Презентация на тему «SKF Half-year results 2015 Alrik Danielson, President and CEO»

SKF Half-year results 2015 Alrik Danielson, President and CEO

15 July 2015

Highlights - examples of new business in Q2 2015

United Technologies Corporation, USA Long-term contract Pratt & Whitney Delivery of engine bearings ReGen Powertech, India Pitch and yaw bearing sets and mainshaft bearings PT. Kereta API Indonesia (Indonesian Railways) Tapered roller bearing units Floatel International AB, Sweden Global service agreement including SKF Multilog IMx-M Volkswagen, Mexico Wheel hub and MacPherson suspension bearing units

Slide 2

Highlights

Completed the divestment of: - Erin Engineering and Research Inc. to Jensen Hughes, a US-based engineering consultancy. - Two filtration businesses, Purafil and Kaydon Custom Filtration, to Filtration Group Corporation, an affiliate of Madison Industries. New products: - a smaller version of a shaft alignment tool that it launched earlier in the year, designed to make shaft alignment easy and intuitive. - an upgraded version of the third generation hub bearing unit, designed to reduce preload, friction and CO2 emissions.

Slide 3

Highlights – customer awards received

Awards from SKF distributors: -‘Supplier of the Year’ Motion Industries in Canada and in the Southeast and Midwest regions of the USA -‘Supplier of the Year in Transmission Imes Dexis, Benelux and Technics 2014’ ‘Best Supplier Award Year 2014’ Shanghai Hanbell Precise Machinery Co., China ‘Best Supplier Award’ Shanghai Automobile Gear Works, China ‘Best Plant award’ The PSA Group, for SKF’s factories in St Cyr, France and Tudela, Spain.

Slide 4

Automotive Market profit improvement programme

Clear aim of improving productivity and competitiveness Three main focus areas: Products – Review of product portfolio; emphasis on application-focused offerings with the specific performance required for the application Competitiveness – Improve our overall competitiveness; focus on costs, manufacturing footprint and process technology Vehicle Service Market – Further adapt aftermarket and OEM offerings, as the design-life of products delivered to OEM customers continues to increase; adapt our aftermarket offering to new reality, ensuring a competitive offer and value proposition for second and third vehicle owners Actions to run as part of normal business; possible restructuring costs to be communicated as and if they occur Intention to develop business as part of SKF

Slide 5

SKF Group – Q2 2015

Financial performance (SEKm)

2015

2014

Net sales

19 961

17 955

Operating profit

2 383

2 096

Operating margin, %

11.9

11.7

Operating margin excl. one-time items, %

12.9

12.3

Profit before taxes

2 241

1 761

Basic earnings per share, SEK

3.65

2.54

Net cash flow after investments before financing

1 654

-1 402*

Organic sales change y-o-y:

Organic sales change y-o-y:

Organic sales change y-o-y:

SKF Group

-1.5%

Europe

0.7%

Industrial Market

-2.5%

North America

-5.7%

Automotive Market

0%

Asia

-3.7%

Specialty Business

1.0%

Latin America

4.6%

Middle East and Africa

15.7%

*Adjusted for the EU payment this is 1 423 million

Slide 6

SKF Group – Half year 2015

Financial performance (SEKm)

2015

2014

Net sales

39 415

34 689

Operating profit

4 104

4 120

Operating margin, %

10.4

11.9

Operating margin excl. one-time items, %

12.6

11.9

Profit before taxes

3 833

3 548

Basic earnings per share, SEK

6.11

5.26

Net cash flow after investments before financing

2 642

-1 465*

Organic sales change y-o-y:

Organic sales change y-o-y:

Organic sales change y-o-y:

SKF Group

-0.2%

Europe

0.8%

Industrial Market

-0.6%

North America

-4.1%

Automotive Market

0.3%

Asia

0.6%

Specialty Business

0.8%

Latin America

1.5%

Middle East and Africa

15.0%

*Previously published cash flow information is restated and adjusted for the EU payment this is 1 360 million

