Since 1907 and the invention and patent of the self aligning ball bearing SKF has made an astonishing journey. SKF went global very early and grew at a rapid rate. As early as 1920s, the company was well established in Europe, America, Australia, Asia and Africa. Today when people talk about the importance of the BRIC countries. SKF has been established there for a very long time, e.g Brazil and Russia 1914, China 1916 and India 1923.
Throughout its 100-year history SKF has been a technology leader. SKF´s fundamental strength is its ability to develop technologies, products and services that create competitive advantages. The company does this by combining its knowledge across the SKF technology platforms and through innovation and development, creating new value propositions for SKF customers. A key thrust is the work directed to SKF sustainability, reducing energy losses for a cleaner, brighter environment. By partnering with SKF, customers get access to our worldwide bank of experience and our global network of top research laboratories and universities. This can take even best-in-class customers to higher levels of performance.
The three dimensions of knowledge engineering: The cultural/geographical dimension –understanding of cultures and regions where we live and work SKF is a global company with a local presence. We intimately understand the demands of our customers and their customers. Wherever they are. Our local expertise is supported by global industry specialists who can put those needs in perspective and draw upon successes in similar situations around the world. They in turn are backed by a worldwide manufacturing footprint and a fine-meshed service and support network to put our solutions to work. The customer dimension- industries and segments The number of SKF customers is about two million. Over the years, SKF has progressively organized itself into application areas that are now centred around nearly 40 specialized customer industries. The competence dimension – our technical platform SKF’s specialist teams who are competent in areas ranging from bearings and units to seals, mechatronics, services and lubrication, work closely together to provide advanced integrated solutions. Since SKF began operating the Group´s efforts in the area of research and development have resulted in numerous innovations that have created new standards and new products and solutions in the bearing industry. In 2007, the number of first filings of patent applications was 186. Through our knowledge, SKF can help customers improve their effectiveness, making them more successful and profitable. By combining our technical knowledge with the extensive experience we have from many specialized customer industries together with the understanding for local customer demands we can help customers overcome their specific challenges. Altogether we call this SKF Knowledge.
SKF has a broad range of bearing types produced globally. This include high-quality, high-performance, low-friction, standard and customized solutions to critical and standard applications. Units are product combinations integrated into solutions with unique performance, used in specific applications requiring a compact design, combined performance and light weight. Pictures upper left; Bearings Housings Engineering products Y-units Pictures from bottom left; Engineered products Hub unit (can be found on cars or forklifts) Sensorized bearings
SKF develops and produces sealing solutions for the automotive and industrial markets, as well as seals integrated into bearings. SKF provides value added sealing solutions because of its excellent technical and application knowledge across the closely related platforms of seals, bearings, lubrication, mechatronics and service, which is leveraged in addressing customer needs .&quot; Pictures from upper left; Sensorized engine crankshaft seal with integrated retainer assembly Shock absorber seal , Speedi Sleeve A repair sleeve for worn shafts Pictures from bottom left; Latest generation engine valve stem seal capable of handling pressure Latest generation Metric Rubber OD Seal available in a comprehensive size range from stock Heavy Duty large diameter seal used e.g in wind, metals and mining applications Sample of different types of Hydraulic Seals
Within mechatronics SKF is combining its strong mechanical experience and electronic technology. This covers systems for precision multi-axis positioning, intelligent monitoring and by-wire applications, as well as components such as ball and roller screws, actuators, rail guides and sensor modules. A number of mechanical and electronic products are combined into modules and sub-systems addressing unique needs where SKF has specialist industrial-specific expertise. Pictures from left; Linear motion assortment High efficiency screws and guides, Electromechanical actuators Magnetic bearing system and one sensorized bearing, Aeronautical throttle control + Electromechanical Parking Brake
