SKF Group Presented by Tom Johnstone President and CFO

Transcription

1 SKF Group Presented by Tom Johnstone President and CFO SKF Capital Markets Day 2008

2 SKF Group Vision To equip the world with SKF knowledge

3 SKF Group financial targets Operating margin, level 12 % Growth in local currencies, per annum 6-8 % Return on capital employed 24 % Inventories 18 %

4 Financial performance Operating margin, % Sales growth in local currency, % Return on capital employed, % Q Q Inventories / Sales, % Q Q1 2008

5 Six Sigma 2007 status: 16 Master Black Belts 378 Black Belts 1,614 Green Belts 704 projects closed, whereof 145 replicated 915 projects ongoing Hard savings 2005: SEK 150 m 2006: SEK 200 m 2007: SEK 302 m 4 dimensions: Standard Six Sigma, Design for Six Sigma, Lean Six Sigma and Six Sigma for Growth

6 April 2007: Outlook for the second quarter 2008 (compared to the first quarter 2008) The market demand for SKF s products and services in the second quarter of 2008 is expected to be higher for the Group. The demand is expected to be higher in Europe, relatively unchanged in North America and significantly higher in both Asia and Latin America. The demand is expected to be higher in the Industrial Division and the Service Division and slightly higher for the Automotive Division. The manufacturing level for the second quarter 2008 will be slightly higher compared to the first quarter 2008, and higher than the second quarter 2007.

7 Volume development Net sales 2007 Europe 56% North America 18% Asia Pacific 18% Latin America 5% Total Daily volume trend for: Q Q Outlook Q vs =

8 Key focus areas ahead 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 sustainability as a guiding light

9 Platforms investing in the future Organic Acquisitions * Investing >20% above depreciation * 9 new factories (incl. 3 under development) * Significant investment in existing operations (eg Sweden, Germany) * Over SEK 4.5 billion invested * 18 acquisitions all platforms R&D & AE * New energy efficient bearings and solutions * Over 60 new market offers/products ~ 19 BSEK (~2 BEUR) invested since 2003

10 Investing in R&D for staying in the forefront 20% increase in spending per annum for 5 years Main areas: Environment Core technologies New products Strengthen R&D activities in fast growing regions Strengthen links with universities and high schools.

11 SKF Corporate Sustainability Business Care Employee Care Operating margin BeyondZero TM SKF Care Environment Care Community Care

12 SKF energy-efficient bearings Providing a minimum 30% reduction in energy consumption.

13 Deep groove ball bearings Interested customers (tests and enquiries) Electric Motors; France Germany Spain Finland India Italy USA Japan

14 Tapered roller bearings Interested customers (tests and enquiries) Wind turbines Hydraulic pumps Gearboxes for cranes Marine gearboxes Automotive gearboxes Heavy truck axles

15 SKF Group in 2008 On its way to becoming The Knowledge Engineering Company Performing in line with financial targets Investing in long term profitable growth Strengthening its position in the markets it serves Continued good volume outlook Managing raw material and currency headwinds Sustainability the guiding light

16 Operating margin % Long-term target level: 12% Q1 Excluding income from Ovako

17 Growth development in local currency % Long-term target level: 6-8% per annum Q1

18 Return on capital employed % 30 Long-term target level: 24% Q1 ROCE: Operating profit plus interest income, as a percentage of twelve months average of total assets less the average of non interest bearing liabilities.

19 Questions that investors and analysts ask! How has SKF changed? How is SKF different today from the past? Is profit level more sustainable than in the past? Is growth more sustainable?

20 SKF today a more robust company Divesting assets Property, Plant and Equipment Reducing working capital inventory Improving productivity Diversifying growth

21 Divesting assets - PPE PPE / Sales Assets divested: -Steel - non strategic components New assets: - Acquisitions in all platforms - 6 new factories opened

22 Reducing working capital - inventory Inventories / Sales %

23 Improving productivity Sales per employee, SEK billion S&A / Sales, %

24 Net sales by customer segment Cars and light trucks Industrial business Industrial distribution Vehicle Service Market Special industrial equipment Heavy industry Cars General industry Aerospace Railway Off-highway Trucks Commercial transport Two-wheeler and Electrical

25 Diversifying growth Industrial business % of Net sales Key segments: Energy Aerospace Railway Mining/construction Service business

26 SKF 2007 (2002) (1998) (25) (14) (26) (19) (13) (18) (10) (12) (9) (14) (13) (8) Net sales Average number of employees Tangible asset North America Latin America Western Europe Eastern Europe Middle East and Africa Asia % of group total

27 Diversifying growth increase non bearing sales % of Net sales

28 SKF today a more robust company Divesting assets Property, Plant and Equipment Reducing working capital inventory Improving productivity Diversifying growth

29 SKF Group in 2008 On its way to becoming The Knowledge Engineering Company Performing in line with financial targets Investing in long term profitable growth Strengthening its position in the markets it serves Continued good volume outlook Managing raw material and currency headwinds Sustainability the guiding light SKF Group a more robust company