SKF Half-Year Report 2001; Further Profit Improvement.Business Editors GOTEBORG, Sweden--(BUSINESS WIRE)--July 17, 2001 The SKF SKF Svenska Kullagerfabriken SKF Svenska Klätterförbundet (Sweden) SKF Smithsonian Kite Festival SKF San Antonio Kelly Field Annex (Lackland AFB, Texas) Group reports a profit before taxes for the first half of 2001 of MSEK MSEK Meyer, Suozzi, English & Klein (New York law firm) MSEK Million Swedish Kroner 1 611 (1 509). Excluding the non-recurring items in the first quarter last year of MSEK 100, the figure is MSEK 1 611 (1 409), up 14,3%. Profit for the second quarter was MSEK 820 (739). Outlook: Market demand in Europe peaked in the second quarter. The North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. market declined further. Total demand in the Asian region improved slightly. Over the next quarters the overall market demand for the Group is expected to decrease further in terms of volume. Considerably lower production compared with the third quarter in 2000 is planned for the third quarter this year. The number of employees was reduced during the first six months by 1 154 whereof where·of conj. 1. Of what: I know whereof I speak. 2. a. Of which: ancient pottery whereof many examples are lost. b. Of whom. 523 refer to the second quarter. The number of employees will continue to be reduced. -- Operating profit for the first half of 2001 amounted to MSEK 1 887 (1 842). The corresponding figures for the second quarter were MSEK 979 (904). -- The operating margin for the first half of 2001 amounted to 8.6% (9.3), and for the second quarter to 8.8% (9.0). Excluding non-recurring items, the operating margin was 8.6% (8.8) and 8.8% (9.0) respectively. -- Cash flow after investments before financing amounted to MSEK 1 746 (1 086). Cash flow for the second quarter was MSEK 1 249 (676). -- Net sales amounted to MSEK 22 054 (19 894), an increase of 10.9% compared with the figure for the corresponding period in 2000. Net sales for the second quarter amounted to MSEK 11 148 (10 072). -- The increase in net sales for the first half-year was attributable to: structure +0.4%, volume -0.7%, price/mix +1.9% and currency effect +9.3%. The corresponding figures for the second quarter were; structure +0.4%, volume -2.7%, price/mix +1.9% and currency effect +11.1%. -- Net profit amounted to MSEK 1 082 (924) and earnings per share to SEK 9.50 (8.12). Net profit for the second quarter was MSEK 520 (427). The Group's financial net for the first half of 2001 was MSEK -276 (- 333). Additions to tangible assets Tangible Asset An asset that has a physical form such as machinery, buildings and land. Notes: This is the opposite of an intangible asset such as a patent or trademark. Whether an asset is tangible or intangible isn't inherently good or bad. totalled MSEK 676 (531). At the end of June, the Group's inventories amounted to 23.7% (23.5) of annual sales. Group solvency was 37.6% (34.2)%. Return on capital employed Return on capital employed (ROCE) Indicator of profitability of the firm's capital investments. Determined by dividing Earnings Before Interest and Taxes by (capital employed plus short-term loans minus intangible assets). for the 12-month period ended June 30 was 15.8% (14.8). Return on equity was 15.4% (14.7). The registered number of employees was 39 247 (40 648). Compared with the corresponding period in 2000, exchange rates for the first six months of 2001, including translation effects and flows from transactions, had a positive effect on SKF's profit before taxes to an estimated amount of MSEK 225 whereof MSEK 125 refer to the second quarter of 2001. SKF and EDS (Electronic Data Systems, Plano, TX, www.eds.com) Founded in 1962 by H. Ross Perot (independent candidate for the President of the U.S. in 1992), EDS is the largest outsourcing and data processing services organization in the country. signed a contract during the quarter regarding the transfer of SKF's internal IT Services with some 700 employees to EDS. The agreement was a major step taken in line with the strategy to outsource activities that SKF does not have to handle itself. This strategy aims to reduce the Group's costs, increase flexibility and reduce capital employed Capital Employed 1. The total amount of capital used for the acquisition of profits. 2. The value of all the assets employed in a business. 3. Fixed assets plus working capital. 4. Total assets less current liabilities. . SKF has signed an agreement with a syndicate of nine banks to obtain a five-year and USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 300 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. The purpose is to replace existing credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities in order to get longer maturity. The Industrial Division's external sales for the first half-year amounted to MSEK 5 097 (4 355), an increase of 17.0%. Total sales (sales and deliveries to external and internal customers) were MSEK 8 112 (7 199). The Division's operating result for the first six months was MSEK 842 (824) resulting in an operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 10.4% (11.4) on total sales including internal deliveries. The volume of sales in Europe was the same in the second quarter this year as in the corresponding period last year, but was substantially lower in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . SKF's sales volume to the windmill windmill, apparatus that harnesses wind power for a variety of uses, e.g., pumping water, grinding corn, driving small sawmills, and driving electrical generators. Windmills were probably not known in Europe before