Automotive Division. Tryggve Sthen President, Automotive Division

Transcription

1 Automotive Division Tryggve Sthen President, Automotive Division Capital Market Day 2009

2 Presentation outline Key achievements Automotive Division overview Financial update Improving our efficiency Opportunities from new environmental trends Key business messages The way ahead

3 Key achievements Q Record sales and profits Q1 - Q New factories in Mexico, Korea, China and Indonesia ramped up Dramatic steel price increases off-set by different activities Quality and Six Sigma developed well SKF Bridge of Manufacturing Excellence launched Acquisitions GLO and ABC finalized Extremely dramatic volume drop in Q4 Restructuring initiated and on plan Production volumes adjusted, inventory levels reduced, costs reduced

4 Automotive Division overview

5 Customer segments served Cars Trucks Two-wheelers Vehicle service market Home appliances & Power tools

6 Working with the world s top car industry

7 Helping automakers and suppliers Reduce fuel consumption and emissions Reducing friction and weight Compact design Calculation of energy reduction Magnetic sensoring for Stop-Start functions Reduce time to market Virtual test rigs Pre-assembled parts Improve safety and functionality Integrated electronics Sensor-equipped hub units Tesla Roadster

8 Calculating CO 2 savings SKF Vehicle Environmental Performance simulation software calculates CO 2 savings Complements other SKF software programmes Factors in driver behavior under various conditions Assesses fuel saving potential Optimizes designs prior to prototyping x

9 Car driveline energy saving potential areas

10 Car driveline reducing CO 2 emissons Up to 8 grams of CO 2 saved per kilometer grams 2-3 grams 3-4 grams SKF Energy Efficient Tapered Roller Bearing Driveline angular contact ball bearing Ball pinion unit SKF Hybrid Pinion Unit Low friction pinion unit Manual transmission Power-take off unit Final drive Note: CO 2 reduction estimates based on the normal European driving cycle (NEDC)

11 Stop-Start function for micro & mild hybrids SKF Rotor Positioning Bearing enables Stop-Start function Cuts CO 2 up to 25% in dense urban traffic Enabling Valeo's StARS (Starter Alternator Reversible System) Citroën C2/C3, Smart, Mercedes A/B

12 Opel Insignia SKF applications Tailgate Engine Wheel end, rear and front Gas spring seal Valve stem seal Engine, 2,0l diesel Suspension Hub bearing unit, X-Tracker Idler pulley MacPherson suspension bearing unit

13 Working with the world s top truck industry

14 Helping truck manufacturers and suppliers Improve fuel economy Reduce friction with energy efficient bearings and valve steam seals Reduce weight using light-weight materials Reduce size using integrated hub units Improve safety and service life Unitized hubs Wheel end monitoring device Reduce time to market Virtual test rigs Pre-assembled parts

15 New business - Trucks New contract from FUWA including both seals and bearings Guangdong Fuwa Engineering Manufacturing Co Ltd is the largest trailer axle manufacturer in the world, headquartered in Shunde city, Guangdong Province, China Bearing contract value USD 4.5 million annually Scotseal Pro Tapered roller bearing Trailer axle

16 Working with the world s top two-wheeler industry

17 Helping manufacturers and suppliers Reduce weight and simplify assembly Hub unit expertise, lightweight materials Boost service life, cut maintenance Bearings/units that handle high contamination, poor lubrication, high temperatures Customize high-performance solutions Integrated functions with sensors and tachometers Improve engine management systems Upgrade performance with end-user kits

18 New business Two-wheelers Awarded new contract with Hero Honda in Uttarakhand state, northern India Build a factory to supply ball bearings to Hero Honda and other automotive customers in the region

19 Working with the vehicle aftermarket

20 Driving aftermarket success Broad range More than kits for wheel end, driveline and engine repairs A complete repair with one kit Right system utilization Online and CD catalogues TecCom, EDI, TecDoc, VMI support On demand delivery Best in class logistics Right knowledge support Training programmes - print and face to face Mounting guides and videos Technical bulletins

21 New business VSM NORTH AMERICA New contract CHINA Strong focus on distributor growth Distributor/Dealers = 26 (end of year) EUROPE Strong distributor network Q1 slower business Q2 recovering business

