MS Powerpoint 4.28 MB - SKF.com _cash out

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					The SKF Group



Nine-month result, 2006



Tom Johnstone,
President and CEO
2006-10-17
                                                                                           3

Acquisitions and divestments

Completed:
• Macrotech Polyseal Inc., a leader in fluid power seals.
• SNFA SAS, a leading French manufacturer of bearings for aerospace and machine tool
  applications.
• The lubrication systems business of John Crane Safematic Oy, part of Smiths Group plc.
• Economos, a manufacturer of hydraulic and pneumatic seals.
• Precision Balancing & Analyzing, specialized in repair of machine tool spindles.
• Monitek Australia, a leading Australian predictive maintenance service company.
• RC DEI Norge AS, provides services for condition based maintenance

Still subject to customary due diligence and/or regulatory approvals:
• Rautaruukki Corporation, AB SKF and Wärtsilä Corporation have signed an agreement
  whereby their jointly held company, Oy Ovako Ab, will sell its operating subsidiaries.
• Divestment of SKF's forging business at the Luchow factory in Germany to
  Johann Hay GmbH & Co KG.

2006-10-17
                                                                 4

Third quarter 2006


MSEK                                            2006     2005
Net sales                                      12,544   12,027
Operating profit                                1,538    1,464
Operating margin                                12.3%    12.2%
Profit before taxes                             1,422    1,480
Net profit                                       966     1,025
Basic earnings per share, SEK                    2.06     2.20
Cash flow after investments before financing   -141*     1,495

* MSEK 1,382, before acquisitions.

2006-10-17
                                                                 5

Nine-month result 2006


MSEK                                            2006     2005
Net sales                                      39,206   36,637
Operating profit                                4,849    4,059
Operating margin                                12.4%    11.1%
Profit before taxes                             4,541    3,978
Net profit                                      3,175    2,745
Basic earnings per share, SEK                    6.81     5.88
Cash flow after investments before financing    604*    1,901*

* MSEK 2,272 (2,366), before acquisitions.

2006-10-17
                                         6

Operating margin

     %
    13
    12
    11
    10
     9
     8
     7
     6
     5
     4
     3
     2
     1
     0

             2003   2004   2005   2006

2006-10-17
                                                           7
Operating margin
excl. income from jointly controlled company OY Ovako Ab
     %
    13
    12
    11
    10
     9
     8
     7
     6
     5
     4
     3
     2
     1
     0

             2003   2004       2005         2006

2006-10-17
                                                                             8

Operating margin per division

   %
  14
                                                                Industrial
  12
                                                                Service
  10
   8
   6                                                            Automotive
   4
   2
   0
       Q1     Q2   Q3   Q4   Q1     Q2   Q3   Q4   Q1     Q2   Q3
       2004                  2005                  2006


2006-10-17
                                                  9

Sales in local currencies (excl. structural changes)

% change y-o-y
  16
  14
  12
  10
   8
   6
   4
   2
   0
        2003     2004    2005        2006

2006-10-17
                                                                                           10

      Net sales development per quarter

                    2004                        2005                        2006
Percent y-o-y       Q1     Q2     Q3     Q4     Q1     Q2     Q3     Q4     Q1     Q2     Q3


 Volume             4.8    8.9    9.6   10.2    8.3    7.6   5.1    1.3     6.0    2.5   3.3


 Structure          0.1    0.0    2.2    2.0    2.3    0.2   -2.9   -3.7   -4.9   -0.5   1.1


 Price / Mix        1.1    1.8    2.3    4.2    3.6    3.6   2.1    2.6     2.9    2.0   2.0


 Sales in local     6.0   10.7   14.1   16.4   14.2   11.4   4.3    0.2     4.0    4.0   6.4
 currency
 Currency          -4.6   -2.3   -2.9   -3.8   -3.2    0.2   3.2    9.4     8.0    1.0   -2.1


 Net sales          1.4    8.4   11.2   12.6   11.0   11.6   7.5    9.6    12.0    5.0   4.3


      2006-10-17
                                                             11
Growth development / local currency
6% annual growth rate (whereof 4% organic)



% Y-o-Y
                          11.8
  12
  10
                                             (Organic 6.3)
   8                                  7.3
   6          5.2                                4.7
   4
   2
   0
             2003         2004        2005      YTD
                                             September
                                               2006
         Acquisitions / Divestments
         Organic growth
2006-10-17
                                                 12
Growth development / local currency
excluding the effect from the Ovako divestment



 % Y-o-Y
                    11.8
   12                      10.4
   10
                                      7.3
    8
    6        5.2
    4
    2
    0
             2003   2004   2005       YTD
                                   September
                                     2006

2006-10-17
                                                          13

Cash flow, after investments before financing

MSEK
1 600

1 400

1 200                             Cash out from acquisitions:
                                  2006 MSEK 1,668
1 000
                                       (mainly SNFA in Q3)
 800                              2005 MSEK 419
                                       (mainly Jaeger in Q2)
 600                              2004 MSEK 644
 400                                   (mainly Vogel in Q3)
 200

