Skf year end results 2013
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SKF Year-end results 2013. Tom Johnstone, President and CEO. Key achievements 2013. Acquisitions and divestments: acquisition of German-based ship components provider Blohm + Voss Industries (BVI) acquisition of US-based Kaydon Corporation

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SKF Year-end results 2013

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Skf year end results 2013

SKF Year-end results 2013

Tom Johnstone, President and CEO


Key achievements 2013

Key achievements 2013

  • Acquisitions and divestments:

  • acquisition of German-based ship components provider Blohm + Voss Industries (BVI)

  • acquisition of US-based Kaydon Corporation

  • divestment of the aerospace metallic rods business

  • New facilities:

  • lubrication systems laboratory in SKF Global Technical Centre, India

  • manufacturing unit in Pune in India for producing housings for bearings

  • gearbox remanufacturing centre in Tianjin, China

  • SKF opened six new SKF Solution Factories: in Toronto, Canada,in Manesar, India, in Urumqi, China and in Abu Dhabi, United Arab Emirates. There are now 27 SKF Solution Factories worldwide.

Bearing


Key achievements 20131

Key achievements 2013

  • In 2013, SKF provided around SEK 4 billion in verified savings for customers and since 2003 the accumulated figure is over SEK 27 billion.

  • SKF Distributor College awarded its 200,000th certificate. The recipient is Yang Chunxiao, an employee of Shandong Jiarui Industry Develop Co, Ltd, one of SKF’s Certified Maintenance Partners in China, who completed a course on ”selling value”.

  • SKF’s factories in Ahmedabad, India and in Dalian, China was awarded LEED Gold certification.

SKF was included in the FTSE4Good Index Series for the 13th successive year

SKF was included in the Dow Jones Sustainability Indexes for the 14th successive year


Examples of new business in q4 2013

Examples of new business in Q4 2013

  • SKF started deliveries of wheel hub bearing units and MacPherson suspension bearing units to Volvo Car Corporation in their new factory in Chengdu, China for the delivery of the newly launched Volvo S60L car model.

  • SKF received an order from Hyundai Motors as a supplier of the recently launched robust MacPherson suspension bearing unit. The value of the order is around SEK 370 million.

  • SKF is providing bearings, lubrication systems and engineering support for a US-based pump producer for London’s Lee Tunnel Project is building its largest-ever waste water pump, which will contribute to London’s storm water and sewage overflow issues.

  • SKF received an order for compact tapered bearing unit from Tikhvin Freight Car Building Plant, affiliated to United Wagon Company LLC. The value of the order is around SEK 120 million.

  • SKF was awarded by CSR ZHUZHOU ELECTRIC CO., LTD in China a contract for locomotive bearings for a value of SEK 76 million.

  • SKF gained lubrication business worth SEK 38 million from a heavy industry customer in Peru.


Examples of new business in q1 q3 2013

Examples of new business in Q1 – Q3 2013

  • New business

  • with Pratt & Whitney, to supply engine main shaft bearings

  • with Nordex for delivery of main shaft bearings and lubrication systems

  • for automated lubrication systems installed in the MSC Home Terminal cranes in Belgium’s Port of Antwerp

  • with Turbomeca a 10-year contract worth SEK 900 million

  • with Fiat for the delivery of wheel hub bearing units, worth SEK 1 billion

  • with Great Wall Motors in China for high pressure valve stem seals, hub bearing units and bearing retainers. SKF and Great Wall Motors also signed a strategic partnership for developing sustainable solutions in energy efficient vehicles.

  • with Goldwind for SKF Nautilus bearing units, worth SEK 100 million

  • with Tangshan Loco and Changchun Railway Co for wheel set bearings for high speed trains

  • with Wuhan Iron & Steel Heavy Industry Group Co, Ltd (WISCO Heavy) to establish a remanufacturing centre in Wuhan, China.


