SKF SHB Large Cap Seminar 2017, Christian Johansson, CFO

Transcription

1 SKF 2017 SHB Large Cap Seminar 2017, Christian Johansson, CFO

2 It s all about reducing friction

3 SKF strategy clear focus since 2016 SKF CMD November 2015 Focus on the business around the rotating shaft Two value propositions - Rotating machine efficiency - Products Automotive turn around Simplified organization What we ve done Five divestments completed New business offers launched - SKF Enlight - Application specific products TAP delivered on time New and leaner organization in place Clear targets and responsibilities

4 Group strategy Priorities Value propositions Creating customer value 1 2 Create and capture customer value Application driven innovation Rotating equipment performance 3 4 World class manufacturing Cost competitiveness Product 5 Maximize cash flow over time

5 Change drivers Digitalization & connectivity New manufacturing technology Electric and connected vehicles

6 Investing in digitalisation and automation for enhanced product offering and improved productivity Research and development Increased resources in core technologies like digitalization and engineering software 2.2 bn in R&D in 2016 or 3.1% of sales, vs 2.6% in average Capex Increased investments in PPE and clear investment strategy focused on cost competitiveness and upgrade of manufacturing technology 1.9 bn in > 2.2 billion in 2017 Rotation for life Investments Investments 2016 Investments 2017-> Cost reduction Replacement Capacity New business 2.1 bn 1.9 bn 2.2 bn 5G Other

7 High pace in transformation Q2 activities Digitalisation and connectivity Collaboration in place with Honeywell Enlight Centre for Marine launched SKF Insight, wireless condition monitoring system enabling condition based maintenance for rail operators Investments The world s first test centre for large-size bearings was inaugurated in Schweinfurt, Germany New production facilities for automotive spare parts in St-Cyr-sur-Loire, France Structure Divestment of Reelcraft completed

8 Sven Wingquist Test Center

9 Manufacturing entering a new era Stock management and delivery performance True pull Sensorized, communicating products and processes Automated, selflearning production Investments: SRB Göteborg CRB Schweinfurt LSB Schweinfurt SRB Hanover/Flowery Branch SRB Nilai 5G Fast and reliable industrial internet Employee role

10 Powertrain electrification Light vehicle production - Millions % The trend is clear: Electrification Smart vehicles (autonomous, sharing) 50 But we think that it will take time. Electric (BEV) Hybrid (PHEV) ICE (incl. Start/Stop) CY 2016 CY 2017 CY 2018 CY 2019 CY 2020 CY 2021 CY 2022 CY 2023 Source: IHS Automotive Nov 2016 CY 2030 Source: Various, SKF estimation

11 Future powertrain component partner EV Application specific design Insulation Conductivity Pure electric High speed Traction motor e-axles ICE Traction motor Dedicated Hybrid Transmission Mild hybrid: Belt Starter Generator 48V Engine Transmission Today Tomorrow

12 Market update

13 Broad-based market recovery Europe: Organic sales change, % First six months 2017 Q3 outlook Industrial - Q1 +7.9% organic growth - Q2 +7.7% organic growth We expect to see higher volumes for both Industrial and Automotive N America: Organic sales change, % Automotive - Q1 +8.4% organic growth - Q2 +7.1% organic growth The recovery is broad-based and we expect higher Q3 volumes in Europe, North America as well as in Asia Asia: Organic sales change, %

14 Business cycle management a key success factor, now in upturn Manage production ramp-up Price management Manage supply shortages based on profitability Raw material prices and inflation by supplier switches and compensating sourcing activities in other categories Don t let the cycle take over the full agenda, keep on executing the strategic agenda Organic sales change, % yoy Market outlook Q3, yoy: + 4-8%

15 Pricing Industrial distribution - price increases implemented in all markets OEM - in discussions but it takes longer time to implement than in distribution due to length of contracts etc. Direct sales

16 SKF Q2 results 2017

17 Solid financial performance in Q2 Net sales 18.3 bn 20.2 bn Sales SEK M, +10.4% compared to Q2 2016, organic sales +7.5% Q2 Q3 Q4 Q1 Q2 17 Adjusted operating profit SEK M (2 020) Adjusted operating margin 12.0% (11.0) Items affecting comparability SEK -121 M (-145) Operating profit* 2.0 bn 2.4 bn Cash flow SEK M (4 225) Profit before tax SEK M (1 656) Q2 Q3 Q4 Q1 Q % Operating margin* * Adjusted for items affecting comparability

18 Sales development by geography Organic growth in local currency Q vs Q Europe +3.1% North America +10.0% Asia/Pacific +11.7% Latin America +9.9% Middle East & Africa +13.3%

19 Cost management The fixed cost index was 101 at the end of Q2, adjusted for the costs related to the implementation of our new ERP system Unite the index was 99. The number of employees increased by 732 in the quarter, adjusted for the divestment of Reelcraft, of which 41 permanent employees, and 691 temporary employees including agency personnel. Staff employees were reduced by 35 people. Activity-based cost reductions continue with high focus Fixed cost index Employees, including agency and temporary personnel 51,729 49,041

20 Net debt increased by 1 billion in the quarter dividend of 2.5 billion paid Net debt, SEK bn 0 Net debt/equity 160% % % 100% 80% 60% 40% 86% Net debt/equity 20% Net debt, excl post empl. Net fin debt Post-empl. benefits 0% benefits/equity %

21 Debt structure EUR EUR EUR EUR EUR USD Average duration of four years No financial covenants or material adverse change clauses Credit facilities: - EUR 500 M SEK 3,000 M 2018 Buy back of EUR 300 M of the 2020 bond in Q2 - one time effect in the financial net of -97 M in Q2

22 Improving performance towards our targets 7.5% Organic growth: Target: 5% Operating margin: 11.4% Target: 12% Net debt / equity: 86% Target: <80% Net working capital: 29.8% Target: 25% Return on capital employed: 13.3% Target: 16%

23 Questions?