    0

-200

        2004   2005      2006



2006-10-17
                                                14
Cash flow, after investments before financing
and acquisitions

       MSEK
        1 600

        1 400

        1 200

        1 000

             800

             600

             400

             200

              0

                   2004   2005   2006


2006-10-17
                                                                        15

    Net cash
    (Short-term financial assets - loans)

 MSEK

5 500                                              AB SKF, dividend paid:
                                                   2003 Q2, MSEK     911
4 500
                                                   2004 Q2, MSEK 1,138
3 500
                                                   2005 Q2, MSEK 1,366
2 500                                              2006 Q2, MSEK 1,821

1 500
                                                   2004 Q2, Pension:
  500
                                                            MSEK 3,100
 -500                                              2005 Q2, Redemption,
                                                            MSEK 2,846
-1 500
          2003      2004         2005       2006

    2006-10-17
                                                                 16

Inventories as % of annual sales

    %
    23
                                        Target, end 2007 - 18%
    22

    21

    20

    19

    18
         Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
         2003        2004        2005         2006

2006-10-17
                                                                            17

Financial net

                                                YTD Q3          Full year
MSEK                               Q3 2006       2006            2005
Interest income/expense, net         -32          -65              -29
Interest on post-employment
benefits                              -57         -172           -235
Other items*, net                     -27          -71            190
Financial net                       -116          -308            -74


* includes e.g. share swaps, capital gains/losses and foreign
  exchange gains/losses.


2006-10-17
                                                                            18
October 2006: Outlook for the fourth quarter 2006
(compared to the third quarter 2006)



   The market demand for SKF's products and services in the fourth
   quarter of 2006 is expected to be slightly higher. The demand is
   expected to be higher in Europe and Latin America, significantly
   higher in Asia and to be lower in North America. The demand for the
   Industrial and Service Division's products and services is expected to
   be higher and for the Automotive Division is expected to be slightly
   lower.

   The manufacturing level for the fourth quarter of 2006 will be
   unchanged, while higher in absolute terms due to normal seasonality.




 2006-10-17
                                                                        19

Volume development


             Net sales         Daily volume trend for:   Outlook Q4
              2005             Q3 2006       Q4 2006     2006 vs 2005

 Europe                  55%                                  +

 North America           20%                                  -

 Asia Pacific            17%                                 +++

 Latin America           5%                                   +

 Total                                                        +



2006-10-17
                                           20

SKF Group targets



     • 10% Operating margin level

     •       6% Growth per annum    2006

     • 20% ROCE

     • 18% Inventory / sales        2007




2006-10-17
                                                              21

Guidance 2006


• Underlying tax level: around 32-33%
• Financial net, annual level: approximately MSEK 350
• For the fourth quarter, exchange rates are estimated to
  have a limited negative effect on the operating profit.
  For the full year, the positive effect is estimated to be
  approximately MSEK 250. This is based on current
  assumptions and exchange rates.
• Additions to property, plant and equipment: approximately
  in line with depreciations

2006-10-17
Acquisition - SNFA

• Sales in 2005: 82 million euro
• 720 employees
• Bearings for the aerospace industry, high
  precision ball bearings for machine tool and
  other special applications
• Price: 138.5 million euro (cash and debt free)
                                                         23

Acquisition - Economos


• Sales in 2005: close to 70 million euro
• 805 employees
• Sealing solutions and engineering plastics solutions
• Price: 67 million euro cash and debt free




2006-10-17
                                                    24

Acquisition - Safematic lubrication system business

  • Sales in 2005: 25 million euro
  • 127 employees
  • John Crane Safematic Oy's lubrication systems
    business is part of Smiths Group plc.
  • Price: 22.9 million euro




 2006-10-17
                                                                              25

  Acquisitions


• Monitek Australia                       • Precision Balancing & Analyzing
• Yearly sales: 4.3 million               • Yearly sales: 7 million US dollars
                Australian dollars
                                          • 40 employees
• 29 employees
                                          • Specialized in repair and
• A leading predictive maintenance          upgrading of machine tool
  services company.                         spindles.



                      • Price: 62 million SEK in total



  2006-10-17
New factories in China


Two new factories started to operate during the third quarter:

• In Dalian, North East of China - manufacturing of large size bearings

• In Pinghu, outside Shanghai - electromechanical actuators and
  actuation systems
                                                                         27

SKF College


SKF Colleges offers a wide range
of training for SKF employees,
distributors and customers.




                            In September, SKF inaugurated a new regional
                            training centre in Pinghu, outside Shanghai - the
                            fourth SKF College in the world.


2006-10-17
                                                                               28

Cautionary statement


      This report 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 20-F report on file with the SEC (United States Securities and
      Exchange Commission) under "Forward-Looking Statements" and
      "Risk Factors".



2006-10-17

				
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