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SKF Half-year report 2014

2014 July 15, 08:00 CEST

Tom Johnstone, President and CEO:
“Sales overall developed in line with our expectations and excluding one-offs we had a good cash flow from operations and we saw a good sequential improvement in our operating margin and profit. While the business mix remained somewhat negative the steps we are taking to improve the price/mix gave positive results. Our cost reduction programme is also delivering the expected results and additional activities were announced in the quarter.
   We continue to take steps to strengthen SKF and to support our long-term targets. The new campus
in Shanghai which hosts a new automotive factory, Global Technical Centre, SKF Solution Factory and SKF College was opened as was our new distribution centre also near Shanghai in the new government free trade zone. These will enable us to better support our customers in North East Asia, a region which is developing very well for us. In addition, based on our increased investment in research and development, a number of new products particularly focusing on energy savings and improved
operating performance were launched. We also gained a number of important new businesses.
   Kaydon is developing well both from a sales and profitability viewpoint and the integration activities
are going according to plan. The major order which was gained from a North American wind energy
customer for business in both North America and Brazil is a great example of how the combination
of SKF and Kaydon can bring real value to our customers.    
   Looking forward and taking account of the continued uncertainty in the global market place we expect that in the third quarter overall demand for our products and services will stay on the same level.”

 


 
Key figures

Q2 2014

Q2 2013

YTD 2014

YTD 2013

Net sales, SEKm

17,955

16,392

34,689

31,544

Operating profit, SEKm

2,096

1,837

4,120

3,317

Operating margin, %

11.7

11.2

11.9

10.5

Operating margin excl. one-time items, %

12.3

12.4

11.9

11.9

Profit before taxes, SEKm

1,761

1,627

3,548

2,864

Net profit, SEKm

1,187

1,104

2,462

1,922

Basic earnings per share, SEK

2.54

2.36

5.26

4.10



The operating profit was affected by one-time costs in the second quarter by around SEK 120 million (190) and in the half year by SEK 0 million (440). Additionally, the financial net in the second quarter and half year were affected by one-time costs of around SEK 100 million.

Net sales change y-o-y, in SEK,

attributable to:

Volume

Price/
mix

Structure

Currency
effect

Total

Q2 2014

3.6%

1.0%

3.8%

1.1%

9.5%

Half year 2014

5.0%

0.2%

4.2%

0.6%

10.0%




Sales in Q2 in local currency and excluding structure increased by 1% in Europe, 3% in North America, 2% in Latin America, 14% in Asia and 14% in Middle East and Africa.
Manufacturing in the second quarter was slightly higher compared to last year.
Sales in the first half year in local currency and excluding structure increased by 3% in Europe, 3% in North America, 1% in Latin America, 13% in Asia and 18% in Middle East and Africa.
Manufacturing in the first half year was higher compared to last year.

Outlook for the third quarter of 2014
Demand compared to the third quarter 2013

The demand for SKF’s products and services is expected to be slightly higher for the Group and North America, higher for Asia, relatively unchanged for Europe and slightly lower for Latin America. It is expected to be higher for Strategic Industries and relatively unchanged for Regional Sales and Service and Automotive.

Demand compared to the second quarter 2014
The demand for SKF’s products and services is expected to be relatively unchanged for the Group and Europe. It is expected to be slightly higher for North America and Asia and slightly lower for Latin America. For Strategic Industries it is expected to be slightly higher and for Regional Sales and Service and Automotive it is expected to be relatively unchanged.

Manufacturing
Manufacturing is expected to be slightly higher year over year and relatively unchanged compared to the second quarter.

Gothenburg, 15 July 2014

Aktiebolaget SKF
      (publ)


A teleconference will be held on 15 July at 08.30 CEST, 07.30 (UK):
SE: +46 (0)8 505 564 74
UK: +44 (0)203 364 5374

You will find all information regarding SKF Half-year results 2014
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 2014.



For further information, please contact:
Press Relations: Ingalill Östman, +46 31-337 3260; +46 706-97 32 60; ingalill.ostman@skf.com
Investor Relations: Marita Björk, +46 31-337 1994; +46 705-18 19 94; 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 2013 were SEK 63,597 million and the number of employees was 48,401. www.skf.com  

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