22 Working with electrical industry

23 Helping develop effective electrical solutions Integrated functions Load sensor bearing units for washing machines Units for front and top loading washing machines Analogical and digital tachometers for washing machines Wobble bearings for drills and hammers Low weight units Alternative materials Vibration reduction for hand tools Auto balancing units for angle-grinders

24 Financial update

25 Operating Income Q OI 6,2% YTD Sept Q Q Q Q Q OI operational OI restructuring* * Incl. other one-time items

26 Market situation - Net sales Q vs Q in local currencies Cars Seals Trucks Electrical & Two wheelers Vehicle Service Market

27 Capacity reduction Q Q ,000 people in lay-off and early retirement programs 1,100 contract workers and consultants discontinued 8,900 people on reduced work measures Production stops on a daily/weekly basis (CIGO, Kurzarbeit, ERE, etc.) More than 2/3 of the Automotive Division employees affected

28 Q Summary Sales significantly lower during the quarter in almost all markets and segments (-34%) Two wheeler industry in Asia relatively unchanged Aftermarket less affected than OEM Fast reduction of production volumes and costs

29 Improving our efficiency

30 Cost reduction Restructuring Internal improvements Plant restructuring in Europe & North America Shift of production to best cost countries Lower cost

31 Plant restructuring over the last few years North America Plant closures/restructuring Aiken Springfield Franklin Glasgow Elgin mfg Europe Restructuring France capacity reduction continued Germany TRB restructuring, production relocation to BCC moved 4 channels to India, Mexico and Brazil Moving rollers to Lutsk BCC = Best Cost Countries

32 Stronger manufacturing footprint in best cost countries Latin America Mexico Seals production relocation from US Bearings production relocation from US Brazil Increased capacity relocation from Germany East Europe Ukraine Increased capacity SKF branded products Transfer in TRB rollers Bulgaria Competitive source for bearings, forgings and seals increased capacity for DGBB and Seals Asia expansion China Aquired 100% of j/v plant in China for DGBB New HBU plant ATC Korea 2 new plants inaugurated Indonesia New plant for two wheeler market India New plant in Haridwar initiated

33 Cost reduction Restructuring Internal improvements Internal benchmarking Six Sigma Manufacturing Excellence Lower cost

34 Internal benchmarking 8 parameters based on the SKF strategy Followed-up on a monthly basis Aurelio Nervo Director, BU Cars Amadeo Comin Factory Manager Cajamar

35 Reduced energy consumption at SKF Cassino Situation: Air compressors with very high energy consumption Solution: New air blow part for air dryer Results (2009 vs 2008): Energy cost reduction of more than SEK 1 million per year CO 2 reduction of more than 50 tons per year Replication on-going in Jakarta, Sopot and Shanghai factories.

36 Manufacturing Excellence Training - SKF Bridge of Manufacturing Excellence Knowledge and awareness First steps - 5S and Zero Defect Environment, Health, Safety Get commitment from all Results Increased customer satisfaction Scrap reduction Safer and cleaner work place 5S Discard, Organize, Clean, Standardize, Discipline Factory workers at Cajamar, Mexico

37 Opportunities from new environmental trends

38 Global warming Environmental mega trend Transports represents 13-30% of man-made CO 2 emission Drives legislative initiatives Consumer awareness and preferences

39 Technology challenges for cars Vehicle weight reduction Engine down-sizing and boosting Transmission efficiency improvement and technology Engine management and control Hybridization Stop-Start and Micro hybrids Mild hybrids Full hybrid Electrical vehicle Kinetic Energy Recovery Systems (KERS) Tesla Roadster

40 SKF business opportunities Customers urgent need for solutions Emission mile stones! New solutions required Solutions being developed by SKF with partners and suppliers SKF s competitive advantage A knowledge engineering company - system/application knowledge Providing proof = quantifiable customer value

41 Key business message - The way ahead

42 Key business message Manage the Business cycle. Adapt to new volumes quickly and reduce costs. Clear focus on cash flow. Manufacturing footprint consolidate and shift to best cost countries. Grow the aftermarket business and integrate GLO. Continue activities for profitable growth and prepare for upturn in Asia. Exploit new opportunities from value added solutions, especially for energy efficiency; CO 2 and fuel reduction The way ahead

43