Slide 7

Organic sales growth in local currency

2013

2014

2015

% change y-o-y

Slide 8

Organic sales growth in local currency

% y-o-y

3.9%

-0.7%

-0.2%

Structure in 2013: 2.5% Structure in 2014: 3.7% Structure in 2015: -0.1%

Slide 9

Sales development by geography Organic growth in local currency Q2

2015 vs Q2 2014

Europe 0.7%

North America -5.7%

Asia/Pacific -3.7%

Latin America 4.6%

Middle East & Africa 15.7%

Slide 10

Sales development by geography Organic growth in local currency YTD

2015 vs YTD 2014

Europe 0.8%

North America -4.1%

Asia/Pacific 0.6%

Latin America 1.5%

Middle East & Africa 15.0%

Slide 11

Components in net sales

2013

2013

2013

2013

2014

2014

2015

2015

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Organic

-8.0

-2.2

2.0

6.9

5.8

4.6

3.2

2.8

1.4

-1.5

Structure

1.5

2.6

1.1

4.8

4.7

3.8

5.4

0.9

0

-0.2

Sales in local currency

-6.5

0.4

3.1

11.7

10.5

8.4

8.6

3.7

1.4

-1.7

Currency

-4.0

-5.0

-2.2

-2.1

-0.1

1.1

5.3

8.9

14.9

12.9

Net sales

-10.5

-4.6

0.9

9.6

10.4

9.5

13.9

12.6

16.3

11.2

Percent y-o-y

Slide 12

Operating profit as reported

2013

2014

2015

SEKm

Slide 13

Operating profit excluding one-time items

2013

2014

2015

SEKm

Slide 14

Operating margin

One-time items

* Excluding one-time items

12.6*

11.9*

11.7*

11.0

10.4

5.8

%

Slide 15

Operating margin per business area, as reported

2013

2014

2015

%

Industrial Market

Specialty Business*

Automotive Market

* Q4 2013, impacted by cost related to Kaydon acquisition

Slide 16

Operating margin per business area, excl

one-time items

2013

2014

2015

%

Industrial Market

Specialty Business

Automotive Market

Slide 17

Operating profit bridge, Q2 2015

80

+650

+2 383

+2 096

-223

-80

-140

-1 547

SEKm

Q2 2014

Organic sales in local currencies

Currency impact

Savings from cost-reduction programme

Other*

Q2 2015

One-time items at 2014 exchange rates

* Includes general inflation, manufacturing and purchasing impacts, IT project, and R&D.

Slide 18

Operating profit bridge, YTD 2015

+1 100

80

+4 104

+2 096

-396

-780

-20

-1 547

SEKm

YTD 2014

Organic sales in local currencies

Currency impact

Savings from cost-reduction programme

Other*

YTD 2015

One-time items at 2014 exchange rates

* Includes general inflation, manufacturing and purchasing impacts, IT project, and R&D.

Slide 19

Employee productivity and efficiency

Expected productivity and efficiency gains from new organisation on-track: - merging the two industrial businesses - general staff optimization and productivity improvements Agreements have been reached covering 60% of the concerned individuals.

Q1 2015

Q2 2015

Target

Cost, SEKm

535

224

1 400

People affected

575

270

1 500

Cost savings

-

80

-

Annual cost savings, SEKm

460*

170*

1 200

* On a full-year basis, as of Jan 2016

Slide 20

Net working capital as % of annual sales

Target: 27%

2013

2014

2015

%

Slide 21

Return on capital employed

15.1*

14.8*

14.7*

13.9

12.6

7.5

One-time items

* Excluding one-time items

%

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.

Slide 22

Cash flow, after investments before financing*

2013

2014

2015

SEKm

4)

3)

2)

1)

Excl. acq. and div.: 1) Q1 2013 SEK -69 million 2) Q3 2013 SEK 871 million 3) Q4 2013 SEK 1 122 million Excl. EU payment 4) Q2 2014 SEK 1 423 million

* 2013 and 2014 are restated

Slide 23

Net debt

AB SKF, dividend paid (SEKm): 2013 Q2 2 530 2014 Q2 2 530 2015 Q2 2 567

Cash out from major acquisitions (SEKm): 2013 Q1 823 2013 Q4 7 900

Cash from divestments (SEKm): 2015 Q2 1 000

EU payment (SEKm): 2014 Q2 2 825

2013

2014

2015

SEKm

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

Slide 24

Debt structure, maturity years

850

500

500

200

110

100

Available credit facilities: EUR 500 million 2019 SEK 3 000 million 2018 EUR 150 million 2017

No financial covenants nor material adverse change clause

Slide 25

July 2015: SKF demand outlook Q3 2015

Demand compared to the third quarter 2014 The demand for SKF’s products and services is expected to be relatively unchanged for the Group, Europe and Asia. For North America it is expected to be lower and for Latin America higher. For all business areas it is expected to be relatively unchanged. Demand compared to the second quarter 2015 The demand for SKF’s products and services is expected to be slightly lower for the Group. For Europe it is expected to be lower and for all other regions it is expected to be relatively unchanged. For the business areas, Industrial Market and Specialty Business it is expected to be relatively unchanged and for Automotive Market it is expected to be lower.

Slide 26

Guidance for 2015*

Q3 2015: Financial net: around -230 million Currency impact on operating profit vs 2014 Q3: 450 million, based on exchange rates June 30. 2015: Tax level: below 30% for 2015 Additions to PPE: around 1 700 million for 2015

* Guidance is approximate and based on current assumptions and exchange rates.

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

Slide 28