Download SKF Half-year results 2013 Tom Johnstone, President and CEO

SKF Half-year results 2013
Tom Johnstone, President and CEO
Highlights Q2 2013
New business
• 10-year contract worth SEK 900 million with Turbomeca
• service contracts worth SEK 200 million in Latin America
• contract for wheel hub bearing units (HBU3) to Volvo Car Corporation
Two new SKF Solution Factories
Inaugurated in Madrid, Spain and
Katowice, Poland
Katowice, Poland
Madrid, Spain
Divestment, after quarter end
SKF divested its metallic rods business including the operations at the
SKF sites in St. Vallier sur Rhône, France and Monroe, Washington, USA.
© SKF Group
Slide 1
16 July 2013
Highlights Q2 2013
Research programme
SKF and INSA Lyon started a research programme to study the behavior
of lubricants under extreme conditions for aerospace.
SKF Windfarm Management Conference
SKF’s eighth SKF Windfarm Management Conference
was held in Warsaw, Poland.
Asset Management Conference
SKF hosted an Asset Management Conference in Dallas, USA
with more than 160 customers.
SKF Distributor College awarded its 180,000th certificate.
© SKF Group
Slide 2
16 July 2013
New products - examples
SKF Steering boot kits
for cars and light trucks.
SKF Telescopic pillars
series CPMA and CPMB
for medical equipment.
© SKF Group
Slide 3
16 July 2013
SKF Restructuring programme –
costs and expected savings
Restructuring activities launched in:
Q4 2012
Q1 2013
Q2 2013
Total
One-off costs
200
250
190
640
Annual savings when
fully implemented
150
100
80
330
SEKm
The savings for the second half year 2013 will be around SEK 150 million,
evenly split between the third and the fourth quarter.
© SKF Group
Slide 4
16 July 2013
SKF Group – Q2 2013
Financial performance
Net sales, SEKm
Operating profit, SEKm
Operating margin, %
Operating margin excl. restructuring,%
Profit before tax, SEKm
Cash flow, SEKm
Organic sales growth in local currency:
SKF Group:
-2.2%
Strategic Industries:
-7.6%
Regional Sales and Service:
-4.8%
Automotive:
7.7%
2013
16,392
1,837
11.2
12.4
1,627
1,147
2012
17,174
2,049
11.9
12.7
1,774
686
Europe:
North America:
Asia:
Latin America:
Key points
Sales volumes down by -1.6% y-o-y
Manufacturing relatively unchanged compared to last year
Inventories 21.6% of sales
© SKF Group
Slide 5
16 July 2013
-4%
-1%
-4%
14%
Organic sales growth in local currency
% change
y-o-y
25
20
15
10
5
0
-5
- 10
2011
© SKF Group
Slide 6
16 July 2013
2012
2013
Growth development by geography
Organic growth in local currency Q2 2013 vs Q2 2012
Europe
-4%
North
America
-1%
Asia/Pacific
-4%
Latin
America
14%
© SKF Group
Slide 7
16 July 2013
Middle East
& Africa
-3%
Growth development by geography
Organic growth in local currency YTD 2013 vs YTD 2012
Europe
-7%
North
America
-6%
Asia/Pacific
-5%
Latin
America
11%
© SKF Group
Slide 8
16 July 2013
Middle East
& Africa
-4%
Components in net sales
2011
Percent y-o-y
2013
2012
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
20.1
12.6
6.2
0.0
-0.8
-2.8
-5.0
-5.9
-8.7
-1.6
Structure
5.0
4.4
5.1
4.8
-0.1
0.0
0.8
1.0
1.5
2.6
Price/mix
1.3
1.6
2.0
2.8
1.9
2.0
0.5
0.7
0.7
-0.6
18.6 13.3
7.6
1.0
-0.8
-3.7
-4.2
-6.5
0.4
-6.3
-2.1
0.4
3.6
-2.7
-3.6
-4.0
-5.0
7.0
5.5
1.4
2.8
-6.4
-7.8
-10.5
-4.6
Volume
Sales in local
currency
Currency
-10.8 -12.2
Net sales
© SKF Group
Slide 9
26.4
15.6
16 July 2013
6.4
Growth in local currency, including structure
% y-o-y
20
16.3%
15
10
5
0
-2.1%
-5
-3.1%
- 10
2011
© SKF Group
Slide 10
16 July 2013
2012
Structure in 2011:
4.8%
Structure in 2012:
0.4%
Structure in YTD 2013: 2.0%
YTD 2013
Operating profit
SEKm
2 700
2 400
2 100
1 800
1 500
1 200
900
600
300
0
2011
One-time items
© SKF Group
Slide 11
16 July 2013
2012
2013
Operating margin
%
16
14
12
10
8
6
4
2
0
2011
2012
One-time items
© SKF Group
Slide 12
16 July 2013
2013
Operating margin
%
16
14
12
14.7*
14.5
12.0*
11.4
10
11.9*
10.5
8
6
4
2
0
2011
One-time items
* Excluding one-time items
© SKF Group
Slide 13
16 July 2013
2012
YTD 2013
Operating margin per business area
%
18
15
9
Regional Sales
and Service
Strategic
Industries
6
Automotive
12
3
0
-3
Q1
Q2
2011
Q3
Q4
Q1
Q2
Q3
Q4
2012
Excluding one-off items
© SKF Group
Slide 14
16 July 2013
(eg. restructuring, impairments, capital gains)
Q1
2013
Q2
Inventories as % of annual sales
%
25
24
23
22
21
20
19
18
Q1
Q2
2011
© SKF Group
Slide 15
16 July 2013
Q3
Q4
Q1
2012
Q2
Q3
Q4
Q1
Q2
2013
Return on capital employed
One-off costs
* Excluding one-off costs
%
30
25
23.9*
20
23.6
15
17.2*
15.3*
16.2
13.8
10
5
0
2011
2012
YTD 2013
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.
