SKF Nine-month report 2018

Alrik Danielson, President and CEO:

“The third quarter developed as anticipated, with continued growth in both our industrial and automotive businesses. Sales grew organically by 7%, to stand at SEK 21.3 billlion. Our operating profit was SEK 2.6 billion, 0.6 billion higher than last year and the highest operating profit we have ever recorded in a third quarter.

Cash flow was SEK 1.6 billion, compared to SEK 0.7 billion the previous year. This was supported by our continued efforts to reduce finished goods inventories, whilst maintaining good customer service levels.

The industrial business continues its strong performance, with an operating margin of 14% and organic growth of 9%. We saw significantly higher sales volumes in our three largest regions: Europe, North America and Asia, driven by continued broad-based investments and activities in most of the industries in which we operate.

The automotive business delivered an operating margin of 7%. Despite a drop in European car sales, resulting from the implementation of new test cycles (WLTP) and a slow-down in truck sales in Asia the business delivered an organic sales growth of 2% in the quarter.

At the end of July we announced the divestment of our linear and actuation business for a total consideration of SEK 2.75 billion. The deal is expected to close during the fourth quarter. Following a total of eight divestments in the past three years, we have strengthened our financial position and focused our business portfolio. We continue to invest in research and development with a number of new market offerings being launched in the coming months, including solutions for the rail, food and beverage and agriculture industries.

Entering the fourth quarter of 2018, we expect to see higher demand within industrial and slightly lower demand within automotive.”