SKF Half-year report 2015

2015 July 15, 08:00 CEST

Alrik Danielson, President and CEO:

”Demand in the quarter was largely in line with guidance, with reported sales in local currency declining with 1.5 percent, excluding structural change. We saw a good growth in railways except for China and in energy except for Europe. A weaker demand was seen in heavy industry and the distributor segment in North America as well as an underlying weaker demand in China. The automotive business in North America was also slow during the quarter.

The operating margin increased to 12.9 percent excluding one-time items and the balance sheet strengthened during the quarter. The cost-reduction programme progressed well and at the end of the quarter agreements have been reached covering 60 percent of the concerned individuals.

Within the Automotive Market a profit improvement programme was launched. A number of activities were initiated with the aim to improve productivity and the competitiveness of the business. The structure has been simplified and focused initiatives are being carried out through the value-chain.

In line with our ambition to focus efforts and resources on bearings, our main business and to strengthen our balance sheet, we have divested three non-core businesses: Erin Engineering and Research Inc., Purafil, and Kaydon Custom Filtration with a total consideration close to SEK 1 000 million on a cash-free and debt-free basis.

During the first-half year we saw a weak development of the global industrial production. Lately the uncertainty regarding the market demand in China has increased further. Entering the third quarter we all in all experience a relatively weak industrial production. Looking forward we expect demand to be sequentially slightly lower and relatively unchanged year-over-year.’’

Key figuresQ2        
2015
Q2        
2014
YTD      
2015
YTD
2014
Net sales, SEKm                                          
19 96117 95539 41534 689
Operating profit, SEKm2 3832 0964 1044 120
Operating margin, %11.911.710.411.9
One-time items, SEKm-194-119-849-2
Operating profit excl. one-time items, SEKm2 5772 2154 9534 122
Operating margin excl. one-time items %12.912.312.611.9
Profit before taxes, SEKm2 2411 7613 8333 548
Net profit, SEKm1 7061 1872 8712 462
Basic earnings per share, SEK3.652.546.115.26
Net cash flow after investments before financing1 654-1 4022 642-1 465

Operating profit in Q2 included one-time items of -194 million (-119), whereof -224 million (-98) related to the ongoing cost-reduction programme and the remainder +30 million
included profit on sold businesses as well as impairment and write-off of assets. In Q2 2014, the cash flow after investments before financing excluding the EU payment
was +1 423 million.

Key figures30 June 201531 March 201530 June 2014
Net working capital, % of annual sales30.932.132.7
ROCE for the 12-month period, %12.612.68.7
Net debt/equity, %113.4122.2143.7
Net debt/EBITDA2.83.24.7
Net sales change y-o-y, %:OrganicStructureCurrencyTotal
Q2 2014-1.5-0.212.911.2
YTD-0.2-0.113.913.6
Organic sales change in local
currencies, per region y-o-y, %:
EuropeNorth
America
Latin
America
AsiaMiddle East 
& Africa 
Q2 20150.7-5.74.6-3.715.7
YTD0.8-4.11.50.615.0

Outlook for the third quarter 2015

Demand compared to the third quarter 2014
The demand for SKF’s products and services is expected to be relatively unchanged for the Group, Europe and Asia. For North America it is expected to be lower and for Latin America higher. For all business areas it is  expected to be relatively unchanged.

Demand compared to the second quarter 2015
The demand for SKF’s products and services is expected to be slightly lower for the Group. For Europe it is expected to be lower and for all other regions it is expected to be relatively unchanged. For Industrial Market and Specialty Business it is expected to be relatively unchanged and for Automotive Market it is expected to be lower.

A teleconference will be held on 15 Julyat 09.00 (CEST), 08.00 (UK):

SE: +46 8 5065 3936
UK: +44 20 3427 1912
US: +1 646 254 3362


You will find all information regarding SKF Half-year report 2015 on the IR website.investors.skf.com/quarterlyreporting

AB SKF is required to disclose the information provided herein pursuant to the Securities Markets Act and/or the Financial Instruments Trading Act. The information was submitted for publication at around 08.00 on 15 July 2015.

For further information, please contact:
MEDIA HOTLINE: 46 31 337 2400

PRESS: Theo Kjellberg, Director, Press Relations
tel: 46 31 337 6576, mobile: 46 725-776576, e-mail: theo.kjellberg@skf.com

INVESTOR RELATIONS: Marita Björk, Head of Investor Relations
tel: 46 31-337 1994, mobile: 46 705-181994, e-mail: marita.bjork@skf.com

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 2014 were SEK 70 975 million and the number of employees was 48 593. www.skf.com  

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