0. Industrial Market, Strategic Industries
31 March 2017
31 March 2017

1. Speakers 25 min Rakesh Makhija President Strategic Industries
15 min Rutger Barrdahl Director Railway and Off-highway
15 min Ole K Jødahl
Director
Industrial Drives
5 min Key business message & Summary
15 min Q&A
CMD 2013

2. Agenda Strategic Industries agenda & overview Significant news
Strategy and market direction
Value and Cost leadership
Asset Life Cycle – ‘every business must have a service business’
SKF BeyondZero
Outlook and key business message
CMD 2013

3. Industrial Market, Strategic Industries
Net Sales 2012 = SEK 20,204 million
No. of employees = 19,096
Full responsibility for sales to both OEM and end users, as well as business development, manufacturing, and engineering
% of net sales by geographical area (2012):
Middle East, Africa
Asia, Pacific
Europe
North America
CMD 2013
31 March 2017

4. Film
31 March 2017

5. Voice of the Customer – what is important to them
Energy efficiency
Reliability
Cost reduction
Uptime
Partnership
CMD 2013
31 March 2017

6. Significant news
31 March 2017

7. Aerospace Significant news
Long-term contract worth SEK 900 million with Turbomeca
Awarded key bearing programs with the industry leaders (Pratt GTF, Bell 525, Eurocopter X4, Safran LEAP X)
Renewed long-term agreements with major partners such as GE and Agusta- Westland
SKF Aerospace Innovation Centers with Penn State Erie, The Behrend College, and a co-Chair with INSA Lyon dedicated to the study of lubricated interfaces in aerospace
In France, SKF and INSA Lyon have jointly created a Chair dedicated to the study of lubricated interfaces, to explore the identification, modeling and understanding the behavior of lubricants in lubricated interfaces under extreme conditions.
In the USA, SKF has partnered with Penn State Erie, The Behrend College, to develop applied research initiatives, pursuing advancements in composites, steel and heat treatments, testing and sensor technology.
CMD 2013
31 March 2017

8. Railway Significant news
Start up of production and global launch of a new range of Tapered Roller Bearing units (AAR) for freight cars, strengthening our role in the large freight wagon markets.
Major orders of wheel set bearings (TBU) for very high speed trains (>300 km/h) in China, with the customers Tangshan Loco and Changchun Railway Co.
Very strong overall growth in our Chinese railway business for passenger train applications.
CMD 2013
31 March 2017

9. Renewable Energy Significant news
Three-year agreement signed with Siemens Windpower for supply of the new generation SKF Nautilus bearings
Success with SKF WindCon systems to Vestas Services in multiple markets
Supplier and development partner to David Brown Wind for gearbox development for a multi- megawatt offshore wind turbine model
SKF in forefront development in the ocean energy market with supply agreements with several manufacturers of wave and tidal turbine devices
Launch of the SKF Wind Industry Quality Standard
CMD 2013
31 March 2017

10. Traditional Energy Significant news
Extended service contract with two major oil producers on the Norwegian shelf, SEK 40 million over 5 years
Service contract with major USA oil & gas pipeline (20,000km) in the US, 3 years SEK 20 million
Contracts for condition monitoring, bearings and maintenance services with a major Latin American oil company for SEK 20 million over 3 years
Supplying Magnetic Bearing technology for two new major off shore projects in Australia for the Ichthys Gas Field
CMD 2013
31 March 2017

11. Industrial Drives Significant news
Received large prototype orders from major Chinese and American air-blower customers for our new high speed permanent magnet motors using magnetic bearings
Tripled seal sales to a leading German gearbox producer. We are the main seal supplier to several of their manufacturing locations
New product start of Full Complement Cylinder Roller Bearings in a market that was traditionally dominated by our competitors in Germany
CMD 2013
31 March 2017

12. Precision Significant news
Large order achieved in material joining applications for Automotive industry, to supply SKF Electromechanical Cylinders (based on SKF superior roller screw technology)
Global launch of new telescopic pillar for ophthalmic and infant care devices
Initiated Super Precision bearings production in Charleston, US to better serve the North America machine tool market
Machine Tool Competence Centre in Shanghai
CMD 2013
31 March 2017

13. Lubrication Significant news
Photo: BEUMER Group GmbH & Co. KG
Equipped BEUMER belt conveyer complex for unloading iron ore vessels in Malaysia with 100 SKF automatic lubrication systems
Secured Oil Circulation System and Grease lubrication systems for three new machines at Metso Paper Sweden AB
Supplying 25 Automatic Lubrication System including installation, testing and documentation to the Norwegian Public Roads Administration
CMD 2013
31 March 2017

