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19 April 2012
0
SKF First-quarter results 2012
Tom Johnstone, President and CEO
19 April 2012
19 April 2012
2Highlights Q1 2012
•
SKF signed
an agreement
to acquire
the US-based
General Bearing Corporation for around
USD 125 million on a cash
and debt
free
basis.
•
SKF received
an order worth
around
SEK 350 million from Vestas
for the delivery
of main
shaft
solutions to the Vestas
V112-3.0 MW turbine.
•
SKF was
awarded
two
contracts
totaling
around
SEK 50 million from Siemens Rail Systems for railway projects in Europe. SKF will deliver axle boxes and wheel set bearing units.
•
SKF received orders from one major metal industry customer for SKF ConRo
Compacts worth EUR 1.8 million.
•
SKF signed a three-year contract with Scania. The contract includes bearings for truck wheel end units and transmissions to Scania
production facilities in Brazil.
Acquisition:
New businesses:
19 April 2012
3
•
inaugurated two SKF University Technology Centres:
•
held the SKF North American Distributor convention in Florida, and participated in a maintenance fair in Sweden.
• awarded the 140,000 certificate from the SKF Distributor College
•
launched
a range
of informational
and calculation-focused
apps
for iPhone
and iPad.
Highlights Q1 2012
SKF:
Luleå
University of Technology, for condition monitoring and asset management
Chalmers University of Technology, for sustainability and environment
Foto
: Kar
l Willi
am
Foto
: Rob
in O
lsso
n
19 April 2012
4Examples of new products
launched
in 2012
SKF Nautilus
rangeextensions
Servo Actuator
for industrial
applicationsNext
generation SNL, SE housings
A hand-held, 18-volt,
lithium-iongrease
gun
SKF SpeedSensor Unit
Integrated
monotube
seal
SKF Compact
Wire Steering
Bearing
SKF Solar Hub
SKF ThrusterMonitoring
SKF Bus DoorActuator
4
19 April 2012
5SKF Group Q1 2012
Financial performance
Q1 2012
Q1 2011Net sales, SEKm
16,931
16,702Operating profit,
SEKm
2,140
2,504Operating margin, %
12.6
15.0Profit before tax, SEKm
1,981
2,318Cash flow, SEKm
696
372
Organic sales growth in local currency:SKF Group: +1.1%Europe:
-1.2%
Industrial market, Strategic Industries:
+2.5% North America:
+14.7%
Industrial market, Regional Sales and Service:
+3.0%Asia:
-8.1%
Automotive:
-4.2%Latin America:
+11.1%
Key points Sales were relatively unchanged y-o-yManufacturing was significantly lower y-o-yInventories were reduced to 20.5% of sales
19 April 2012
6Organic sales growth in local currency
0
5
10
15
20
25
20122010 2011
% change y-o-y
19 April 2012
7Sales volume
-5
0
5
10
15
20
25
% change y-o-y
2010 2011 2012
19 April 2012
8
Europe
-1.2%
Asia/Pacific -8.1%
Latin America +11.1%
Middle East & Africa +2.5%
North America +14.7%
Growth development
by geography
Organic
growth
in local
currency
Q1 2012 vs Q1 2011
19 April 2012
9
-5
0
5
10
15
2010 2011 Q1 2012
Growth in local currency
% y-o-y
Acquisitions/DivestmentsOrganic growth
14.2% 16.3% 1.0%
Long-term target: 8% per annum
Total growth
4.8%
11.5%
0.0%
14.2%
-0.1%1.1%
19 April 2012
10Components in net sales
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
5.3 16.6 19.0 16.3 20.1 12.6 6.2 0.0 -0.8
0.0 0.0 0.0 0.0 5.0 4.4 5.1 4.8 -0.1
-0.3 -0.5 0.3 0.9 1.3 1.6 2.0 2.8 1.9
5.0 16.1 19.3 17.2 26.4 18.6 13.3 7.6 1.0
-7.7 -5.2 -3.2 -6.2 -10.8 -12.2 -6.3 -2.1 0.4
-2.7 10.9 16.1 11.0 15.6 6.4 7.0 5.5 1.4
Percent y-o-y
Volume
Structure
Price/mix
Sales in local currency
Currency
Net sales
2010 2011 2012
19 April 2012
11Operating profit
0
300
600
900
1 200
1 500
1 800
2 100
2 400
2 700
SEKm
2010
Restructuring
and one-time
items
2011 2012
19 April 2012
12Operating margin
%
0
2
4
6
8
10
12
14
16
2010
Restructuring
and one-time
items
2011
Long-term target
level: 15%
2012
19 April 2012
13Operating margin
0
2
4
6
8
10
12
14
16
2010 2011 Q1 2012
%
Restructuring
and one-time
items
* Excluding
restructuring
and one-time
items
14.7*
Long-term target
level: 15%
14.2*
13.8 14.512.6
19 April 2012
14
0
3
6
9
12
15
18
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Operating margin per business area
Strategic Industries
Regional Sales and Service
Automotive
%
2010 2011 2012
19 April 2012
15
SEKm 2012 2011
Net sales 16,931 16,702
Operating profit 2,140 2,504
Operating margin, % 12.6 15.0
Profit before taxes 1,981 2,318
Net profit 1,341 1,620
Basic earnings per share, SEK 2.84 3.44
Cash flow, after investments before financing 696 372
First quarter 2012
19 April 2012
16
18
19
20
21
22
23
24
25
Inventories as % of annual sales
% Long-term target level: 18%
2010 2011 2012
19 April 2012
17Cash flow, after investments before financing
-6 000
-5 000
-4 000
-3 000
-2 000
-1 000
0
1 000
2 000
SEKm
2010 2011 2012
* SEK 798 million,
excluding
SEK 6,799 million for the acquisition
of Lincoln.
