SKF Q1 2012 presentation by ESh0i12Z

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19 April 2012
SKF First-quarter results 2012




Tom Johnstone, President and CEO




19 April 2012
        Highlights Q1 2012                                                              2




         Acquisition:
         • SKF signed an agreement to acquire the US-based General Bearing
           Corporation for around USD 125 million on a cash and debt free basis.

         New businesses:
         • 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.


19 April 2012
        Highlights Q1 2012                                                                                     3




        SKF:
        • inaugurated two SKF University Technology Centres:
                Chalmers University of Technology,             Luleå University of Technology,
                for sustainability and environment             for condition monitoring and asset management




                                          Foto: Robin Olsson




                                                                                       Foto: Karl William
        • 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.



19 April 2012
        Examples of new products launched in 2012                                                 4




    Servo Actuator for         A hand-held,     Next generation SNL, SE        SKF Solar Hub
    industrial applications          18-volt,                  housings
                                 lithium-ion
                                 grease gun



                                                          SKF Compact                    SKF Speed
                                                          Wire Steering                 Sensor Unit
                                                               Bearing


                              SKF Thruster
                                Monitoring
                                                Integrated monotube seal   SKF Nautilus
      SKF Bus Door
      Actuator                                                             range
                                                                           extensions




19 April 2012
        SKF Group Q1 2012                                                                      5


        Financial performance                Q1 2012     Q1 2011
        Net sales, SEKm                       16,931      16,702
        Operating profit, SEKm                 2,140       2,504
        Operating margin, %                      12.6        15.0
        Profit before tax, SEKm                1,981       2,318
        Cash 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-y
        Manufacturing was significantly lower y-o-y
        Inventories were reduced to 20.5% of sales
19 April 2012
        Organic sales growth in local currency          6




        % change
          y-o-y
           25

                20

                15

                10

                5

                0

                     2010        2011            2012

19 April 2012
        Sales volume                      7




          % change
            y-o-y
             25

                20

                15

                10

                5

                0

                -5

                     2010   2011   2012

19 April 2012
        Growth development by geography                                       8

         Organic growth in local currency Q1 2012 vs Q1 2011



                                              Europe
                                               -1.2%


North America
   +14.7%
                                                               Asia/Pacific
                                                                  -8.1%


                Latin America
                   +11.1%
                                             Middle East &
                                             Africa +2.5%



19 April 2012
        Growth in local currency                                                                 9



                                                                Long-term target: 8% per annum

        Total growth       14.2%                      16.3%               1.0%
                % y-o-y
                   15     14.2%

                                                 11.5%

                   10

                                                         4.8%
                    5
                                                                   1.1%
                                   0.0%                                    -0.1%
                    0


                   -5

                            2010                      2011         Q1 2012
                           Organic growth
19 April 2012              Acquisitions/Divestments
         Components in net sales                                                    10




                   2010                         2011                        2012
Percent y-o-y      Q1     Q2     Q3     Q4      Q1      Q2     Q3     Q4      Q1


Volume             5.3   16.6   19.0   16.3   20.1    12.6     6.2    0.0    -0.8


Structure          0.0    0.0    0.0    0.0     5.0     4.4    5.1    4.8    -0.1


Price/mix         -0.3   -0.5    0.3    0.9     1.3     1.6    2.0    2.8     1.9


Sales in local     5.0   16.1   19.3   17.2   26.4    18.6    13.3    7.6     1.0
currency
Currency          -7.7   -5.2   -3.2   -6.2   -10.8   -12.2   -6.3   -2.1     0.4

Net sales         -2.7   10.9   16.1   11.0   15.6      6.4    7.0    5.5     1.4



 19 April 2012
        Operating profit                                                11




            SEKm
           2 700
           2 400
           2 100
           1 800
           1 500
           1 200
                900
                600
                300
                 0

                      2010                                2011   2012

                       Restructuring and one-time items
19 April 2012
        Operating margin                                                                  12



                                                            Long-term target level: 15%
                %
           16

           14

           12

           10

                8

                6

                4

                2

                0

                    2010                             2011                 2012

                       Restructuring and one-time items
19 April 2012
        Operating margin                                                                       13



                                                                 Long-term target level: 15%

                %
                16                                14.7*
                             14.2*
                14                                              12.6
                             13.8                 14.5
                12
                10
                 8
                 6
                 4
                 2
                 0