the 12th cent. industry continues to grow strongly. SKF is today the leading supplier in Europe for spherical roller bearings roller bearing One of the two types of rolling, or antifriction, bearings, the other being the ball bearing. Like a ball bearing, a roller bearing has two grooved tracks, but the balls are replaced by rollers. The rollers may be cylinders or shortened cones. and housings for the main shaft of the mills as well as for bearings for the gearboxes. There is also a very clear trend towards using spherical roller bearings of the unique Explorer design, launched by SKF two years ago. SKF acquired the Italian company Gamfior S.p.A during the quarter. Gamfior, which has 180 employees and an annual turnover of MSEK 180, is a leading European supplier of spindles and ball screws A ball screw is a mechanical device for translating rotational motion to linear motion. A threaded shaft provides a spiral raceway for ball bearings which act as a precision screw. for the machine tool industry. With this acquisition SKF became one of the world's leading suppliers of machine tool spindles. The Automotive Division's external sales for the first half-year amounted to MSEK 5 061 (4 622), an increase of 9.5%. Total sales were MSEK 5 820 (5 250). The Division's operating result for the first six months was MSEK 201 (219) resulting in an operating margin of 3.5% (4.2) on total sales including internal deliveries. The volume of sales to the car and light truck segment in the second quarter, both in Europe and North America, was slightly higher than in the same period a year ago. SKF's volume of sales in Europe is better than those of the overall market thanks to new businesses and the customer mix. The volume of sales to the truck segment in Europe was lower in the second quarter and was substantially lower in North America. The volume of sales to the Vehicle Service Market in Europe in the second quarter was on the same level as in the corresponding period last year. SKF performs better than the market in this segment as well. SKF continues to strengthen its position as the leading supplier of bearings and seals to the world's automotive industry The automotive industry is the industry involved in the design, development, manufacture, marketing, and sale of motor vehicles. In 2006, more than 69 million motor vehicles, including cars and commercial vehicles were produced worldwide. . The new Jaguar X- type is equipped with custom-engineered bearings and seals from the SKF Group. Following the launch of the SKF and Bertone Drive-by-Wire car in Geneva Geneva, canton and city, Switzerland Geneva (jənē`və), Fr. Genève, canton (1990 pop. 373,019), 109 sq mi (282 sq km), SW Switzerland, surrounding the southwest tip of the Lake of Geneva. earlier this year, a number of key automotive customers have expressed significant interest in the new technology that was shown. The Electrical Division's external sales for the first half-year amounted to MSEK 908 (807), an increase of 12.5%. Total sales were MSEK 3 220 (3 249). The Division's operating result for the first six months was MSEK 220 (252) resulting in an operating margin of 6.8% (7.8) on total sales including internal deliveries. Compared with the same period last year, the volume of sales in the second quarter was lower in Europe, but substantially higher in Asia. New businesses are helping to counteract the downturn to a certain extent. SKF signed a joint venture contract with Shanghai Bearing (Group) Co. Ltd, (SBC (1) (SBC Communications Inc., San Antonio, TX, www.sbc.com) A large, national telecommunications company that grew from a multitude of local and regional companies, including Southwestern Bell, Pacific Bell and Nevada Bell, into a single, unified brand by 2002. ), part of the Shanghai Electrical Group Corporation, to establish a company to manufacture and sell high-performance deep groove ball bearings ball bearings n → roulement m à billes . SKF has 60 percent in the new joint venture and SBC 40 percent. The market segment to be served is mainly household appliances, electric motors, automotive electrical components, power tools and two- wheelers. This is a fast-growing market in China and production is planned to start in 12 months' time. SKF received two customer awards during the quarter; the "Bearings Supplier of the Year Award" from Siemens Automotive AG and the "The Supplier Award" from the BOSCH Group. The Service Division's external sales for the first half-year amounted to MSEK 6 765 (6 171), an increase of 9.6%. Total sales were MSEK 7 566 (6 688). The Division's operating result for the first six months was MSEK 565 (465) resulting in an operating margin of 7.5% (7.0) on total sales including internal deliveries. Compared with the same period last year, the volume of sales in Europe was the same in the second quarter, but was substantially lower in North America. The volume of sales in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. was considerably lower but slightly higher in Asia. The service business continues to penetrate new markets for its products and services. New service contracts have been concluded with customers for example within the textile and carpet industries, food production and the petrochemical industry. SKF Logistics Services has signed an agreement with Johnson Pump for the handling of their deliveries in Europe and also their sea- and airfreight air·freight n. 1. A system of transporting freight by air. 2. The amount charged for transporting freight by air. air traffic between Europe, the USA and Australia. During the quarter, SKF acquired Naiden Teknik AB (NTAB NTAB