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The SKF Group. First-quarter results 2009 Tom Johnstone, President and CEO. Highlights in the first quarter 2009. SKF - PowerPoint PPT Presentation
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1
21 April 2009
The SKF Group
First-quarter results 2009
Tom Johnstone, President and CEO
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21 April 2009
Highlights in the first quarter 2009
SKF
• gained an order from CSR Zhuzhou ElectricLocomotive Co., Ltd. ZELC. 500 electriclocomotives, for Chinese railways, will beequipped with SKF axleboxes and drivesystem bearings. Order value: EUR 14 m.
• won a new contract for the supply oftapered roller bearings to GuangdongFuwa Engineering Manufacturing Co Ltd.Order value: USD 14 m.
Photo: CSR Zhuzhou Electric Locomotive
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21 April 2009
SEKm 2009 2008
Net sales 14,849 15,596
Operating profit 768 2,040
Operating margin 5.2 13.1
Profit before taxes 531 1,924
Net profit 394 1,296
Basic earnings per share, SEK 0.86 2.77
Cash flow after investments before financial items 523 -131
First quarter 2009
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21 April 2009
-20
-15
-10
-5
0
5
10
15
2007 2008 YTD March2009
Growth in local currency
% y-o-y
Acquisitions/DivestmentsOrganic growth
13.2
Long-term target level: 6-8% per annum
7.1
- 18.4
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Sales in local currencies (excl. structural changes)
-20
-16
-12
-8
-4
0
4
8
12% change y-o-y
2007 2008 2009
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21 April 2009
Sales volume
-30
-25
-20
-15
-10
-5
0
5
10% change y-o-y
2007 2008 2009
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21 April 2009
Components in net sales
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
7.9 6.9 9.0 6.3 4.9 6.2 2.7 -13.0 -26.9
4.0 4.6 3.7 1.0 1.0 1.3 0.5 2.4 1.4
1.8 2.7 2.0 3.2 3.8 4.0 6.4 8.5 7.1
13.7 14.2 14.7 10.5 9.7 11.5 9.6 -2.1 -18.4
-5.6 -2.3 -1.9 -2.0 -1.2 -4.1 -0.9 10.3 13.6
8.1 11.9 12.8 8.5 8.5 7.4 8.7 8.2 -4.8
Percent y-o-y
Volume
Structure
Price / Mix
Sales in local currencyCurrency
Net sales
2007 2008 2009
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Operating margin
0
2
4
6
8
10
12
14
2007 2008 YTD March2009
%
12.9 12.2
Long-term target level: 12%
5.2
13.3* 12.7*
6.4*
Restructuring and one-time items* Excluding restructuring and one-time
items
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21 April 2009
Operating margin
%
0123456789
1011121314
2007
Long-term target level: 12%
2008 2009
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-15
-10
-5
0
5
10
15
20
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Operating margin per division
Industrial
Service
Automotive
%
2007 2008
Excluding one-off items (eg. restructuring, impairments, capital gains)
2009
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21 April 2009
Activities to adapt to lower demand
• Restructuring/impairment programmesPeople Costs charged to operating profit
- announced Q4 2008, around2,500 SEK 340 m - announced Q1 2009, around 500 SEK 175 m
3,000 SEK 515 m
At the end of March 2009, around 1,300 people had left under the programmes.
• In total, around 2,600 people left the Group during H2 2008 and Q1 2009.
• Around 6,000 people in short-time working (Q1 2009).
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18
19
20
21
22
23
24
25
Inventories as % of annual sales
%
2007
Long-term target level: 18%
2008
xexcl. currency effects
2009
Inventories versus Q4 2008, in local currencies, were reduced by around SEK 500 million.
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21 April 2009
Return on capital employed
0
5
10
15
20
25
30
2007 2008 YTD March 2009
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
18.7
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Net debt (Short-term financial assets minus loans and post-employment benefits)
-18 000
-16 000
-14 000
-12 000
-10 000
-8 000
-6 000
-4 000
-2 000
0
SEKm
AB SKF, dividend paid (SEKm):2006 Q2 1,8212007 Q2 2,0492008 Q2 2,277
Redemption (SEKm):
2007 Q2 4,5542008 Q2 2,277
2007 2008 2009
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AB SKF, long-term debt structure
Amount in million Maturity
Euro Bond EUR 250 2010-06
SEK Bond SEK 1,500 2011-06
Term loan in euro EUR 150 2013-06
Euro Bond EUR 500 2013-12
Euro loan EUR 100 2016-06
Euro loan EUR 100 2014-03
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21 April 2009
Cash flow, after investments before financial items
-800
-600
-400
-200
0
200
400
600
800
1 000
1 200
1 400
2007
SEKm
Cash out fromacquisitions (SEKm): 2007 1,2092008 1,284
2008 2009
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21 April 2009
April 2009: Outlook for the second quarter 2009
The demand for SKF products and services is expected to be significantly lower in the second quarter compared to the second quarter last year for the Group in total, for all the Divisions and for all regions.
Compared to the first quarter, demand is expected to be slightly lower for the SKF Group in total and lower in Europe, slightly lower in North America and relatively unchanged in Asia and Latin America. Demand is expected to be relatively unchanged for the Automotive Division and slightly lower for both the Industrial and Service Division.
The manufacturing level will be significantly lower year on year and relatively unchanged compared to the first quarter.
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21 April 2009
Volume trends(based on current assumptions)
Daily volume trends for: Q1 2009 Q2 2009
Net sales2008
Europe
56%
North America
17%
Asia Pacific
19%
Latin America
5%
Total
Outlook Q22009 vs
2008
---
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5% Trucks
20% Industrial OEM,
General+Special
23% Industrial distribution
12% Industrial OEM, Heavy+Off-
highway
13% Cars
3% Electrical and two-wheeler
9% VSM
5% Aerospace
3% Railway
6% Energy
Volume trend for main segment Q2 2009(based on current assumptions)
Net sales 2008
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21 April 2009
Guidance for the second quarter 2009
• Tax level: around 30%
• Financial net for the second quarter:SEK -220 million
• Exchange rates on operating profit versus 2008Q2: SEK 300 million
Full year: SEK 1 billion
• Additions to PPE: Around SEK 2 billion for 2009
Guidance is approximate and based on current assumptions and exchange rates
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21 April 2009
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
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21 April 2009
SKF Care
Employee Care
Community CareEnvironmental Care
Business Care
BeyondZeroT
M
0
2
4
6
8
10
12
14
2003 2004 2005 2006 2007 2008
SKF Care
Operating margin
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21 April 2009
SKF Group Vision
To equip the worldwith SKF
knowledge
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21 April 2009
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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21 April 2009