Service Division. Presented by Phil Knights President, Service Division

Transcription

1 Service Division Presented by Phil Knights President, Service Division

2 Service Division Business

3 Service Division Business Providing platform-based and segment-focused solutions to industrial end-users for improved productivity with: Bearings and related products and services through authorized distributors Knowledge-based products, systems and services to optimize plant asset efficiency Global e-enabled logistics services to external and internal customers

4 Service Division Sales portion of SKF Group Service Division 1Q 05 Net Sales: MSEK (3 300) Operating Margin: 10.5% (9.5%) Net Sales Growth: 6.8%

5 Service Division net sales by geography, 2004 Central & Eastern Europe 10% Western Europe 32% Asia 26% North America 20% Latin America 8% Middle East & Africa 4%

6 Service Division sales, 2004 Services and Service products 16% Bearing & Related Products

7 Service Division Services and service products Maintenance Products Logistics Services Reliability Systems Complementary Products

8 Customer needs SKF Slide 8 [Code] SKF [Organisation]

9 Customers want more Delivery service is the most important Quality is a pre-condition Wide product assortment is essential Right price, availability and reliability TCO more important than unit price Demand for value added services Technical support expected Growth in e-business Facing the Forces of Change Distribution Research and Education Foundation Pembroke Consulting

10 Business strategy SKF Slide 10 [Code] SKF [Organisation]

11 Vision for the SKF Group To equip the world with SKF knowledge

12 SKF Platforms for Service Division

13 The Industrial Market Platform to customer process Platforms Segment Value Proposition Business Opportunities Priority Actions Sales Bearings Seals Mechatronics Services Lubrication Systems Products + Knowledge + Capital Efficiency Siebel Funnel Profit potential Customer readiness By channel for maximum profit and cost effectiveness Customer Value Acceptance

14 Service Division core strategies End User Needs -TCO Pricing Distributor Consolidation Internet Sell Value Added Solutions Manage Our Channels And Our Pricing Grow With Our Distributor Partners Optimize Supply Channel Efficiency TFO PRM IMS AEO RELIABILITY SYSTEMS SKF PRICE LEADERSHIP GROUP CHANNEL/ PRICING STRATEGY MARKET SHARE GROWTH D/D DEVELOPMENT E-BUSINESS/LOGISTICS PLATFORMS Bearings Seals Mechatronics Services Lubrication Systems

15 Service Division core strategies End User Needs -TCO Pricing Distributor Consolidation Internet Sell Value Added Solutions Manage Our Channels And Our Pricing Grow With Our Distributor Partners Optimize Supply Channel Efficiency TFO PRM IMS AEO RELIABILITY SYSTEMS SKF PRICE LEADERSHIP GROUP CHANNEL/ PRICING STRATEGY MARKET SHARE GROWTH D/D DEVELOPMENT E-BUSINESS/LOGISTICS PLATFORMS Bearings Seals Mechatronics Services Lubrication Systems

16 Reliability Systems value proposition per segment Foundation Technology CoMo Products Surveillance Protection Service Categories Systems/Installation Reliability Services Mechanical/Re-eng. Strategy & Consulting RS Proposition Documented valueadded Performance based contracts From Trouble-Free Operation to Integrated Maintenance Solutions

17 Assi Domain Frovi

18 Customer partnerships

19 Baosteel largest fully-integrated steel producer in China China, TFO Contract MAIN FEATURES TFO Agreement signed in Dec. '98 Established Long Term Strategic Partnership in June '99 SKF TFO extended to Baosteel Group members since March '03. The agreement of More Closer Cooperation between Baosteel Intl. & SKF was reached in Feb. '04. Strategic Partnership Agreement signed March 15th '05 RESULTS Zero Stock Management for spares Supported 20% production growth Efficiency of 2050 HRM improved dramatically Bearing inventory reduced 80% SKF market share increased to 50% of Baosteel group. SKF executes root cause failure analysis and achieved good result.

