Capital Market Day, 18 May 2004, Shanghai. Profitable growth

Transcription

1 Capital Market Day, 18 May 2004, Shanghai Profitable growth

2 Tryggve Sthen President, Automotive Division

3 Serving the Global Automotive Industry VW Group Porsche BMW Daewoo Rover Nissan Mazda Isuzu Hyundai/Kia Suzuki Honda Toyota Daimler/Chrysler Ford Worldwide Volvo Saab Renault Fiat Group Peugeot/Citroen GM Worldwide Mercedes Benz/Freightliner MAN Volvo Group: Renault VI, Mack, Volvo Scania Iveco Ford DAF Navistar Paccar Tata Motors ZF Getrag Eaton Arvin Meritor Dana BPW Fruehauf SMB Detroit Diesel Cummins Magneti Marelli Delhpi Metaldyne Bosch Visteon Contiteves NVG ADI - Group TIAG - Group GAUI - Group NAPA Gates Uni-Select

4 Presentation outline AD Overview Market Development & Industry Trends AD Growth Strategy Continuous Cost Reduction Activities Formula for Success

5 Key facts 2003 Global presence with sales in more than 70 countries Production in 25 plants in 12 countries employees world-wide Total net sales 2003: MSEK (~2 BUSD)

6 SKF Automotive sales 2003 Per segment By region Vehicle Aftermarket 26% Others 4% Asia 6% Europe 14% Trucks 56% Cars 58% LA 3% 33% NA Strong growth in local currencies

7 Key achievements 2003 Flat world car market / Strong SKF growth in local currencies: Market share gains More high value products Strong growth in China Strong Growth in the Vehicle Service Market Margin improvement activities: Closure of Franklin plant Restructuring TRB production Six Sigma rolled out in entire division

8 Market development - Assumptions 2004 Vehicles Market recovery Cars Cars +4% +4% Trucks +23% Market recovery Cars Cars +12% Trucks +1% +1% Initially flat flat Cars Cars +2% +2% Fast Trucks +3% Fast Growth +3% Cars Cars +30% Trucks -2% -2% Fast Fast Growth Cars Cars +13% Trucks +8% +8% Source: J.D. Power-LMC and Global Insight, March 04

9 Market development truck (000 s) Source: J.D. Power-LMC, March 04 2,200 2,000 1,800 1,600 1,400 1,200 1, World Truck (>6t) production volumes are projected to increase significantly during

10 Market development light vehicle (000 s) Source: Global Insight, March 04 66,000 64,000 62,000 60,000 58,000 56,000 54,000 52, Production is forecast to grow with 3-4% per year and reach almost 64 million vehicles by 2006

11 Some automotive business trends System integration - Delegating subassemblies to Tier structure Continuous cost improvement - Volume concentration and joint process improvements Global presence - Support of global expansion Reduction of suppliers - improve efficiency and engineering success

12 Profitable Growth

13 AD Profitable Growth Strategy New Products and Technologies Platform Integration Products with Value-added Features

14 Profitable Growth through New Products and Technologies Hub Bearing Unit - Sales development HBU3/3T HBU2/2T HBU1/1T 1992 = Index 100

15 Profitable Growth through Platform Integration Opel Corsa FW HBU1 RW HBU2 GM-Fiat jointly develop new vehicle platform SKF already had relationships with both design teams SKF gains higher sales volumes Fiat Punto

16 Profitable Growth through Value Added Features Durango Sport Utility Asymmetrical Ball Bearing Hub Unit provides benefits of: Increased spindle stiffness Improve brake operation Reduced noise & vibration Dakota Pickup

17 Profitable growth through value added products - Vehicle Service Market One box, one part number Over 500 kits added in 2003 to assortment of Suspension kits added 180 part numbers in 2003 Automotive Division

18 Profitable growth through value added products SKF Kit Concept

19 Continuous cost reduction activities

20 Continuous cost reduction initiatives Value-engineering driven cost reduction Resourcing to low-cost facilities Six Sigma driven efficiencies Channel optimisation and plant restructuring

21 Continuous cost reduction through utilization of lower cost facilities TRB restructuring Lutsk Bearing Plant, Ukraine acquired by SKF in 1998 upgraded to provide higher quality components a key part of the TRB restructuring program and cost reduction initiative Lutsk was recognized as producing one of the 100 Best Products of Ukraine for 2003.

