AB SKF Business Report FY ended Dec. 2016
Financial Overview |
(in million SEK) |
| FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | Rate of change (%) | Factors | |
| Overall | ||||
| Net Sales | 72,787 | 75,997 | (4.2) | 1) |
| Operating Profit | 7,527 | 6,968 | 8.0 | 2) |
| Automotive Segment | ||||
| -Net Sales | 22,005 | 21,942 | 0.7 | 3) |
| -Operating Profit | 1,424 | 739 | 92.7 | - |
Factors
1) Net Sales
-The Company’s net sales in the fiscal year ended December 31, 2016 totaled SEK 72,787 million, a decrease of 4.2% from the previous year. Sales decreased due to structural changes, negative currency effects and decreased sales in North America, Asia and Latin America. These decreases were partially offset by increased sales in Europe.
2) Operating Profit
-The Company’s operating profit was SEK 7,527 million in the fiscal year ended December 31, 2016, an increase of 8.0% over the previous year. The decrease in the cost of one-time items in 2016, savings from cost reduction programs, and lower material prices all increased operating profit. These gains were partially offset by lower sales and manufacturing volumes, customer mix, sales price development, divested companies, and general inflation.
3) Automotive Segment Sales
-Sales in the automotive business area increased by 0.7% in the fiscal year ended December 31, 2016 to SEK 22,005 million. Increased sales of hub bearing units and electric vehicle powertrain applications were primary factors for the Company’s increased sales.
The BeyondZero portfolio
-The Company focuses on products and solutions that help customers save energy, reduce carbon emissions.
-The total revenue generated from the BeyondZero portfolio in the fiscal year ended December 31, 2016 amounted to approximately SEK 6.8 billion.
-The BeyondZero portfolio includes the following automotive products;
- Sealed Energy Efficient (E2) deep groove ball bearings
- Tyre pressure monitoring systems for trucks, trailers and buses
- Motor encoder sensor-bearing units
- Rotor positioning bearing
- Rotor positioning sensor-bearing units
- Low friction engine seal
- Low weight hub bearing units
- eDrive ball bearings
- Low friction hub bearing units
- High pressure valve stem seal
- Low friction driveline solutions
- Low friction X-Trackers
- Hub bearing unit seal
- Turbocharger ball bearing units
- Energy Efficient (E2) tapered roller bearings for trucks
- Bus door actuators
- Solutions to fully electric vehicles
- Low friction grease
Restructuring
-The Company announced the consolidation of its manufacturing facilities in North America, including the closure of its sites in San Diego, California and Baltimore, Maryland. Production will be transferred from the Company’s site in Hanover, Pennsylvania, to Flowery Branch, Georgia. Taking customer commitments into account, the move will consolidate production of spherical roller bearings and large size roller bearings into the Company’s existing bearing manufacturing operations in Flowery Branch. With a stronger, more efficient manufacturing base, the Group will be better able to serve its North American customers. Consolidation of the sites in Hanover, Flowery Branch, Baltimore and San Diego is expected to take between 18 and 24 months. (From a press release on June 9, 2016)
Contracts
-The Company announced that it supplies General Motors with front and rear wheel hub bearing units for the new 2016 Cadillac CT6 prestige luxury sedan. The new hub bearing units were developed in partnership with GM. The units are supplied from the Company’s factory in Puebla, Mexico. (From a press release on December 8, 2016)
-The Company announced that its HBU3 wheel hub bearing units have been selected for FCA's new Alfa Romeo Giulia. (From a press release on September 27, 2016)
-The Company is supplying a range of bearings, seals and linear actuation technologies for Scania's new generation of trucks. These products include gearbox bearings, prop-shaft bearings and engine bearings and seals. The tailor-made wind deflector, which uses linear actuation technology to allow for ease of adjustment, is also being supplied by the Company. The Company is also supplying updated front- and rear-wheel truck hub units, which reduce friction by up to 30%, compared to standard wheel bearing sets. (From a press release on September 8, 2016)