                             2010                 2011         Q1 2012
                     Restructuring and one-time items
                * Excluding restructuring and one-time items
19 April 2012
        Operating margin per business area                                        14



          %
         18

         15
                                                                 Regional Sales
                                                                 and Service
         12
                                                                 Strategic Industries
           9

           6
                                                                 Automotive
           3

           0
                Q1     Q2   Q3   Q4   Q1     Q2   Q3   Q4   Q1

                2010                  2011                  2012


19 April 2012
        First quarter 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



19 April 2012
        Inventories as % of annual sales                                 16




            %                              Long-term target level: 18%
           25

           24

           23

           22

           21

           20

           19

           18
                2010        2011                    2012

19 April 2012
        Cash flow, after investments before financing                       17




         SEKm

          2 000

          1 000
                                                  *
                0

        -1 000

        -2 000

        -3 000

        -4 000

        -5 000

        -6 000

                     2010                             2011           2012

                    * SEK 798 million, excluding SEK 6,799 million
                      for the acquisition of Lincoln.
19 April 2012
        Return on capital employed                                                                            18



                                                                                      Long-term target: 27%

                %
            30
                                 24.0                          23.6
            25                                                                      21.9

            20

            15

            10

                5

                0
                                2010                          2011                 Q1 2012

                    ROCE: Operating profit plus interest income, as a percentage
                          of twelve months rolling average of total assets less
                          the average of non-interest bearing liabilities.
19 April 2012
        Net debt                                                                                   19




            SEKm
                0
                                                                           AB SKF,
         -2 000
                                                                           dividend paid (SEKm):
         -4 000
                                                                           2010 Q2         1,594
         -6 000                                                            2011 Q2         2,277
         -8 000
        -10 000                                                            Cash out from
        -12 000
                                                                           acquisitions (SEKm):
        -14 000
                                                                           2010           6,799
        -16 000
        -18 000

                     2010                             2011          2012


                Net debt: Loans and net provisions for post-
                          employment benefits less short-term
                          financial assets excluding derivatives.
19 April 2012
        Debt structure                                                                          20



        Maturity years, EURm
            600
                                                                                          500
            500                   396

            400

            300

            200
                                           130
                                                     100         100       110
            100
                        0
                0
                      2012       2013      2014     2015       2016        2017       2018
                • Credit facilities:              • No financial covenants nor material
                  EUR 500 million 2014              adverse change clause
                  SEK 3,000 million 2017


19 April 2012
        Dividend proposal                                              21




            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
        April 2012: Outlook for the second quarter 2012                                        22




          Demand compared to the second quarter last year
          The 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 2012
          The 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 level
          The manufacturing level is expected to be lower year on year but higher compared
          to the first quarter.



19 April 2012
        Demand outlook Q2 2012, regions                                         23
        (based on current assumptions)




                Share of net sales       Sequential trends for:     Q2 2012
                      2011                Q1 2012        Q2 2012   vs Q2 2011

          Europe                46%                                   +/-
          Asia Pacific          26%                                   +/-
          North America         19%                                  +++
          Latin America          6%                                  +++
          Total                                                        +


19 April 2012
        Demand outlook Q2 2012, business areas                                24
        (based on current assumptions)




                Share of net sales       Sequential trends for    Q2 2012
                      2011                    Q2 2012            vs Q2 2011
          Strategic
          Industries
                                31%                                  +
          Regional Sales
          and Service
                                39%                                  +
          Automotive            27%                                 +/-
          Total                                                      +




19 April 2012
        Sequential volume trend Q2 2012, main segments   25
        (based on current assumptions)
       Share of net
       sales 2011*
                5% Trucks
            26% Industrial Distribution
            18% Industrial OEM, General + Special
            13% Cars
            10% Vehicle Service Market
            10% Industrial OEM, Heavy + Off-highway
                6% Energy
                3% Two-wheelers and Electrical
                5% Aerospace
                4% Railway

19 April 2012
                    * excluding Lincoln
        Guidance for the second quarter 2012                                        26




          • Tax level: around 30%

          • Financial net for the second quarter:
            Around SEK -175 million

          • Exchange rates on operating profit versus 2011
            Q2:          SEK 125 million
            Full 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
        Key focus areas ahead 2012                                                  27



                 • 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
        Cautionary statement                                                                             28




          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




19 April 2012

								
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