Automotive Division Tryggve Sthen President, Automotive Division SKF Capital Markets Day 10 May 2011
Presentation outline Automotive Division update Division overview Key financials Business outlook The way ahead Growth Cost reductions
Automotive Division update
Automotive Division customer segments Cars Trucks Two wheelers Vehicle service market Other
Customer segments volume trend development Cars Trucks Two wheelers Vehicle service market Other Q1 yoy Q1 yoy Q1 yoy Q1 yoy Q1 yoy +++ +++ +++ +++ +++ Q2 outlook Q2 outlook Q2 outlook Q2 outlook Q2 outlook
A continued strong recovery after the recession Sales development Operating margin 20 18 4.7 10,0% 9,0% 9.0% 16 14 8,0% 7,0% 6% 12 10 6,0% 5,0% Q1 9.0% BSEK 8 6 PERCENT 4,0% 3,0% 4 2,0% 2 1,0% 0 2000 2005 2006 2007 2008 2009 2010 2011 Q1 0,0% 2000 2005 2006 2007 2008 2009 2010 2011 Q1 Excl one time costs Strong sales growth in local currencies Q1 +19.8% yoy
Business outlook
Truck Production (GVW>6t) 2 000 1 800 1 600 1 400 1 200 1 000 800 600 400 200 0 +24.3% W.Europe N.America Asia Total growth 2011/2010: +3.4% Values in KUnits +51 % -6.7 % 2006 2007 2008 2009 2010 2011 fcst Source: JDP March 2011
Light Vehicle Production 40000 Values in KUnits +2.7 % 32000 2006 24000 16000 +2.3 % +10.1 % 2007 2008 2009 8000 0 W.Europe N.America Asia Total growth 2011/2010: +4.1% 2010 2011 fcst Source: CSM April 2011
Japan disaster Significant effect on the big three Japanese OEMs CSM expect effect on non-japanese OEMs to be manageable during the year CSM forecast Q2 car production to be down ~10% yoy in Western Europe and North America due to parts shortage
The way ahead
Paradigm shifts 10 0 Asian growth Production of cars (Millions, CSM forecast) CO 2 race International CO2 emission targets 90 80 70 60 50 40 30 20 10 Rest of Asia China India China US Japan Europe 0 2009 2010 2011 2012 2013 2014 2015 Source: CSM, 2010 Source: CSM, August 2010
The way ahead
Automotive Division - the way ahead Growth Cost reductions
Automotive Division - the way ahead Growth Global account management Winning customers Aftermarket Engineering partner Fast growing markets
The new world
Significant expansion in fast growing markets Significant sales growth in China, India and Brazil Substantially increased SKF presence in fast growing markets Front Line New sales offices Testing & Field Return New centres in China, India & Brazil Product Development Large expansion in India & China Manufacturing New factories
SKF builds new factory in China SKF announced to build a new factory in Jinan, Shandong province (8 March -11) Focused products: Tapered roller bearings and truck hub units The investment amounts to around SEK 590 million on 104,000 m2 land Factory will start production first half of 2012 and will initially employ about 500 people Built according LEEDs certification standards
SAIC - Zhu Jie
SAIC - Zhu Jie New products and technologies Product development support
The CO 2 challenge calls for engineering partnerships Engineering close to key customers development centres Partnership for CO 2 reduction with Engineering Companies Launch green product portfolio
Growing the vehicle aftermarket business Fast growing markets Doubled number of distributors in China since 2009 Broader product line including acquisitions 1,000 new kits per year Strong installer support 25,000 garage visits 2011
Fast growth at winning customers
Global account management a good example Successful global account management helps business grow: Strong customer focus makes SKF the preferred partner Good support and understanding of customer needs makes SKF easy to work with Close contact helps SKF keep up with changes 20 global accounts in AD GM is a good example New business gained Supplier Of the Year award 2010
X-Tracker wheel hub bearing units to GM General Motors placed several orders for different hub bearing unit solutions in 2010, including X-Tracker, for a number of its successful models. X-Tracker Buick Regal, launched in the US in March 2011
2010 GM Supplier Of the Year Award SKF Sealing Solutions Korea Co. Ltd received the award for "dedication and commitment to consistently perform above expectations. "Your organization has played an important role in our efforts to design, build and sell the world's best vehicles" - Mr. Bob Socia, VP Purchasing at GM SKF supplies: Bonded Piston Seals to GM Korea and China since 2009 Additional Bonded Piston Seals to GM North America starting 2010
Automotive Division the way ahead Offers for regional demand Productivity Cost and capital efficiency Cost reductions
Improve cost and productivity Business Excellence, Manufacturing Excellence & Six Sigma Manufacturing and sourcing in fast growing markets AD Benchmark Integrated Cost Reduction
Plant closures/restructuring over the last few years Europe Fontenay, France St Cyr HBU, France Schweinfurt STRB, Germany Schweinfurt Rollers, Germany Leverkusen, Germany North America Aiken Springfield Glasgow Elgin Seneca
Stronger manufacturing footprint in fast growing markets East Europe growth Ukraine Capacity SKF brand Bulgaria capacity - Bearings - Seals - Rings Manufacturing in fast growing markets has increased to 45% in 2010 (30% in 2008) Asia expansion China new HBU plant Korea new plants Indonesia new plant India new DGBB plant India new seals plant China new bearings plant Latin America growth Mexico Seals Bearings Brazil
Automotive Division the way ahead Growth Offers for regional demand Productivity Cost and capital efficiency Winning customers Global account management Aftermarket Engineering partner Fast growing markets Cost reductions
Automotive Division - the way ahead Growth Cost and capital efficiency Productivity Offers for regional demand Winning customers Global account management Aftermarket Engineering partner Profitable growth Fast growing markets Cost reductions
Automotive Division - key business message Strong performance and outlook Q1 2011 was best first quarter ever Paradigm shifts in the automotive industry New technology with green focus Fast growth in Asia Accelerated product renewal Solutions and engineering support in fast growing markets Fast growth of business in Asia