Transcript Document

The SKF Group
Half-year result, 2005
Tom Johnstone, President and CEO
Second quarter 2005
MSEK
2005
2004
12 739
11 417
1 383
1 159
Operating margin
10.9%
10.2%
Profit before taxes
1 319
1 049
Net profit
905
733
Earning per share, SEK
1.95
1.49
Cash flow after investments before
262
559
Net sales
Operating profit
financing*
* MSEK 718, before the acquisition of Jaeger Industrial Ltd. and the purchase of
minority shareholding in previously acquired companies.
Half-year 2005
MSEK
2005
2004
24 610
22 106
2 571
2 062
Operating margin
10.4%
9.3%
Profit before taxes
2 443
1 864
Net profit
1 684
1 402
Earning per share, SEK
3.60
2.80
Cash flow after investments before
406
1 094
Net sales
Operating profit
financing
Areas in focus 2005
2005
•
•
Operating margin level
Maintain a positive price/mix
3.6%
Recovery of raw material cost increase
Ongoing
Continued sales growth
Maintain organic growth pace
Structure
•
•
Performance Q2
Strengthen the platform/segment offer
11.2%
0.2%
Ongoing
Cash flow before financing
and acquisitions
In line with net profit, annual basis
MSEK 718
Major events during the quarter
• Merger of long-steel operations, Oy Ovako Ab
• Share split and redemption
• Launch of a 350 million euro dual-tranche bond
• Acquisition of Jaeger Industrial Ltd.
• Announcement of the closure of two plants in the USA
Operating margin*
%
11
10
9
8
7
6
5
4
3
2
1
0
2002
2003
* excluding restructuring and
impairment in Q4 2003
2004
2005
Operating margin per division*
%
14
12
Service
10
Industrial
Electrical
Aero and Steel
excl. Ovako
Automotive
8
6
4
2
0
Q1
2003
Q2
Q3
Q4
Q1
2004
* excl. restructuring and impairment
in Q4, 2003 and in Q2, 2005
Q2
Q3
Q4
Q1
2005
Q2
Sales in local currency
% change y-o-y
18
16
14
12
10
8
6
4
2
0
-2
-4
-6
2002
2003
2004
2005
Growth development / local currency
10 BSEK additional sales = 6 % annual growth rate
% Y-o-Y
16
14
12
10
8
6
4
2
0
6% total growth
4% organic growth
2002
2003
2004
2005
Up to June
Growth by acquisitions
Organic growth
Net sales development per quarter
2003
2004
2005
Percent y-o-y
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Volume
6.2
3.2
4.2
3.1
4.8
8.9
9.6
10.2
8.3
7.6
Structure
0.7
0.1
0.2
0.3
0.1
0.0
2.2
2.0
2.3
0.2
Price / Mix
1.2
0.6
1.2
0.1
1.1
1.8
2.3
4.2
3.6
3.6
8.1
3.9
5.6
3.5
6.0
10.7
14.1
16.4
14.2
11.4
-9.3
-8.6
-5.5
-7.4
-4.6
-2.3
-2.9
-3.8
-3.2
0.2
-1.2
-4.7
0.1
-3.9
1.4
8.4
11.2
12.6
11.0
11.6
Sales in
local
currency
Currency
Net sales
Inventories as % of annual sales
%
25
24
23
22
21
20
19
18
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2002
2003
2004
2005
Cash flow, after investments before
financing
MSEK
1 400
1 200
1 000
800
600
400
200
0
- 200
2002
2003
2004
2005
Net debt
(Short-term financial assets - loans)
MSEK
Dividend paid:
5500
2001 Q2, MSEK
598
2002 Q2, MSEK
683
3500
2003 Q2, MSEK
911
2500
2004 Q2, MSEK 1 138
4500
2005 Q2, MSEK 1 366
1500
500
2004 Q2, Pension:
MSEK 3 100
-500
2005 Q2, Redemption,
MSEK 2 846
-1500
2001
2002
2003
2004
2005
Net interest bearing liabilities
(Short-term financial assets - loans - net postemployment benefits)
MSEK
1000
0
- 1000
- 2000
- 3000
- 4000
- 5000
- 6000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2003
2004
2005
Share split and distribution to
shareholders
MSEK 1 366 Dividend
MSEK 2 846 Redemption
MSEK 4 212 Distributed to shareholders
Number of shares
as per June 30, 2005
SKF A
SKF B
Total
SKF issued during the second quarter:
A 350 million euro dual-tranche bond
- a 100 million euro three-year floating-rate bond
- a 250 million euro five-year fixed rate bond
63 876 892
391 474 176
455 351 068
Jaeger Industrial Co Ltd.
• Leading supplier in AsiaPacific
• Turnover year 2004,
MSEK 320
• Complete range of actuation
systems
• 750 employees
• Low cost manufacturing and
high volume capabilities
• Own sales units plus sales
through specialized dealers
• Manufacturing plants both in
Taiwan and China
• ~50% sales volume in Asia
• Founded 1982
• Five business units (Taiwan,
China & USA)
• ISO 9001
Jaeger market segments
• Satellite disc positioning
• Gate openers
• General industry
• Health care & Ergonomics
Accumulated change in the number of
employees
Employees
6000
4000
acquisitions
2000
0
-2000
-4000
-6000
-8000
capacity adjustment
and restructuring
2000
2001
2002
2003
2004
2005
Fixed assets / Sales
%%
40
38
36
34
32
30
28
26
24
22
20
98
99
00
01
02
03
04
Up to June
05
SKF Group targets
• 10% Operating margin level
•
6% Growth per annum
2006
• 20% ROCE
• 18% Inventory / sales
2007
July 2005: Outlook for the third quarter
The market demand for SKF’s products and services in
the third quarter, compared to the previous quarter, is
expected to remain on a high level in Europe, to be
slightly higher in North America, higher in Latin America
and significantly higher in Asia. However, the third quarter
is seasonally lower than the second quarter.
The manufacturing level will be unchanged during the
third quarter, compared to the second quarter, while lower
in absolute terms due to normal seasonality.
Volume trend for the third quarter 2005
Net sales
2004
Europe
57%
North America
20%
Asia Pacific
15%
Latin America
Total
Note: This is the sequential
development
5%
April 2005
July 2005
Cautionary statement
This report 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 20F report on file with the SEC (United States Securities and
Exchange Commission) under "Forward-Looking Statements"
and "Risk Factors".