*
19 April 2012
18Return on capital employed
0
5
10
15
20
25
30
2010 2011 Q1 2012
ROCE: Operating profit plus interest income, as a percentageof twelve months rolling average of total assets less the average of non-interest bearing liabilities.
%
21.924.0
Long-term target: 27%
23.6
19 April 2012
19Net debt
-18 000
-16 000
-14 000
-12 000
-10 000
-8 000
-6 000
-4 000
-2 000
0
SEKm
AB SKF, dividend paid (SEKm):2010 Q2
1,5942011 Q2
2,277
2010 2011
Cash out fromacquisitions (SEKm): 2010
6,799
2012
Net debt:
Loans and net provisions for post-
employment benefits less short-term
financial assets excluding derivatives.
19 April 2012
20
0
100
200
300
400
500
600
2012 2013 2014 2015 2016 2017 2018
Debt structure
Maturity years, EURm
396
100100
•
Credit
facilities:
EUR 500 million 2014 SEK 3,000 million 2017
•
No financial
covenants
nor
material adverse
change
clause
130
500
110
0
19 April 2012
21Dividend proposal
AB SKF’s Board proposes to the Annual General Meeting
an increase of the dividend by 10%, giving a dividend of SEK 5.50 (5.00) per share.
The Annual General Meeting
will
be held
on 25 April.
19 April 2012
22April 2012: Outlook for the second quarter 2012
Demand
compared
to the second
quarter
last yearThe demand
for SKF’s
products and services is expected to be slightly higher for the Group. It is expected to be relatively unchanged in Europe and Asia, and significantly higher in North America and Latin America. The demand is expected to be slightly higher for Strategic Industries and Regional Sales and Service and relatively unchanged for the Automotive.
Demand
compared
to the first quarter
2012The demand
for SKF’s
products and services is expected to be slightly higher for the Group. It is expected to be relatively unchanged in Europe, slightly higher in North America and higher in Asia and Latin America. The demand is expected to be slightly higher for all business areas.
Manufacturing
levelThe manufacturing
level is expected to be lower year on year but higher compared to the first quarter.
19 April 2012
23Demand outlook
Q2 2012, regions
(based
on current
assumptions)
Sequential
trends for: Q1 2012 Q2 2012
Share
of net
sales2011
Europe 46%
Asia
Pacific 26%
North America 19%
Latin America 6%
Total
Q2 2012 vs Q2 2011
+/-
+/-
+++
+++
+
19 April 2012
24Demand outlook
Q2 2012, business areas
(based
on current
assumptions)
Sequential
trends for Q2 2012
Share
of net
sales2011
Strategic
Industries 31%
Regional Sales
and Service 39%
Automotive 27%
Total
Q2 2012 vs Q2 2011
+
+
+/-
+
19 April 2012
25
5%
26%
18%
13%
10%
10%
6%
3%
5%
4%
Trucks
Industrial Distribution
Industrial OEM, General + Special
Cars
Vehicle
Service Market
Industrial OEM, Heavy
+ Off-highway
Energy
Two-wheelers
and Electrical
Aerospace
Railway
Sequential volume
trend Q2 2012, main
segments
(based
on current
assumptions)
Share
of net
sales
2011*
* excluding
Lincoln
19 April 2012
26Guidance for the second quarter 2012
• Tax level: around 30%
•
Financial net for the second quarter:
Around SEK -175 million
•
Exchange rates on operating profit versus 2011
Q2: SEK 125 millionFull year: SEK 200 million
•
Additions to PPE: Around SEK 2.0 billion for 2012
Guidance is approximate and based on current assumptions and exchange rates
19 April 2012
27Key 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
19 April 2012
28Cautionary 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”.
19 April 2012
29