Examples of new technologies products and solutions 2013

Examples of new technologies, products and solutions 2013

Sealed SKF single row angular contact ball bearings

Super precisions bearings for wood-working applications

SKF Extended Life spherical plain bearing

SKF Condition Based Lubrication

An energy efficient high speed permanent magnet solution

SKF Telescopic pillars series CPMA and CPMB for medical equipment

SKF InsightTMInternally powered sensors and data acquisition electronics sensing directly on the bearing

Reinforced all-rubber HSS seals

Robust angular steering column bearing

High pressure valve stem seal with lower friction

SKF extreme temperature bearings

SKF Axial excluder seal


Skf group q4 2013

SKF Group – Q4 2013

  • Financial performance20132012

  • Net sales, SEKm16,43014,984

  • Operating profit, SEKm -1,5471,221

  • Operating margin, % -9.48.1

  • Operating margin excl. one-time costs,%11.0 10.2

  • Profit before tax, SEKm-1,760969

  • Cash flow, SEKm -6,7321,076

  • Organic sales growth in local currency:

  • SKF Group: 6.9%

  • Strategic Industries: 6.5%

  • Regional Sales and Service:4.6%

  • Automotive:10.8%

  • Key points

  • Sales volumes up by 7.1% y-o-y

  • Manufacturing higher compared to last year

  • Inventories 21.5% of sales (20.9% excluding Kaydon)

Europe:3%

North America:4%

Asia:15%

Latin America:11%


Skf group 2013

SKF Group – 2013

Financial performance20132012

Net sales, SEKm63,59764,575

Operating profit, SEKm 3,6937,314

Operating margin, % 5.811.3

Operating margin excl. one-time costs,%11.9 12.0

Profit before tax, SEKm2,8216,408

Cash flow, SEKm -5,3423,555

Organic sales growth in local currency:

SKF Group: -0.7%

Strategic Industries: -4.1%

Regional Sales and Service:-2.1%

Automotive:5.3%

Key points

Sales volumes down by -0.7% y-o-y

Manufacturing relatively unchanged compared to last year

Inventories 21.5% of sales (20.9% excluding Kaydon)

Europe:-3%

North America:-3%

Asia:2%

Latin America:10%

Slide 7

28 January 2014


Operating profit excluding one time costs

Operating profit excluding one-time costs

Slide 8

28 January 2014


Adjusted 2013 key figures

Adjusted 2013 key figures

Slide 9

28 January 2014


Skf year end results 2013

Organic sales growth in local currency

% change

y-o-y

2011

2012

2013


Growth development by geography organic growth in local currency q4 2013 vs q4 2012

Growth development by geographyOrganic growth in local currency Q4 2013 vs Q4 2012

Europe3%

North

America 4%

Asia/Pacific 15%

Latin America 11%

Middle East & Africa 16%


Growth development by geography organic growth in local currency 2013 vs 2012

Growth development by geographyOrganic growth in local currency 2013 vs 2012

Europe-3%

North

America -3%

Asia/Pacific 2%

Latin America 10%

Middle East & Africa 3%


Components in net sales

Components in net sales

2013

2011

2012


Growth in local currency including structure

Growth in local currency, including structure

% y-o-y

16.3%

1.8%

-2.1%

Structure in 2011: 4.8%

Structure in 2012: 0.4%

Structure in 2013: 2.5%


Operating profit as reported

Operating profit as reported

SEKm

2012

2011

2013


Operating profit excluding one time items

Operating profit excluding one-time items

SEKm

2012

2011

2013


Operating margin

Operating margin

%

14.7*

11.9*

12.0*

14.5

11.4

5.8

One-time items

* Excluding one-time items


Operating margin per business area

Operating margin per business area

%

Regional Sales and Service

Strategic

Industries

Automotive

2012

2013

2011

Excluding one-time items(eg. restructuring, impairments, capital gains)


Inventories as of annual sales

Inventories as % of annual sales

%

excl. Kaydon

2011

2012

2013


Return on capital employed

Return on capital employed

One-time costs

* Excluding one-time costs

%

23.9*

23.6

17.2*

15.1*

16.2

7.5

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.