SKF offers products, solutions and vast support within areas such as industrial lubricants, lubrication consultancy, lubricator equipment, lubrication assessment, lubricant analysis, lubricant recommendations and automatic lubrication systems. Around 36% of premature bearing failures are caused by poor or inadequate lubrication. We help businesses to prevent these costly failures. We deliver the right lubricant, in the right amount, at the right time, with the right lubrication system to the right lubrication point. We are a global partner for lubrication systems and tribology knowledge, the combination of friction, wear and lubrication sciences. We provide integrated lubrication solutions with leading technologies, where and when our customers need them and across all industry segments and applications. Images from left; Lubricants [SKF bearing grease] - Manual lubricators [SKF grease gun] Single-point lubricators [SKF SYSTEM 24 LAGD, automatic gas driven single point automatic lubricator suitable for many applications] Centralized lubrication systems - grease systems Centralized lubrication systems - Minimal quantity lubrication [MQL] systems Centralized lubrication systems - oil circulating systems
The Service platform delivers value throughout the entire life cycle of an asset. Engineering consultancy and engineering services in the design phase, maintenance and logistics services in the operations stage and in the final stage upgrading, refurbishment, bearing dismounting and mounting, alignment, balancing and post-maintenance testing. SKF also offers a wide spectrum of training for customers, on and off site, around the globe. Images from upper left: Bearing remanufacturing services SKF Multilog On-line System IMx-T Asset Efficiency Optimisation process Mechanical Maintenance Services Asset Management Services Images from bottom left: SKF @ptitude Suite - integrated software for on-line, portable, and operator driven monitoring solutions Portable monitoring solutions. This also extends to cover Maintenance Products . SKF Wireless Monitoring System V/T
MS Powerpoint 3.69 MB
The SKF Group SKF Investor Relations 1 September 2009
SKF - A truly global company <ul><li>Established: 1907 </li></ul><ul><li>Sales 2008: SEK 63,361 million </li></ul><ul><li>Employees: 44,799 </li></ul><ul><li>Production sites: 110 in 28 countries </li></ul><ul><li>SKF presence: in over 130 countries </li></ul><ul><li>Distributors/dealers: 15,000 locations </li></ul><ul><li>Global certificates: ISO 14001 </li></ul><ul><li>OHSAS 18001 certification </li></ul>
Net sales by customer segment Aerospace Railway Off-highway Trucks Two-wheeler and Electrical General industry Heavy industry Special industrial equipment Vehicle Service Market Industrial distribution Cars and light trucks Commercial transport Industrial business Energy
North America Latin America Western Europe Eastern Europe Middle East and Africa Asia Net sales Average number of employees Tangible asset % of group total SKF 2008 (18) (8) (13) (26) (13) (14) (2002) (1998) (25) (14) (19) (10) (12) (9) Sweden
SKF Group Vision To equip the world with SKF knowledge
Platforms – investing in the future Organic * Investing above depreciation * 9 new factories (6 opened already, 3 under development) * Significant investment in existing operations (e.g. Sweden, Germany) Acquisitions * Over SEK 5.2 billion invested * 20 acquisitions – all platforms R&D & AE * New energy efficient bearings and solutions * New market offers/products ~SEK 24 billion (~USD 3.5 billion) invested since 2003
Investing in new factories in Russia and India Tver, Russia Ahmedebad, India Haridwar, India
SKF Solution Factories 2009 Brazil Colombia Mexico Alberta Tianjin Shanghai Taiwan India Australia Russia Turkey Sweden UK Germany Italy Johannesburg Planned Opened Texas
New pitch bearing design with improved corrosion protection DRTRB-unit “Nautilus” with segmented cage for minimized friction New CRB-design with extra-high carrying capacity for wind-gearboxes. XL Hybrid bearings with ceramic balls for superior insulation SKF WindCon 3.0/Webcon Intranet supervised condition monitoring Automatic centralized lubrication kits for reduced maintenance cost SKF wind energy industry
Acquisition 2003-2009 Identifying gaps and opportunities in all platforms Seals Bearings and units Lubrication systems Services Mechatronics SNFA (2006) S2M (2007) QPM (2008) Economos (2006) Macrotech (2006) Macrotech (2009) Baker (2007) PMCI (2007) PB&A (2006) Monitek (2006) Safematic (2006) Vogel (2004) ALS (2007) Sommers (2005) ABBA (2007) Jaeger (2005) Peer (2008) GLO (2008) TCM (2003) Scandrive (2003) Cirval (2008) Segments Technologies Geographies Products
Investing in R&D for staying in the forefront <ul><li>>30% increase in R&D spending </li></ul><ul><li>in 2008 </li></ul><ul><li>Main areas: </li></ul><ul><li>Environment </li></ul><ul><li>Core technologies </li></ul><ul><li>New products </li></ul><ul><li>Strengthen R&D activities in fast growing regions </li></ul><ul><li>Strengthen links with universities and high schools. </li></ul>
Six Sigma <ul><li>2009 Q2 status: </li></ul><ul><ul><ul><ul><li>18 Master Black Belts </li></ul></ul></ul></ul><ul><ul><ul><ul><li>421 Black Belts </li></ul></ul></ul></ul><ul><ul><ul><ul><li>2,165 Green Belts </li></ul></ul></ul></ul><ul><ul><ul><ul><li>452 projects closed whereof 17 replicated </li></ul></ul></ul></ul><ul><ul><ul><ul><li>1,131 projects ongoing </li></ul></ul></ul></ul>Hard savings 2005: SEK 150 m 2006: SEK 200 m 2007: SEK 302 m 2008: SEK 462 m 2009 Ytd: SEK 184 m 4 dimensions: ” Standard” Six Sigma, Design for Six Sigma, Lean Six Sigma and Six Sigma for Growth
