Bearings maker SKF sees slightly slower demand ahead as autos slump
The company, the world's biggest maker of industrial bearings, reported results amid a slump in car markets globally, above all in China, while an increasing number of industrial firms have also pointed to softening demand.
SKF's shares are up 22% in 2019, but have dropped 6% in July after warnings on demand from a string of auto suppliers as well as industrial technology group Hexagon.
Sweden's SKF on Wednesday forecast slightly lower year-on-year demand in the third quarter on the back of a sharp slowdown in the autos market, after restructuring costs pushed its quarterly operating earnings just below market forecasts.
The company, the world's biggest maker of industrial bearings, reported results amid a slump in car markets globally, above all in China, while an increasing number of industrial firms have also pointed to softening demand.
SKF's shares are up 22% in 2019, but have dropped 6% in July after warnings on demand from a string of auto suppliers as well as industrial technology group Hexagon.
The Gothenburg-based company, which competes with companies such as Germany's Schaeffler, said organic sales dipped 2%, its first quarterly decline in almost three years, hit by a 7% fall in its automotive business alone.
SKF derives around 70% of sales from its industrial business, which still showed marginal growth, while the remainder stems from the automotive sector.
"Entering the third quarter of 2019, we expect to see slightly lower volumes for the group, relatively unchanged for industrial and lower for automotive," SKF CEO Alrik Danielson said in a statement.
The company said its second-quarter operating profit fell to 2.54 billion Swedish crowns ($270.47 million) from 2.93 billion a year ago, lagging the 2.62 billion forecast in a poll of analysts according to Refinitiv data.
However, adjusting for restructuring and impairment costs which hit results to the tune of 317 million crowns, earnings were slightly better than expected.
"Our efforts to keep costs under control are showing results, in a market with lower demand," Danielson said.
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