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The SKF Group

The SKF Group. Nine-month results 2009 Tom Johnstone, President and CEO. Key points from Q3 report. Strong cash flow Q3: SEK 1,359 m YTD September: SEK 4,307 m Dramatic volume drop year over year. Trend indicates levelling off. Q3: -24.9% YTD September: -27.6%

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The SKF Group

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  1. The SKF Group Nine-month results 2009 Tom Johnstone, President and CEO

  2. Key points from Q3 report • Strong cash flow • Q3: SEK 1,359 m YTD September: SEK 4,307 m • Dramatic volume drop year over year. Trend indicates levelling off. • Q3: -24.9% YTD September: -27.6% • Continued strong price/mix • Q3: 3.7% YTD September: 5.5% • Cost reduction efforts in focus and giving results • - annualised savings from all programmes, around SEK 800 million • - significant short-time working being utilized. Now 14,000 people. • Demand outlook for Q4 • - year over year:significantly lower • - sequentially: slightly higher

  3. Highlights Q3 2009 • SKF • inaugurated its additional investment in the factory for large size bearings in Dalian, China, which doubles the manufacturing capacity. • signed a Memorandum of Understanding with Sinovel Wind Co. Ltd for strategic partnership, and a series of contracts with a value exceeding SEK 330 m for main shaft bearings and sealing systems for 3MW wind turbines. • signed a service contract with Transocean. The contract is worth SEK 10 m and covers asset reliability services for 59 of Transocean's drilling rigs. • was selected as the sector leader for the IEQ Industrial Engineering sector in the 2009 Dow Jones Sustainability Indexes (DJSI). SKF was also included in the FTSE4Good Index Series, for the ninth year in succession.

  4. Machine condition advisor Actuators Profile rail guides Oil conditioning unit Highlights Q3 2009 • SKF launched 11 new solutions to help customers increase equipment reliability, reduce maintenance costs and environmental impact: Super precision bearings Sealed spherical roller bearings Y-bearings Wind turbine blade bearing grease Telescopic pillar system Sealing solutions for screw compressors Large diameter sealing solutions

  5. Third quarter 2009 * Q3 restructuring around SEK 200 m Operating profit excl. restructuring activities SEK 1,157 m

  6. First nine months 2009 * YTD September restructuring around SEK 875 m Operating profit excl. restructuring activities SEK 3,074 m

  7. Growth in local currency(Organic growth + Acquisition/Divestments) Long-term target level: 6-8% per annum % y-o-y 13.2% 7.1% -20.8% Organic growth Acquisitions/Divestments

  8. Sales in local currencies (excl. structural changes) % change y-o-y 2009 2008 2007

  9. Sales volume % change y-o-y 2008 2009 2007

  10. Components in net sales 2007 2009 2008 Percent y-o-y

  11. Operating margin Long-term target level: 12% % 13.3* 12.7* 12.9 12.2 7.3* 5.2 Restructuring and one-time items * Excluding restructuring and one-time items

  12. Operating margin Long-term target level: 12% % 2009 2007 2008 Restructuring and one-time items

  13. Operating margin per division % Service Industrial Automotive 2009 2007 2008 Excluding one-off items (eg. restructuring, impairments, capital gains)

  14. Activities to adapt to lower demand • Restructuring/impairment activities People Costs charged to operating profit • Q4 2008 2,500 SEK 340 m • Q1 2009 500 SEK 175 m • Q2 2009 900 SEK 500 m • Q3 2009 70 SEK 200 m • 3,970 SEK 1,215 m • At the end of September 2009, around 4,400 people have left the Group since the third quarter last year, of which around 2,500 people under the programmes. • Total savings from these activities around SEK 800 m. • In addition, around 14,000 people in short-time working end of September 2009.

  15. Inventories as % of annual sales Long-term target level: 18% % 2007 2008 2009

  16. Return on capital employed Long-term target level: 24% % 24.9 24.0 10.2 ROCE: Operating profit plus interest income, as a percentage of twelve months average of total assets less the average of non-interest bearing liabilities.

  17. 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 2009 2007 2008

  18. 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.

  19. Cash flow, after investments before financial items SEKm Cash out from acquisitions* (SEKm): 2007 1,209 2008 1,284 2009 239 2009 2007 2008 * including non-controlling interests.

  20. October 2009: Outlook for the fourth quarter 2009 Sales development compared to fourth quarter last year The demand for SKF products and services is expected to be significantly lower for the Group in total and in Europe and North America. In Asia it is expected to be unchanged and in Latin America slightly higher. It is expected to be unchanged for the Automotive Division but significantly lower for the Industrial Division and Service Division. Sales development compared to the third quarter this year The demand is expected to be slightly higher for the SKF Group in total. It is expected to be relatively unchanged in Europe and North America and slightly higher in Asia and Latin America. It is expected to be relatively unchanged for the Automotive Division and slightly higher for both the Service Division and the Industrial Division. Manufacturing level The manufacturing level will be significantly lower year on year and slightly higher compared to the third quarter.

  21. Volume trends(based on current assumptions)

  22. Sequential volume trend main segments Q4 2009(based on current assumptions) Net sales 2008

  23. Guidance for the fourth quarter 2009 • Tax level: around 30% • Financial net for the fourth quarter:Around SEK -200 million • Exchange rates on operating profit versus 2008 Q4: +0 • Full year: SEK 750 million • Additions to PPE: Around SEK 2 billion for 2009 - Guidance is approximate and based on current assumptions and exchange rates.

  24. 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 • - restructuring • - short-time working • Growing segments and geographies • Strengthening the platform/segment approach • Competence development SKF Care and Six Sigma as guiding lights

  25. SKF Care Business Care Employee Care Operating margin SKF Care BeyondZeroTM Community Care Environmental Care

  26. SKF Group Vision To equip the world with SKF knowledge

  27. Cautionary 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; "Most important factors influencing the financial results", "Financial risks" and "Sensitivity analysis”.

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