14. Strategy and market direction
31 March 2017

15. SI agenda – short to medium term
Making growth happen – profitably
Every business must have a service business
Manufacturing Development – cost, quality, and safety
Execute SI organization efficiency programs – footprint, stock optimization, and cost reduction
China, Germany, USA, and India
M&A
SKF BeyondZero portfolio
Building a great SI organization – meritocracy, excitement and vibrancy
Value and Cost Leadership – the road to sustained leadership
CMD 2013
31 March 2017 15

16. Capture the full potential of the asset life cycle
Concept evaluation & simulation
Detailed calculations & virtual testing
Design validation & real testing
Series production
Factory Acceptance Test > OEM Asset
Idea
Design
Develop
Manufacture
OEM Supply
End User Install
End User Install
Commissioning > Site Acceptance Test
Asset Register development & spare parts plan
Maintenance strategy deployment
Operate
Monitor
Maintain
Repair
Restore
Operator Inspections (technology & processes)
Condition Monitoring & prognostics
Remote Diagnostics & Onsite Investigations
- Maintenance & Reliability Engineering
Mechanical Services / Troubleshooting
Root Cause Failure Analysis
Reliability analysis & improvement assessment
CMD 2013
31 March 2017

17. Asset life cycle management for wind industry
Design and develop
Engineering Consultancy Services
Calculation and simulation tools
Design development partnership with turbine manufacturers
R&D and testing activities
Manufacturing and testing
Customized mainshaft solutions
(Nautilus, Self aligning / CARB and rigid)
Industry specific gearbox offerings;
(HC-CRB, separable HC-CRB, black-oxidized)
Generator solutions; (XL-hybrid bearings, Insocoat bearings)
Sealing solutions, Lubrication systems
Specifications
(Active involvement in
standardization
committees and
other industry bodies)
Maintenance & Repairs
Bearings & seals replacement parts
Gearbox Spare part kits
Gearbox refurbishment services
Logistic services
Installation
Alignment services
Bearing mounting services
Operate and Monitor
WindCon monitoring system
Remote monitoring services
Lubricants
Mechanical & Training services
Asset Efficiency programs
CMD 2013
31 March 2017

18. Value built around Asset Life Cycle Management
END USER
OEM
Manufacture
Repair Redesign
Develop
Operate Monitor Maintain
Design
Install
Idea
CMD 2013
31 March 2017

19. Value propositions for wind aftermarket
Spare parts
Driveline services
Condition based maintenance
Remote monitoring & Asset Management Services
CMD 2013

20. Availability – Spare Parts Management Program for wind
SKF Spare Parts Management
As wind farms age, the O&M cost increase
In order to maintain turbine performance and reliability, a Spare Parts Program is needed to ensure
Availability of key and critical components
Short lead times and committed service levels
Spare parts for gearboxes, main bearings, generators,…
Bearings
Housings
Seals
Lubrication systems
Lead time
Availability
CMD 2013

21. LCOE reduction by early involvement!
Levellized Cost of Energy (LCOE) - Driveline services for wind
SKF driveline services
Actively develop and implement new, efficient solutions and services
Root cause failure analysis on large drive train components like main shaft and gearbox
Development of upgrade packages
Wind turbines specific improvement programs
LCOE reduction by early involvement!
Offer
Drive line service offers:
Upgrading instead of replacing
Bearing remanufacturing
Application analysis
Training
CMD 2013

22. Reduce maintenance – Condition Based Maintenance for wind
Page 22
Reduce maintenance – Condition Based Maintenance for wind
Condition Based Maintenance
Clear industry trend to equip multi MW WTGs with condition monitoring systems
Large utilities upgrade their wind farms with CMS
Market focus still on hardware
Values lies in the efficient remote diagnostic capabilities and expertise.
WindCon + Active WindCon
Vattenfall – Vestas V80 – Esbjerg Sweden
CBM enables value positioning in terms of:
Upgrading customer assets
Increasing power output
Increasing uptime
Maintenance
cost
Availability
CMD 2013
31 March, 2017
31 March 2017

23. Electrical Motor Monitoring Turbomachinery & Pumps
Oil and gas services
Maintenance strategy
Mechanical Support
Alignment, Balancing
Condition Monitoring
Electrical Motor Monitoring
Advanced Diagnostics
Turbomachinery & Pumps
Maintenance complexity
Business impact 1 2 3 4
SKF services directly to Oil & Gas
Asset management and maintenance optimization, Reliability services, Condition Monitoring and Advanced Diagnostic services: Mechanical support, Training. As well as hardware and software solutions to support all our services. All these services are presently being delivered on North Sea facilities by our teams in Aberdeen and Norway.
CMD 2013
31 March 2017

