SKF Capital Markets Day Christian Johansson, Senior Vice President & CFO

Transcription

1 SKF Capital Markets Day 2018 Christian Johansson, Senior Vice President & CFO

2 SKF in business for 111 years, fit and ready for the future! Fast and customer focused Net debt / equity: 60% Target: <80% Refocused on the core business (8 divestments in 3 years) Strengthened financial position Lowered cost level => market share growth, record sales & record high profit Organic growth: 6.9% Target: 5% Operating margin: 12.2% Target: 12% 29.0% Net working capital: Target: 25% Return on capital employed: 16.5% Target: 16%

3 Performance versus targets Organic sales growth Growth (Q3) Target Operating Result (rolling 12 months) 14,0 11,0 8,0 5,0 Operating Result Margin Target Cash flow after investments before financing* % (rolling 12 months) Cash flow Cash Conversion 160% 120% 80% 40% Net debt/equity Net working capital/sales ROCE Net debt/equity Target (Q3) NWC Target (Q3) (Q3) ROCE Target

4 Accelerating for the future within tight frames We have increased our efforts on: Research and development IT Capital expenditures While: Kept fixed costs unchanged Reduced the number of employees Reduced debt by more than 11 billion Prioritizations based on a clear and agreed direction

5 Prioritizations are seen in the numbers

6 Strategic IT SKF an overview Rotating Equipment Performance SKF CLOUD Supply Chain 4.0 Advanced Analytics & Machine Learning Customers E-Commerce Customer Relationship Management ERP (Unite - SAP) (Com. Systems) (SMT divest.) IoT Digital Platform Robotics Process Automation Supplier Integration Suppliers The Connected Shop Floor (Industry 4.0) SKF Digital Workplace

7 R&D footprint moving testing closer to customer Nieuwegein, The Netherlands Gothenburg, Sweden Shanghai, China Schweinfurt, Germany Airasca, Italy July 2017 July 2019

8 New market offers for products and REP Newly launched product offers New REP initiatives in Asia

9 NWC / Sales 25% - improving but target not yet reached Target: 19% Gap >2 % Reduce inventory days +2 bn inventory value to be reduced Activities and responsibilities are set Implementation ongoing Target: 16% Gap 1 % Reduce AR-days Steady improvement last 2 years Accountability and incentive schemes Credit policy and standardized processes Target: 10% Almost on target Increase AP-days Improvement potential in indirect material & services Some countries still with untapped potential

10 Inventory reduction activities Demand Management Improved demand plan to reduce demand related overstock Manage Customer Agreements Integrated Planning End-to-End planning setup Assortment Management Keep the right products on stock Reduce the supply network complexity Manufacturing & Supplier Footprint Region for Region in full supply chain Increase Factory Flexibility Reduce manufacturing lead-time and increase flexibility

11 Net debt/equity ratio reduced from 144% to 60% Net debt, SEK bn Net debt/equity, % 0 160% % Net debt/equity 20% Net debt, excl post empl. Net fin debt Post-empl. benefits 0% benefits/equity % 100% 80% 60% 40% 60% 25%

12 Debt structure Debt structure 500 Ratings Moody s: Baa1 Stable outlook Fitch: BBB Stable outlook New 7-year 300M EUR-bond issued in September Extending our maturity profile Issued at record low coupon rate of 1.25% Proceeds used to buy back outstanding bonds - maturing in 2019 and 1.875% and 2.375% coupon rates

13 Strong balance sheet capital allocation Net debt, SEK bn Net debt/equity, % 160% 140% 120% 100% 80% 60% 40% 60% Capital allocation Dividend policy to distribute 50% of net income Invest in the company - Capital expenditures - Research & development Mergers & Acquisitions % Net fin debt Post-empl. benefits 0% Net debt/equity Net debt, excl post empl. benefits/equity 25%

14 Active portfolio management Speciality Business Area >9 bn SEK of sales in bn divested 5 bn integrated in SKF organisation, Industrial & Automotive Divestments KAYDON FILTRATION Outcome Clear focus in organisation Sales and cost synergies from full integration in SKF 4.2 billion in cash proceeds after tax Fly-by-wire

15 Strong balance sheet create gunpowder for acquisitions Strengthening Positions Strengthening Customer Offer Wind Power Electrical Vehicles Bearings Railway Sealings Machine Tools PowerTransmission Lubrication Systems Remanufacturing Services Condition Monitoring China India Japan Metrology Automation SKF Fly-by-Wire SKF Motion Technologies Light Vehicle Combustion Engine Transmissions Divested Erin Engineering Kaydon Filtration & Purafil Canfield Technologies Kaydon Velocity Control ReelCraft Light Vehicle Combustion Engines Phasing Out over time

16 Business cycle management - Great timing & execution in upturn, peak cycle management in focus Price management Manage service levels versus inventory Long versus short commitments Production flexibility with cost flex Strict prioritization of costs, manage fixed costs Change in Net sales, YoY Don t let the cycle take over the full agenda, keep on executing the strategy Market outlook Q4, yoy: + 2-4%

17 Summary Historically best ever performance Accelerating for the future within tight frames Activities to reach 25% NWC to sales under implementation Strong balance sheet create gunpowder for acquisitions Peak cycle management in focus