-The Company is supplying the FCA Group with solutions for their compact SUV model, the Jeep Renegade. The products being supplied are wheel hub bearing units for front and rear wheels, shock absorber seals, transmission seals and engine seals. In April 2015, FCA officially opened the new Jeep production facility in Goiana, located in the state of Pernambuco, Brazil. The Company is supporting FCA with its local capabilities linked to its global network. The Company is already supplying similar components for the Fiat 500X, which is based on the same platform as the Jeep Renegade. The bearing units and seals are presently supplied from the Company’s factories in Italy, Germany, Korea and Brazil. (From a press release on February 23, 2016)
Awards
-The Company has received an American Axle & Manufacturing (AAM) Supplier Recognition Award. The Company currently supports AAM globally with multiple types of seals and bearings included in driveline and drivetrain systems for multiple product families. (From a press release on July 19, 2016)
R&D Expenditure |
(in million SEK) |
| FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | FY ended Dec. 31, 2014 | |
| Overall | 2,246 | 2,372 | 2,078 |
| % of Sales | 3.1 | 3.1 | 2.9 |
R&D Facilities
-The Company has a total 18 technical centers, with global technical centers in China and India. Its other technical centers are located in Japan, U.S., the Netherlands, Sweden, Germany, Italy, France and Austria.
Product Development
Inboard seal for hub bearing units
-The Company introduced a newly developed inboard seal for hub bearing units that leads to a 50% decrease in friction compared to other competing seals. The innovative technology combines outstanding sealing capabilities over a long service life with the power to boost overall vehicle efficiency. The robust cassette seal accommodates current ABS encoders and features an external lip and an optimized labyrinth design that collects and redirects contamination flow away from a main radial lip. This radial lip, along with low friction grease, ensures even interference and contact pressure distribution, as well as protection in static conditions. "With this sophisticated, yet robust design we have been able to realize the lowest level of friction ever achieved in an SKF hub bearing unit seal, typically a 0.1 Nm contribution to bearing friction under load," said Ronnie Spolidoro, Business Development Manager SKF Sealing Solution. (From a press release on December 7, 2016)
Patents
-In 2016, the Company registered for 191 first filings of patent applications.
Capital Expenditure |
(in million SEK) |
| FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | FY ended Dec. 31, 2014 | |
| Overall | 2,209 | 2,310 | 2,644 |
| -Automotive Market | 520 | 394 | N/A |
*2014 figures are unavailable due to reorganization of business in 2016.
Investments Outside Sweden
-The Company announced the launch of its new centralized distribution centre at Chakan, Pune, India. Spread over 64,000 square feet, the India Distribution Centre is strategically located in the industrial belt of Maharashtra within the vicinity of key automobile manufacturers. It is also well connected with the factories to ensure better availability of stocks and quicker delivery time. This facility is also aligned towards the impending GST implementation. The center combines the latest logistics infrastructure with the Company’s best practices in its logistics operations. (From a press release on December 14, 2016)
-The Company announced that it is investing SEK 150 million in modernizing its cylindrical roller bearing manufacturing facility in Schweinfurt, Germany. This is the third significant manufacturing investment announced by SKF in the last 18 months, following the announcement of similar investments in Gothenburg, Sweden and Flowery Branch, U.S. The project is expected to be completed by the middle of 2018. (From a press release on November 3, 2016)
-The Company announced the opening of a newly built sealing solutions factory in Zapopan, Mexico. The new facility is located near the Group’s existing sealing solutions factory in Guadalajara, allowing for continued expansion of production, predominantly for automotive original equipment manufacturers in North America. Production at the new factory will be ramping up during the coming six months. Concurrently, production will be transferred from the Group’s factory in Hobart, Oklahoma, the U.S., which is in the process of being closed. (From a press release on March 30, 2016)