SKF’s Capital Markets Day – giving a broader understanding of SKF’s business
2014 September 11, 09:00 CEST
Gothenburg, Sweden, 11 September 2014: The purpose of SKF’s Capital Markets Day in London on 10 September was to give investors and analysts a broader understanding of SKF’s business. All of SKF’s executive management was there, as well as a number of business unit managers.
SKF’s President and CEO, Tom Johnstone commented on the day: "We have had a very lively and interactive Capital Markets Day. We took the opportunity of digging deeper into our business in a number of areas and specifically focused on how we are working with the asset life cycle with our customers. We also took the opportunity of looking at the priorities and steps we are taking to enable us to achieve our financial targets. I want to thank everyone for their strong interest in SKF.”
SKF presented various examples of how customers benefit from its asset life cycle approach. One example was from the cement industry, where an end-user customer approached SKF with a vibration problem. After uncovering the cause of this problem, SKF designed a customized solution that was subsequently adopted by an OEM supplier. This led to additional new business for SKF.
An SKF customer, the mining company RWE Power, presented at the event why it chooses to work with SKF as a strategic partner and how it has benefited from using SKF’s solutions. Dr.-Ing. Bruno van den Heuvel, explained: “SKF not only has high-quality products, service levels and excellent delivery performance; it also has deep knowledge about bearing systems and it understands our assets and special operating conditions.”
In-line with the Company’s strategy to expand its services and solutions business both organically and through acquisitions, SKF announced that it has acquired two companies. These are GLOi, a Swedish-based alignment technology solutions company and Hofmann Engineering North America, a specialist engineering services company located in Canada.
SKF’s development within the renewable energy market was also featured, with particular focus on the wind energy market and its expanding aftermarket. SKF is a trendsetter in this market through developing condition monitoring systems, SKF WindCon, bearings for main shafts, SKF Nautilus, and the quality standard, SKF Wind Industry Quality Standard, to ensure common standards and traceability for critical components. SKF is also supporting the expanding wind aftermarket with spare parts, and has developed a strong position in this market. The lubrication business focused on automatic systems having a potentially significant environmental and business impact. Automated lubrication systems use 30% less grease than those with manual lubrication and since only about 20% of all lubrication points are automatic today, this provides a major environmental gain and business opportunity.
SKF’s good business development in Asia was focused, highlighting China where SKF is building on its strong portfolio management and creating leading positions in selected market segments. The successful development of SKF’s second brands was covered along with their strong growth and widening global presence.
At last year’s Capital Markets Day the continuing strong order intake from automotive customers was highlighted and some deliveries to them have now commenced. A number of customer testimonials were shown during the day, for example from Volvo Cars, Geely, Great Wall, Dongfeng and Hyundai. SKF has developed a number of strategic partnership agreements in the Automotive sector. One example is Great Wall in China. The partnership will enable SKF to be involved very early in the customer’s development work as a preferred supplier. This provides a major opportunity for SKF to gain long-term business agreements for new platforms.
SKF confirmed its long-term targets and showed a bridge with the components that could bring the company to its operating margin target of 15%. It was also shown how the planned working capital target of 27% could be achieved by 2017. This would free up around SEK 3 billion of capital.
SKF’s programme aimed at reducing annual costs by SEK 3 billion by the end of 2015 was discussed and examples of achieved cost reductions were presented. For example significant reductions in purchasing costs have been made through a center led purchasing operation, supplier reduction programs and applying leading purchasing practices such as strategic sourcing and integrated cost reduction programs. The number of direct material suppliers have been reduced from 6000 in 2012 to around 4000 in 2014, with the goal of around 2000 in 2016. We also shared how total costs for lubricants were reduced by 15 % and for plastic and corrugated packaging by 10%.
To provide a better understanding of SKF, several exhibition areas were made available during the day. The main focus was on SKF’s asset efficiency optimization capability. This part of the exhibition showcased a wide range of condition monitoring solutions, including SKF’s online and offline devices, and Remote Diagnostic Services, as well as the latest mobile application developments. A highlight of the exhibition was SKF’s latest breakthrough technology SKF Insight®. Products and solutions for wind energy, as well as for lubrication systems and vehicle aftermarket solutions were also highlighted.
The entire day was filmed and will be available on SKF’s website.
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SKF is a leading global supplier of bearings, seals, mechatronics, lubrication systems, and services which include technical support, maintenance and reliability services, engineering consulting and training. SKF is represented in more than 130 countries and has around 15,000 distributor locations worldwide. Annual sales in 2013 were SEK 63,597 million and the number of employees was 48,401. www.skf.com
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