13.9 19.0 21.8 24.7 25.4 Return on capital employed % 24.2 <ul><li>Long-term targets </li></ul><ul><li>12% Operating margin level </li></ul><ul><li>6-8% Growth per annum ( local) </li></ul><ul><li>24% Return on capital employed </li></ul>Operating margin % 9.9 10.8 12.6 8.0 12.9 12.2 4.3 (6.6 ex. rest) 13.4 Sales growth in local currency % 5.2 11.8 7.3* 7.5* 13.2 7.1 -21.3 Financial performance <ul><li>* Excluding effect from sale of Ovako: 2005: 10.4% </li></ul><ul><ul><ul><ul><ul><li>2006: 10.1% </li></ul></ul></ul></ul></ul>
Key points from Q2 report <ul><li>Record quarterly cash flow </li></ul><ul><li>Q2: SEK 2,425 m H1: SEK 2,948 m </li></ul><ul><li>Dramatic drop in sales volume continued </li></ul><ul><li>Q2: -30.8% H1: -28.9% </li></ul><ul><li>Strong price/mix </li></ul><ul><li>Q2: 5.6% H1: 6.3% </li></ul><ul><li>Cost reduction efforts in focus and giving results </li></ul><ul><li>- new programme announced </li></ul><ul><li>- annualised savings from all programmes, around SEK 800 million </li></ul><ul><li>- in addition, significant short-time working being utilized </li></ul><ul><li>Demand outlook for Q3 </li></ul><ul><li>- significant decline year over year </li></ul><ul><li>- decline levelling off sequentially </li></ul>
Highlights Q2 2009 <ul><li>SKF </li></ul><ul><li>inaugurated a new Solution Factory in Turin, Italy </li></ul><ul><li>signed a contract with Cambridge University Department of Materials Science and Metallurgy to set up the SKF University Technology Centre on Steels on campus in Cambridge </li></ul><ul><li>won an order to supply Guohua Energy Investment Co. Ltd. in China with SKF WindCon online condition monitoring systems and other related services </li></ul><ul><li>signed a long-term contract with Hero Honda in India to supply ball bearings </li></ul><ul><li>acquired the remaining 49% of the shares in Macrotech Polyseal Inc., now called SKF Polyseal Inc. </li></ul><ul><li>in cooperation with the Czech police, confiscated over 30 tons of counterfeit SKF bearings. </li></ul>
Second quarter 2009 * Q2 restructuring SEK 500 m Operating profit excl. restructuring activities SEK 974 m 13.3% 6.9% Operating margin excl. restructuring, % 872 2,425 Cash flow after investments before financial items 16,077 14,167 Net sales 13.3% 3.4% Operating margin 2008 2009 SEKm 2.95 0.69 Basic earnings per share, SEK 1,369 323 Net profit 1,978 312 Profit before taxes 2,135 474* Operating profit
Half year 2009 * H1 restructuring SEK 675 m Operating profit excl. restructuring activities SEK 1,917 m 13.2% 6.6% Operating margin excl. restructuring, % 741 2,948 Cash flow after investments before financial items 31,673 29,016 Net sales 13.2% 4.3% Operating margin 2008 2009 SEKm 5.72 1.55 Basic earnings per share, SEK 2,665 717 Net profit 3,902 843 Profit before taxes 4,175 1,242* Operating profit
Growth in local currency (Organic growth + Acquisition/Divestments) % y-o-y Acquisitions/Divestments Organic growth 13.2% Long-term target level: 6-8% per annum 7.1% -21.3%
Sales in local currencies (excl. structural changes) % change y-o-y 2007 2008 2009
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 <ul><li>Restructuring/impairment programmes People Costs charged to operating profit </li></ul><ul><li>announced: Q4 2008 2,500 SEK 340 m </li></ul><ul><li> Q1 2009 500 SEK 175 m </li></ul><ul><li>Q2 2009 900 SEK 500 m </li></ul><ul><li>3,900 SEK 1,015 m </li></ul><ul><li>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. </li></ul><ul><li>Total savings from these activities SEK 800 m. </li></ul><ul><li>In addition, around 18,000 people in short-time working. </li></ul>
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 <ul><li>Tax level: around 30% </li></ul><ul><li>Financial net for the third quarter: Around SEK -200 million </li></ul><ul><li>Exchange rates on operating profit versus 2008 Q3: SEK 260 million </li></ul><ul><li>Full year: SEK 900 million </li></ul><ul><li>Additions to PPE: Slightly below SEK 2 billion for 2009 </li></ul>Guidance is approximate and based on current assumptions and exchange rates
Key focus areas ahead 2009 <ul><li>Profit and cash flow </li></ul><ul><li>- maintain positive price/mix </li></ul><ul><li>- drive operational efficiency and cost reduction </li></ul><ul><li>- reduce working capital and investments </li></ul><ul><li>Adjustment of manufacturing output to new demand levels </li></ul><ul><li>- restructuring </li></ul><ul><li>- short-time working </li></ul><ul><li>Growing segments and geographies </li></ul><ul><li>Strengthening the platform/segment approach </li></ul><ul><li>Competence development </li></ul>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
Cautionary statement <ul><li>This presentation contains forward-looking statements that are based on the current expectations of the management of SKF. </li></ul><ul><li>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”. </li></ul>
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