National Tire and Battery ), a leading mechanical condition-monitoring company in Sweden. Naiden develops and markets condition-monitoring hardware and software for customer-specific applications in hydropower hy·dro·pow·er n. Hydroelectric power. , steam and gas turbines, and for marine and train applications. The Seals Division's external sales for the first half-year amounted to MSEK 2 075 (2 042), an increase of 1.6%. Total sales were MSEK 2 427 (2 386). The Division's operating result for the first six months was MSEK 42 (89) resulting in an operating margin of 1.7% (3.7) on total sales including internal deliveries. The Seals Division is highly dependent on the North American automotive business. The volume of sales in North America was considerably lower in the second quarter compared with the same period last year. The number of employees was reduced by 98 during the second quarter and by 378 over the first six first months of 2001. The Steel Division's external sales for the first half-year amounted to MSEK 968 (883), an increase of 9.6%. Total sales were MSEK 1 682 (1 639). The Division's operating result for the first six months was MSEK -3 (23) resulting in an operating margin of -0.2% (1.4) on total sales including internal deliveries. The volume of sales in the second quarter this year was considerably lower than in the same period last year. Production levels were reduced and the number of shifts was decreased in Sweden and in France. The number of employees was reduced by 133 during the first six months. The growing use of high-pressure diesel pumps has increased the demand for the Division's specially developed steel bars. Aerospace and other businesses reported external sales of MSEK 1 146 (994), an increase of 15.3%. Total sales were MSEK 2 094 (1 973). The operating result for the first six months was MSEK 133 (149), resulting in an operating margin of 6.4% (7.6) on total sales including internal deliveries. The aerospace business amounts to just above half of the total turnover for the unit Aerospace and other businesses. The remainder consists mainly of the forging and rings businesses in Luchow in Germany and in Villar Perosa in Italy. The volume of sales to the aerospace industry in the second quarter was considerably higher than in the same period last year. Strong growth was reported during the first six months for the new service centres for aerospace engines in the USA and in Italy. SKF presented its total offering to the aerospace industry at the Paris Airshow in June. It included airframe bearings, airframe rods and struts A framework for writing Web-based applications in Java that supports the Model-View-Controller (MVC) architecture. Struts is deployed as JSP pages using special tags from the Struts tag library, which includes routines for building forms, HTML rendering, storing and retrieving data and , aeroengine bearings, seals, and elastomeric solutions. It incorporates a number of new technologies such as self-lubricating spherical bearings with ceramic-coated balls, ceramic rollers, hybrid bearings, custom-engineered elastomeric bearings, combinations of metals and elastomers into single, extremely strong components, the further development of mechatronics (MECHAnics elecTRONICS) The combination of mechanical and electronic systems. Embracing robotics, industrial control systems and human interfaces in numerous disciplines, mechatronics is a major step beyond "electromechanical," in which only electricity is required. for Fly-by-Wire solutions and high- performance composite rods. Parent Company Profit before taxes for the first half of 2001 amounted to MSEK 551 (184). The company had no net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight . Investments amounted to MSEK 1 (0). As of June 30, short-term financial assets Financial assets Claims on real assets. amounted to MSEK 1 (1). The average number of employees was 109 (118). Previous Outlook statement First quarter 2001: Market demand for SKF's products and services in Europe continued to grow during the first quarter of 2001. Demand declined further in North America. Total demand from the Asian region remained unchanged. Overall demand for the Group is expected to remain fairly flat for the second quarter. Overhead presentation from SKF For your convenience, an overhead presentation of SKF's second quarter result will be published on SKF's internet site. Please go to: http://investors.skf.com/?page=presentations. Enclosures: Consolidated financial information Consolidated balance sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. Consolidated statements of cash flow Consolidated financial information - yearly and quarterly comparisons (Group and Divisions) The accounting principles and methods of calculation are those described in Note 1 in the Annual Report 2000. The quarterly report has not been audited by the Company's auditors. The SKF Nine-months report 2001 will be published on Thursday, October 18, 2001. Further information can be obtained from: Lars G Malmer, Group Communication, tel +46-31-3371541, +46-705-371541, e-mail: lars.g.malmer@skf.com or Marita Bjork, Investor Relations Investor relations The process by which the corporation communicates with its investors. , tel +46-31-3371994, +46-705-181994, e- mail: marita.bjork@skf.com Aktiebolaget SKF, SE-415 50 Goteborg, Sweden, telephone +46-31-3371000, fax +46-31-3372832, www.skf.com This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/07/17/20010717BIT00310/bit0001.doc http://www.waymaker.net/bitonline/2001/07/17/20010717BIT00310/bit0001.pdf |
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