Operating margin per division Industrial Service Automotive % 2007 2008 Excluding one-off items (eg. restructuring, impairments, capital gains) 2009
Activities to adapt to lower demand
Restructuring/impairment programmes People Costs charged to operating profit
announced: Q4 2008 2,500 SEK 340 m
Q1 2009 500 SEK 175 m
Q2 2009 900 SEK 500 m
3,900 SEK 1,015 m
At the end of June 2009, around 3,800 people have left the Group since H2 2008, of which around 2,000 people under the programmes.
Total savings from these activities SEK 800 m.
In addition, around 18,000 people in short-time working.
Inventories as % of annual sales % 2007 Long-term target level: 18% 2008 2009
Return on capital employed ROCE: Operating profit plus interest income, as a percentage of twelve months average of total assets less the average of non-interest bearing liabilities. % Long-term target level: 24% 24.9 24.0 13.4
Net debt (Short-term financial assets minus loans and post-employment benefits) SEKm AB SKF, dividend paid (SEKm) : 2007 Q2 2,049 2008 Q2 2,277 2009 Q2 1,594 Redemption (SEKm) : 2007 Q2 4,554 2008 Q2 2,277 2007 2008 2009
AB SKF, debt structure Amount in million Maturity Euro Bond EUR 132* 2010-06 SEK Bond SEK 1,500 2011-06 Term loan in euro EUR 150 2013-06 Euro Bond EUR 500 2013-12 Euro loans EUR 130 2014-03 Euro loan EUR 100 2016-06 * Was EUR 250 million, reduced by EUR 118 million in Q2.
Cash flow, after investments before financial items 2007 SEKm Cash out from acquisitions* (SEKm) : 2007 1,209 2008 1,284 2009 223 2008 2009 * including non-controlling interests.
July 2009: Outlook for the third quarter 2009 Compared to last year the demand for SKF products and services is expected to be significantly lower in the third quarter compared to the third quarter last year for the Group in total, for all the Divisions and for all regions. Compared to the second quarter and adjusted for seasonality, demand is expected to be relatively unchanged for the SKF Group in total. It is expected to be lower in Europe, relatively unchanged in North America and slightly higher in Asia and Latin America. It is expected to be slightly higher for the Automotive Division, relatively unchanged for the Service Division and slightly lower for the Industrial Division. The manufacturing level will be significantly lower year on year and relatively unchanged compared to the second quarter.
Volume trends (based on current assumptions) Daily volume trends for: Q2 2009 Q3 2009 Total 5% Latin America 19% Asia Pacific 17% North America 56% Europe Net sales 2008 --- --- --- --- --- Outlook Q3 2009 vs 2008
Sequential volume trend main segments Q3 2009 (based on current assumptions) Net sales 2008 Industrial OEM, Heavy+Off-highway Energy Aerospace 12% 6% 5% Industrial OEM, General+Special 20% Cars Vehicle Service Market Railway Electrical and two-wheeler Industrial distribution Trucks 13% 9% 3% 3% 23% 5%
Guidance for the third quarter 2009
Tax level: around 30%
Financial net for the third quarter: Around SEK -200 million
Exchange rates on operating profit versus 2008 Q3: SEK 260 million
Full year: SEK 900 million
Additions to PPE: Slightly below SEK 2 billion for 2009
Guidance is approximate and based on current assumptions and exchange rates
Key focus areas ahead 2009
Profit and cash flow
- maintain positive price/mix
- drive operational efficiency and cost reduction
- reduce working capital and investments
Adjustment of manufacturing output to new demand levels
- short-time working
Growing segments and geographies
Strengthening the platform/segment approach
SKF Care and Six Sigma as guiding lights
SKF Care Employee Care Community Care Environmental Care Business Care BeyondZero TM SKF Care Operating margin
SKF Group Vision To equip the world with SKF knowledge
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; "Most important factors influencing the financial results", "Financial risks" and "Sensitivity analysis”.