SKF Hikes Targets, Makes $1 bln U.S. Acquisition
Resource from: CBCC Likes:2953
Oct 19,2010
Oct 19 (Reuters) - Sweden's SKF, (SKFb.ST) the world's biggest bearings maker, raised its financial targets on Tuesday after unveiling forecast-beating third-quarter earnings and forecast a continued rise in demand.
SKF also said it was buying U.S.-based lubrication systems company Lincoln Industrial for $1 billion on a cash and debt-free basis, representing one of the group's biggest acquisitions in recent years.
The company reported a pretax profit of 1.95 billion Swedish crowns ($292 million) compared with a year-ago 689 million, beating the 1.65 billion seen in a Reuters poll of 18 analysts.
It said its third-quarter operating profit and operating profit margin were at record levels.
SKF, seen as a bellwether for the manufacturing sector, with its bearings used in items ranging from jets to dishwashers, has enjoyed wider profit margins in recent quarters due to rising demand and cost cuts pushed through during the global financial crisis.
As a result, the company said it was raising its financial targets, setting its sights on a 15 percent operating margin compared with the previous goal of 12 percent and sales growth of 8 percent compared with the previous 6-8 percent target.
The manufacturing industry was hit by a head-long fall in demand as the financial crisis ended years of access to credit in 2008, forcing SKF to cut thousands of jobs.
Since then demand has gradually strengthened amid booming growth in emerging markets in Asia and Latin America, leaving companies such as SKF to reap the benefits of smaller cost bases as they move closer to full capacity in their existing plants.
"The demand is expected to be slightly higher for the group, the divisions and for the different geographical areas," the company said, adding it planned to keep its manufacturing level unchanged in the fourth quarter from the third. (Editing by Will Waterman) ($1=6.680 Swedish Crown)
(CBCC)
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