New roce and net working capital targets

New ROCE and Net working capital targets


Key elements of capital efficiency

Key elements of capital efficiency

Flat over 11 years

-8 percentage points in 11 years

Net working capital as % of sales

Plant and property as % of sales

* Excluding Kaydon

* Excluding Kaydon

  • Main actions

  • Continue PPE and sales ratio going forward

  • Step-up activities to:

  • - work with flexibility in our factories to reduce inventory

  • - improve collection of accounts receivables

  • - get effects on A/P from new purchasing activities


Cash flow after investments before financing

Cash flow, after investments before financing

SEKm

*

****

***

**

2012

2013

2011

Excl. acquisitions and divestments:*Q3 2012SEK 1,707 million

**Q1 2013SEK -69 million

***Q3 2013SEK 871 million

****Q4 2013SEK 1,170 million


Net debt

Net debt

SEKm

AB SKF,

dividend paid (SEKm):

2011 Q22,277

2012 Q22,504

2013 Q22,530

Cash out from

acquisitions (SEKm):

2012 Q3829

2013 Q1823

2014 Q47,900

2012

2013

2011

Net debt:Loans and net provisions for post-employment benefits less short-term financial assets excluding derivatives.


Debt structure maturity years

Debt structure, maturity years

EURm

850

500

500

110

100

100

100

  • Available credit facilities:

  • EUR 500 million 2017

  • SEK 3,000 million 2016

  • SEK 3,000 million 2017

  • No financial covenants nor material adverse change clause


Fourth quarter 2013

Fourth quarter 2013


Full year 2013

Full year 2013

* excluding acquisitions and divestments, SEK 3,117 million (4,188).


January 2014 skf demand outlook q1 2014

January 2014: SKF demand outlook Q1 2014

Demand compared to the first quarter 2013

The demand for SKF’s products and services is expected to be slightly higher for the Group, Europe and North America. It is expected to be slightly lower in Latin America and higher in Asia Pacific. For Strategic Industries it is expected to be relatively unchanged, for Regional Sales and Service slightly higher and for Automotive higher.

Demand compared to the fourth quarter 2013

The demand for SKF’s products and services is expected to be slightly higher for the Group, Europe and North America. It is expected to be relatively unchanged in Asia Pacific and slightly lower in Latin America. For Regional Sales and Service and Automotive it is expected to be slightly higher and for Strategic Industries relatively unchanged.

Manufacturing

Manufacturing is expected to be higher year over year and slightly higher compared to the fourth quarter.


Skf demand outlook q1 2014 regions

SKF demand outlook Q1 2014, regions


Skf demand outlook q1 2014 business areas

SKF demand outlook Q1 2014, business areas


Skf sequential volume trend q1 2014 main segments

SKF sequential volume trend Q1 2014, main segments

Share of net sales 2013


Guidance for the first quarter 2014

Guidance for the first quarter 2014*

  • Tax level: around 30%

  • Financial net for the first quarter:Around SEK -250 million

  • Currency impact on operating profit versus 2013Q1: SEK -90 million

  • Full year: SEK -300 million

  • Additions to PPE: Around SEK 1.6 billion for 2014

*Guidance is approximate and based on current assumptions

and exchange rates


Dividend proposal

Dividend proposal

AB SKF’s Board proposes an unchanged dividend ofSEK 5.50 per share to the Annual General Meeting


Skf s priorities

SKF’s priorities

  • Sustainable profitable growth

  • Expand the platform concept

  • Exploit the asset life cycle approach

  • Develop new products and grow SKF BeyondZero portfolio

  • Extend and grow second brands

  • Acquisitions

  • Investments & Innovation

  • New and existing facilities

  • Research and development

  • IT systems and mobility

  • Capital efficiency

  • Fixed capital

  • Net working capital

  • Cost reduction

  • Business Excellence

  • Consolidation of manufacturing

  • Optimization and productivity improvements

  • Reduction in purchasing costs


Cost reduction specific programme 2012 2015

Cost reduction – specific programme 2012-2015

  • Main activities:

  • Consolidation of manufacturing- merger between sites- transfer to faster growing markets with more local production

  • Optimization and productivity improvements- in the manufacturing and demand chain processes- in administration and support functions

  • Reduction in purchasing cost- mainly through standardization and rationalization of the supplier base.

  • Reduction of annual cost by SEK 3 billion by the end of 2015

  • - Total cost for the programme around SEK 1.5 billion

  • - 2,500 people impacted,


Skf cost reduction programme restructuring status

SKF cost reduction programme - restructuring status


Cautionary statement

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; “Important factors influencing the financial results", "Financial risks" and "Sensitivity analysis”.


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