22 Continuous cost reduction through utilization of lower cost facilities Shanghai Volkswagen Volkswagen Hub Unit 2 Bearing SKF Solution reduces customer s costs Product produced in existing hub 2 channel in St. Cyr, France Production channel to be moved Q1 05 to SKF s ABC Bearing, Shanghai SKF s robust integrated ball bearing hub unit replaced loose tapered bearings in the rear wheel

23 Continuous cost reduction through utilization of lower cost facilities Kayaba, Spain Unprofitable business Production was moved to Wuhu -Profitable business -Opportunities for new business

24 Continuous cost reduction through Six Sigma Low Temperature Transmission Output Seal Problems with leakage at extremely low temperature Six Sigma processes analyze failures and evaluate effective solutions New aerospace material solution reduced total costs for SKF and the customer

25 Continuous cost reduction through channel optimisation and plant restructuring Hub Units HBU 2 Technology Transfer to China HBU 3 Technology Transfer to Korea HBU 3 Capacity Added to Italy TRB s TRB Restructuring project to be finalised Add TRB capacity to India Seals Closure of Franklin Increase capacity of Wuhu, China factory

26 The Formula for Success Superior products The + ultimate Betterteamwork Ways of Working + Continuous Cost Reduction

27 The Formula for Success

28 A Winning Formula since 1947 SKF receives the Ferrari Innovation award 2003 "We have to have technical partnerships of the type we have with SKF or we can t succeed We trust SKF, and by doing that I think we get much more out of the relationship. Shanghai Inaugural Race is September 26th

29 Summary Growing Vehicle Markets SKF well positioned to handle industry trends Clear Strategy for profitable growth Ongoing cost reduction activities Continuing improvements in Operating Margin Formula for Success

30 Giuseppe Donato President, Electrical Division

31 Electrical Division Sales to manufacturers of electric motors, household appliances, electrical components for the automotive industry, power tools, office machinery and two-wheelers. Product development and production of all deep groove ball bearings and bearing seals within SKF.

32 Today focus Growth - organic - value added products Cost reduction Business in China

33 Growth

34 Organic growth Electrical Division sales in Two Wheelers

35 Organic growth Electrical Division sales in Asia Pacific area

36 Sales Development in Value Added Products % Y-o-Y Q1

37 Measurement module for two wheelers Front-Wheel Sensor Module for International Motorbike Federation Markets Trial Motorbikes Customer Benefits Precise and reliable sensing of stop and backward motion

38 Encoder seals Speed and position sensing Applications Wheel Bearings Engine crankshafts and camshafts Throttle valves Powertrain and steering

39 Shock absorber seals Benefits Increased service life to meet OEM warranties Reduced seal friction and noise levels Improved dirt exclusion capabilities Customers Kayaba Toyota Applications Seals for monotube, twintube & pressurized shock absorber and struts Fork seals for two wheeler front forks

40 Drum support unit Compact Unit for new model of Washing Machine Customer Benefits Easy to fit Assembly cost saving

41 Spider Arm New washing machine 8 kilos load Spider Arm equipped with HBU first generation

42 Cost reduction

43 Channel philosophy evolution Productivity +25% 90's early 2000's 2004 onwards Channel concept One to one channel Next Model Time

44 Next Model Channel People Actual N Manpower load time People Next N/2 Manpower load time

45 Manufacturing restructuring activities Closure of Thomery, transfer to more productive units. Transfer of angular contact ball bearings and big deep groove ball bearings to Gainesville plant in USA.

46 Manufacturing Restructuring Activities Bulgaria Factories Mission Supplier to East Europe market Supplier to global market Supplier of components to SKF plants Achievements ISO 9001: 2000 quality certifications Q4 2003: start to deliver bearings to washing machines producers

47 Business in China Quency Ng

48 The Growth of DGBB in China Affluent Lifestyle Getting hot in Household Urban home owners increasing and seeking to live a more affluent lifestyle Home cinema, internet connected household beyond traditional basic needs Brand, quality & service awareness, still growing

49 SKF Growth of DGBB in China Affluent Lifestyle Industrial Output Refrigerators Air-con Washing Machine No. in Million

50 The Growth of DGBB in China Strong Export of Motor Industry Leaders Baldor Rockwell Emerson GE ABB Siemens Leroy Somer Brook Crompton Teco Toshiba Hitachi Melco Fuji WEG

51 Success in Haier Group Washing Machine Division Haier Group is the giant in household industry in China. SKF strategical partner of high end product in Haier.

52 Success in SH Valeo SH Valeo is the major alternator supplier to most of car makers in China. SKF strategic partner

53 Summing up Electrical Division is strongly committed to: Getting Business in growing markets and segments Developing value added products Reducing costs Supplying growing markets from local factories Developing its business in China