© SKF Group
Slide 16
16 July 2013
Cash flow, after investments before financing
SEKm
2 500
2 000
*
1 500
1 000
500
0
**
- 500
- 1 000
2011
2012
2013
* SEK 1,707 million, excluding acquisitions and divestments.
** SEK -69 million, excluding acquisitions and divestments.
© SKF Group
Slide 17
16 July 2013
Net debt
SEKm
0
AB SKF,
dividend paid (SEKm):
2011 Q2
2,277
2012 Q2
2,504
2013 Q2
2,530
- 2 000
- 4 000
- 6 000
- 8 000
- 10 000
- 12 000
Cash out from
acquisitions (SEKm):
2012 Q3
829
2013 Q1
823
- 14 000
- 16 000
- 18 000
- 20 000
2011
2012
2013
Net debt: Loans and net provisions for post-employment benefits
less short-term financial assets excluding derivatives.
© SKF Group
Slide 18
16 July 2013
Debt structure, maturity years
EURm
600
500
500
500
400
300
265
200
100
100
100
100
110
2014
2015
2016
2017
100
0
2013
• Available credit facilities:
EUR 500 million 2017
SEK 3,000 million 2017
© SKF Group
Slide 19
16 July 2013
•
2018
2019
2020
No financial covenants nor material
adverse change clause
Second quarter 2013
2013
2012
16,392
17,174
1,837
2,049
Operating margin, %
11.2
11.9
Operating margin excl. one-offs, %
12.4
12.7
Profit before taxes
1,627
1,774
Net profit
1,104
1,244
2.36
2.63
1,147
686
SEKm
Net sales
Operating profit
Basic earnings per share, SEK
Cash flow, after investments before financing
© SKF Group
Slide 20
16 July 2013
Half year 2013
2013
2012
31,544
34,105
3,317
4,185
Operating margin, %
10.5
12.3
Operating margin excl. one-offs, %
11.9
12.7
Profit before taxes
2,864
3,730
Net profit
1,922
2,570
Basic earnings per share, SEK
4.10
5.44
Cash flow, after investments before financing
255*
1,382*
SEKm
Net sales
Operating profit
* excluding acquisitions and divestments, SEK 1,078 million (1,401).
© SKF Group
Slide 21
16 July 2013
July 2013: SKF demand outlook Q3 2013
Demand compared to the third quarter 2012
The demand for SKF’s products and services is expected to be slightly
higher for the Group, Asia and North America as well as for all the
business areas. It is expected to be relatively unchanged for Europe
and higher for Latin America.
Demand compared to the second quarter 2013
The demand for SKF’s products and services is expected to be
relatively unchanged for the Group, Europe, Asia and North America
as well as for all the business areas. It is expected to be slightly higher
for Latin America.
Manufacturing
Manufacturing is expected to be slightly higher year over year and
relatively unchanged compared to the second quarter.
© SKF Group
Slide 22
16 July 2013
SKF demand outlook Q3 2013, regions
Share of net sales
2012
Sequential trend
for Q3 2013
Q3 2013
vs Q3 2012
Europe
43%
+/-
Asia Pacific
24%
+
North America
23%
+
Latin America
7%
++
+
Total
© SKF Group
Slide 23
16 July 2013
SKF demand outlook Q3 2013, business areas
Share of net sales
2012
Sequential trend
for Q3 2013
Q3 2013
vs Q3 2012
Strategic
Industries
31%
+
Regional Sales
and Service
39%
+
Automotive
27%
+
+
Total
© SKF Group
Slide 24
16 July 2013
SKF sequential volume trend Q3 2013, main segments
Share of net
sales 2012
6% Aerospace
6% Energy
5% Trucks
29% Industrial distribution
13% Industrial, heavy, special and
off-highway
13% Cars and light vehicles
12% Industrial, general
10% Vehicle after market
4% Railway
2% Two-wheelers and electrical
© SKF Group
Slide 25
16 July 2013
Guidance for the third quarter 2013*
• Tax level: around 30%
• Financial net for the third quarter:
Around SEK -200 million
• Currency impact on operating profit versus 2012
Q3:
SEK -100 million
Full year:
SEK -450 million
• Additions to PPE: Around SEK 1.7 billion for 2013
* Guidance is approximate and based on current assumptions
and exchange rates
© SKF Group
Slide 26
16 July 2013
Key focus areas 2013
• Managing the uncertain and different demand environment
- Profit and cash flow
• Initiatives and actions to support long-term financial targets
- New factories in Mysore and Bengaluru in India
- New warehouse in Shanghai, China
- SKF Campus in Shanghai, China, including:
‣ New factory for automotive
‣ Global Technical Centre China
‣ SKF Solution Factory
‣ SKF College
- Integration of new acquisitions, GBC and BVI
- Cost reduction and efficiency programme
- New IT systems
• Business Excellence and competence development
One SKF and SKF Care as guiding lights
© SKF Group
Slide 27
16 July 2013
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 Group
Slide 28
16 July 2013
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
Capital efficiency
• Fixed cost reduction
• Working capital efficiency
Investments & Innovation
• New and existing facilities
• Research and development
Cost reduction
• Consolidation of manufacturing
• Optimization and productivity improvements
• Reduction in purchasing costs
© SKF Group
Slide 29
16 July 2013
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”.
© SKF Group
Slide 30
16 July 2013
© SKF Group
Slide 31
16 July 2013