20 Baosteel largest fully-integrated steel producer in China What this means for SKF per platform Bearings/ Units Seals Lubricants Services Mechatronics

21 CVRD World's largest Iron Ore company Bearing supply was dominated by competition Railway bearings is biggest demand 35,000 wagons and 47,000+ TBUs/year SKF value-added solution: Joint design with MWL for an assembly of wheel/axle/tbus Total cost reduction Added safety features - less risk of derailment Longer life - refurbishment by SKF Brazil ISC SKF awarded 40% share = 15,000 TBUs for 2005 Next Steps : Offering that incorporate RS services with general bearings business COMO project in pipeline for $1,200,000 + Copperhead

22 Coca-Cola IMS beverage contract in Brazil 5 year contract Jundiai, near Sao Paulo (second largest Coke bottling plant in the world) 1.1 billion litres p.a. 12 bottling channels Bearings, condition monitoring, maintenance products, training, Pdm and Lubrication services, reliability and application engineering. Pilot IMS for Coke worldwide!

23 Reliability Systems key actions, 2005 Value Propositions per priority segment Key Account approach Life Cycle management program LSB's Priority Segments A B 1. Pulp & Paper 1. Food & Beverage 2. HPI 2. Cement & Mining 3. Power 3. Metal Working SKF Slide 23 [Code] SKF Service Division

24 Service Division core strategies End User Needs -TCO Pricing Distributor Consolidation Internet Sell Value Added Solutions Manage Our Channels And Our Pricing Grow With Our Distributor Partners Optimize Supply Channel Efficiency TFO PRM IMS AEO RELIABILITY SYSTEMS SKF PRICE LEADERSHIP GROUP CHANNEL/ PRICING STRATEGY MARKET SHARE GROWTH D/D DEVELOPMENT E-BUSINESS/LOGISTICS PLATFORMS Bearings Seals Mechatronics Services Lubrication Systems

25 Gross price list increases PRICE LIST 2004 Q Q Q Q Q Q2 Europe Apr Dec North America May Jan Asia Pacific Mar Sep Apr

26 Service Division core strategies End User Needs -TCO Pricing Distributor Consolidation Internet Sell Value Added Solutions Manage Our Channels And Our Pricing Grow With Our Distributor Partners Optimize Supply Channel Efficiency TFO PRM IMS AEO RELIABILITY SYSTEMS SKF PRICE LEADERSHIP GROUP CHANNEL/ PRICING STRATEGY MARKET SHARE GROWTH D/D DEVELOPMENT E-BUSINESS/LOGISTICS PLATFORMS Bearings Seals Mechatronics Services Lubrication Systems

27 Industrial distribution development programmes Creates a sustainable business model for SKF and Distributors Strengthens distributor value by providing new high skilled" entry level reliability services Markets Distributors and SKF s capabilities to increase end-users uptime and productivity

28 Distributor growth path We want to promote the Journey North East Maximize SKF brand Full MRO product range Added value services Product diversification Brgs only Full MRO Low High SKF brand association

29 More value-generating programmes SKF Distributor College More Profits Business Calculator SKF Documented Solutions

30 Service Division core strategies End User Needs -TCO Pricing Distributor Consolidation Internet Sell Value Added Solutions Manage Our Channels And Our Pricing Grow With Our Distributor Partners Optimize Supply Channel Efficiency TFO PRM IMS AEO RELIABILITY SYSTEMS SKF PRICE LEADERSHIP GROUP CHANNEL/ PRICING STRATEGY MARKET SHARE GROWTH D/D DEVELOPMENT E-BUSINESS/LOGISTICS PLATFORMS Bearings Seals Mechatronics Services Lubrication Systems

31 Service Division e-orders ± 80% of all order lines are received electronically All regions (except some Asian countries) have very high utilisation Countries where e-order lines are more than 90% of the total Sweden Finland Germany Portugal Czech Spain Hungary Belgium Poland Brazil Greece USA

32 Summary The industrial market - new approach Developing markets: 50% of Service Division's sales Reliability systems business opportunities Healthy core bearing business supported by superior logistics Synergy opportunities from acquired competence