24. Magnetic Systems services
Installed base:
Large installed base and growing
Worldwide organization
Activities:
Field support service (tuning, commissioning, assistance)
Spare parts
Retrofit and upgrades
Maintenance & training
Success factors:
Short lead time and service level commitment
Competent service organization
New Collaborative Business Model
31 March 2017

25. Traditional Power services
Probabilistic risk assessment (PRA) is a systematic and comprehensive methodology used to evaluate risks associated with complex engineered systems and facilities. In a PRA, risk is characterized by two quantities:
the magnitude (severity) of the possible adverse consequences, and
the likelihood (probability) of occurrence of each consequence.
SKF (ERIN) has established a proven track record as the leading provider of Probabilistic Risk Assessment (PRA) consulting services to the power industry.
CMD 2013
31 March 2017

26. Lubrication - service Rautaruukki Steel Mill, Raahe, Finland
20,000 lubrication points automated by SKF
“Ruukki Metals OY has signed a lubrication service contract with SKF in Finland.
The service covers several areas of the mill and is worth 500,000 euro”
Ruukki
CMD 2013
31 March 2017

27. Lubrication – Top of Rail (TOR) Conditioning Systems
We undertake full responsibility for installation, commissioning, including civil works.
CMD 2013

28. The SKF BeyondZero portfolio
31 March 2017

29. The SKF BeyondZero portfolio – Strategic Industries
ELI spherical plain bearing
Cylinder lubrication unit
Food line Y-bearings
Titanium bearings for Aerospace
SKF Solar Hub
Servo actuator
SKF E2DGBB
SKF solar linear actuator
SKF Nautilus
SRB + CARB
High endurance Slewing bearings
Energy efficient blowers
SKF Flowline
Active magnetic systems
Dry lubrications for conveyor belts
CTBU low friction seal
Sour gas compressor bearings
CMD 2013

30. Business Unit presentations
31 March 2017

31. Outlook and key business message
31 March 2017

32. Performance 2011 – 2013 YTD 2011 2012 Half year 2012 Half year 2013
SEKm
Net sales
20 093
SEKm
10 792
SEKm
9 348
SEKm
13.9%
(14%) restated
9.8%
(10.2%)
9.8%
(10.7%)
9.2%
(11.2%)
Operating margin
CMD 2013

33. Market trend per industry
SI overall outlook:
Modest improvement in overall business environment
Speed of change will differ between segments
China growth expected to improve
Drive life cycle growth strategy
Aerospace:
Strong demand driven by single aisle demand, Boeing and Airbus, supporting a stable, high, build rate
Continuing growth in RIC
Railway & Off-highway:
Railways: Asia coming back on growth track, Europe and USA in stable mode
SKF: Continued strong Agri business
Contraction in mining related business
Renewable energy:
SKF: Renewable Energy in a phase of business recovery, positive projections
Ongoing quick globalization of industry, with new emerging markets developing
Trend of expanding turbine sizes and wind industry going offshore
CMD 2013
31 March 2017

34. Market trend per industry
Traditional energy:
Deepwater and subsea exploration & production continue to be growth areas
Natural gas boom impacting future investments in transportation (pipelines)
Hydraulic fracturing technology now being implemented in UK and China
Industrial Drives:
Modest global business growth
Energy efficiency importance increases - The BeyondZero portfolio and our new launches supports the growth
SKF: New range of application specific performance solutions
Precision:
Moderate business recovery with higher growth in USA, China and India
SKF: Increase regional manufacturing footprint
SKF: Ongoing product cost reduction programs
Lubrication:
SKF: Increased focus on key developing segments (Agriculture, Oil & Gas)
SKF: Integration and synergy-building continue according to plan
SKF: Focused on key growth markets (Russia, Asia, and Latin America)
CMD 2013
31 March 2017

35. Key business message – Strategic Industries
Growth drivers
Every business must have a service business
China, Germany, USA, and India
The SKF BeyondZero portfolio
Competitive advantage
Life cycle management
Five technology platforms
Global footprint with local competence
Cost efficiency
Manufacturing Development – cost, quality, and safety
Execute SI organization efficiency programs – footprint, stock optimization, and cost reduction
Business Excellence across SI
CMD 2013
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36. The Value and Cost Leadership Equation
1930 Oil & Gas Journal ad
valued
CMD 2013