Skf Ab Class A · OMXSTO:SKF_A
Skf Ab Class A — Q3 2008 Earnings Presentation
25 slides from Skf Ab Class A's earnings presentation, Oct 16, 2008
Slide 1: 16 October 2008
16 October 2008
Slide 2: The SKF Group Nine-month results 2008
The SKF Group Nine-month results 2008 Tom Johnstone, President and CEO
Slide 3: Highlights during the third quarter 2008
3 Highlights during the third quarter 2008 SKF • announced it will be investing around SEK 400 million in its facilities in Göteborg, Sweden for a further increase of capacity. • signed an agreement to acquire GLO s.r.I and its manufacturing operation in Italy. The acquisition is subject to certain
Slide 4: Highlights during the third quarter 2008
4 Highlights during the third quarter 2008 SKF • launched through the network of SKF authorized distributors the latest SKF Energy Efficient performance class bearings. • launched new condition based maintenance solutions to the railway industry to achieve lower life cycle cost. • launched the Distr
Slide 5: Third quarter 2008
5 Third quarter 2008 SEKm 2008 2007 Net sales 15,381 14,155 Operating profit 2,085 1,803 Operating margin 13.6% 12.7% Profit before taxes 1,859 1,646 Net profit 1,257 1,174 Basic earnings per share, SEK 2.67 2.48 Cash flow after operating investments before financial items -526 1,274 Cash flow after
Slide 6: First nine months 2008
6 First nine months 2008 SEKm 2008 2007 Net sales 47,054 43,489 Operating profit 6,260 5,708 Operating margin 13.3% 13.1% Profit before taxes 5,761 5,428 Net profit 3,922 3,662 Basic earnings per share, SEK 8.39 7.76 Cash flow after operating investments before financial items 215 1,509 Cash flow af
Slide 7: Operating margin
7 Operating margin Long-term target level: 12% % 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 2006 2007 2008 16 October 2008
Slide 8: Operating margin
8 Operating margin Long-term target level: 12% % 14 12.9 13.3 12.6 12 10 11.3* 8 6 4 2 0 2006 2007 YTD September 2008 * excluding income from the jointly controlled company Oy Ovako Ab 16 October 2008
Slide 9: Operating margin per division
9 Operating margin per division % 16 14 Service 12 Industrial 10 8 6 Automotive 4 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2006 2007 2008 Excluding one-time items (eg. restructuring, impairments, capital gains) 16 October 2008
Slide 10: Sales in local currencies (excl. structural changes)
10 Sales in local currencies (excl. structural changes) % change y-o-y 16 14 12 10 8 6 4 2 0 2006 2007 2008 16 October 2008
Slide 11: Growth development in local currency
11 Growth development in local currency Acquisitions/Divestments Long-term target level: 6-8% per annum Organic growth % Y-o-Y 13.2 14 12 10.2 10 7.5* 8 6 4 2 0 2006 2007 YTD September 2008 * Excluding effect from Ovako: 2006 10.1% 16 October 2008
Slide 12: Net sales development per quarter
12 Net sales development per quarter 2006 2007 2008 Percent y-o-y Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Volume 6.0 2.5 3.3 8.8 7.9 6.9 9.0 6.3 4.9 6.2 2.7 Structure -4.9 -0.5 1.1 4.6 4.0 4.6 3.7 1.0 1.0 1.3 0.5 Price / Mix 2.9 2.0 2.0 2.3 1.8 2.7 2.0 3.2 3.8 4.0 6.4 Sales in local 4.0 4.0 6.4 15.7 13.7 1
Slide 13: Cash flow, after operating investments before financial items
13 Cash flow, after operating investments before financial items SEKm 1 700 1 500 Cash out from 1 300 acquisitions (SEKm): 1 100 2006 2,129 900 2007 1,209 700 2008 YTD 1,116 500 300 Cash in from Ovako 100 (SEKm): -100 -300 2006 Q4 1,217 -500 2007 Q2 46 -700 2006 2007 2008 16 October 2008
Slide 14: Net debt
14 Net debt (Short-term financial assets minus loans and post-employment benefits) SEKm 0 AB SKF, -2 000 dividend paid (SEKm): -4 000 2006 Q2 1,821 2007 Q2 2,049 -6 000 2008 Q2 2,277 -8 000 -10 000 Redemption (SEKm): 2007 Q2 4,554 -12 000 2008 Q2 2,277 -14 000 2006 2007 2008 16 October 2008
Slide 15: Inventories as % of annual sales
15 Inventories as % of annual sales Long-term target level: 18% % 23 22 21 20 19 18 2006 2007 2008 16 October 2008
Slide 16: Return on capital employed
16 Return on capital employed Long-term target level: 24% % 27 26 25 24 23 2006 2007 YTD September 2008 ROCE: Operating profit plus interest income, as a percentage of twelve months average of total assets less the average of non interest bearing liabilities. 16 October 2008
Slide 17: October 2008: Outlook for the fourth quarter 2008
17 October 2008: Outlook for the fourth quarter 2008 The demand for SKF products and services, based on current assumptions, is expected to be slightly lower in the fourth quarter both compared to the third quarter this year (seasonally adjusted) and the fourth quarter last year. In Europe and North
Slide 18: Volume development
18 Volume development (based on current assumptions) Net sales Daily volume trend for: Outlook Q4 2007 Q3 2008 Q4 2008 2008 vs 2007 Europe 56% - North America 18% - Asia Pacific 18% +++ Latin America 5% ++ Total - 16 October 2008
Slide 19: Expected demand by main segment – Q4
19 Expected demand by main segment – Q4 (based on current assumptions) Net sales 2007 15% Cars 5% Trucks 10% VSM 3% Electrical and two-wheeler 22% Industrial OEM, General+Special 23% Industrial distribution 11% Industrial OEM, Heavy+Off-highway 5% Aerospace 3% Railway 3% Energy 16 October 2008
Slide 20: Guidance for the fourth quarter 2008
20 Guidance for the fourth quarter 2008 • Tax level: 32% • Financial net for fourth quarter: SEK -200 million • Exchange rates on operating profit versus 2007 Q4: SEK +100 million Full year: SEK -270 million • Additions to PPE: around SEK 2.5 billion Guidance is approximate and based on current assu
Slide 21: AB SKF, long-term debt structure
21 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 1) EUR 150 2013-06 Euro Bond EUR 500 2013-06 Euro loan 2) EUR 100 2016-06 1) SKF can repay at any time before maturity. 2) SKF can repay from 2010-06 16 October 2008
Slide 22: Key focus areas ahead
22 Key focus areas ahead • Protect profit and cash flow • Strengthen the platform/segment approach • Maintain a positive price/mix • Focus on fast growing segments and geographies • Drive operational efficiency and Six Sigma • Manage material costs and supply • Attract and retain the best people Use
Slide 23: SKF Corporate Sustainability
23 SKF Corporate Sustainability Business Care Employee Care 14 12 10 8 6 4 2 0 2003 2004 2005 2006 2007 Operating margin BeyondZero TM SKF Care Environment Care Community Care 16 October 2008
Slide 24: To equip the world with SKF knowledge
24 SKF Group Vision To equip the world with SKF knowledge 16 October 2008
Slide 25: 16 October 2008
16 October 2008