108.40.206.23.61.9Structure-0.10.00.81.01.52.61.14.220.127.116.11Price/mix2.00.50.7-0.6-0.2-0.41.3Sales in local currency-3.7-4.2-18.104.22.168.710.58.48.6Currency-2.7-3.6-4.0-2.2-2.15.3Net sales1.42.8-6.4-7.8-10.5-22.214.171.1240.49.513.9
18 Operating margin per business area as reported %Regional Sales and ServiceSpecialty BusinessStrategic IndustriesAutomotive201220132014
19 Operating margin per business area excl. one-time items %Regional Sales and ServiceSpecialty BusinessStrategic IndustriesAutomotive201220132014
20 SKF’s programme to improve efficiency and reduce cost Restructuring, SEKm:Q4/12Q1/13Q2/13Q3/13Q4/132013Q1/14Q2/14Q3/14TotalCost taken2002501905049010020810People affected530410320130860170301,590Giving future gross savings, SEKm:Full year gross saving15010080402205475Realized gross savings from total programme, SEKm:vs 2012vs 2013Q1/13Q2/13Q3/13Q4/132013Q1/14Q2/14Q3/142014Restructuring153575200705010130S&APurchasing10040060260Total165185225800150110390Note: Run rate Q SEK 1,340 million vs 2012.
22 Operating profit bridge, nine month 2014 SEKm+505-120-829+390+3526,193+225+4305,240Q1-Q3 2013Volumes excl. Specialty BusinessPrice/mixSpecialty BusinessSavingsOne-time itemsCurrenciesOther*Q1-Q3 2014* R&D, S&A, IT, inflation etc.
23 Net working capital as % of annual sales Target: 27%%201220132014
24 Return on capital employed One-time items* Excluding one-time items%17.1*15.1*13.9*126.96.36.199ROCE: Operating profit plus interest income, as a percentage of twelve months rolling average of total assets less the average of non-interest bearing liabilities.
25 Cash flow, after investments before financing SEKm1)5)4)3)2)201220132014Excl. acq. and div.: 1) Q SEK 1,707 million2) Q SEK -69 million3) Q SEK 871 million4) Q SEK 1,170 millionExcl. EU payment 5) Q SEK 1,423 million
26 Net debt AB SKF, dividend paid (SEKm): 2012 Q2 2,504 2013 Q2 2,530 Cash out from majoracquisitions (SEKm):2012 Q3 8292013 Q1 8232013 Q4 7,900EU payment (SEKm):2014 Q2 2,825201220132014Net debt: Loans and net provisions for post-employment benefits less short-term financial assets excluding derivatives.
27 Debt structure, maturity years 850500500200110100100Available credit facilities:EUR 500 million 2019SEK 3,000 million 2016EUR 150 million 2017No financial covenants nor material adverse change clause
28 October 2014: SKF demand outlook Q4 2014 Demand compared to the fourth quarter 2013The demand for SKF’s products and services are expected to be relatively unchanged for the Group and for Europe, slightly higher for Asia and North America and slightly lower for Latin America. It is expected to be slightly higher for Strategic Industries, relatively unchanged for Regional Sales and Service and slightly lower for Automotive.Demand compared to the third quarter 2014The demand for SKF’s products and services are expected to be relatively unchanged for the Group and for Europe, slightly higher for Asia and North America and slightly lower for Latin America. It is expected to be relatively unchanged for Strategic Industries, slightly higher for Regional Sales and Service and slightly lower for Automotive.ManufacturingManufacturing is expected to be slightly lower year over year and compared to the third quarter.
29 SKF demand outlook Q4 2014, main regions Share of net sales 2013Europe42%Asia Pacific24%North AmericaLatin America7%TotalSequential trend for Q4 2014Q4 2014vs Q4 2013+/-+-
30 SKF demand outlook Q4 2014, main business areas Share of net sales 2013StrategicIndustries29%Regional Sales and Service39%Automotive27%TotalSequential trend for Q4 2014Q4 2014vs Q4 2013++/--
31 SKF sequential volume trend Q4 2014, Industries Share of net sales 201329%Industrial distribution6%Aerospace13%Industrial, heavy, special and off-highway11%Industrial, general5%Energy4%Railway2%Two-wheelers and Electrical14%Cars and light vehiclesVehicle service marketTrucks
32 Guidance for the fourth quarter 2014* Tax level: < 30%Financial net: around SEK -220 millionCurrency impact on operating profit vs Q4: SEK +230 millionFull year: SEK +110 millionAdditions to PPE: around SEK 1.7 billion for 2014* Guidance is approximate and based on current assumptions and exchange rates.
33 SKF’s priorities Sustainable profitable growth Expand the platform conceptExploit the asset life cycle approachDevelop new products and grow SKF BeyondZero portfolioExtend and grow second brandsAcquisitionsCapital efficiencyFixed capitalNet working capitalInvestments & InnovationNew and existing facilitiesResearch and developmentIT systems and mobilityCost reductionBusiness ExcellenceConsolidation of manufacturingOptimization and productivity improvementsReduction in purchasing costs
34 Cautionary statementThis 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 under the Administration Report; “Important factors influencing the financial results", "Financial risks" and "Sensitivity analysis”.