SKF Year-end report 2021
Q4 2021
Net sales: SEK 20,986 million (19,572) Organic growth: 4% (0%) Adjusted operating profit/margin: SEK 2,260 million, 10.8% (2,582, 13.2%)
Full year 2021
Net sales: SEK 81,732 million (74,852) Adjusted operating profit/margin: SEK 10,839 million, 13.3% (9,194, 12.3%)
Rickard Gustafson, President and CEO:
“Looking at the full year, 2021 was very strong for SKF, with solid growth and improved margins. The performance in the first half of the year was especially strong, while the second half of the year saw increasing challenges in the form of supply chain constraints and cost inflation.
During the fourth quarter, we’ve worked hard to mitigate the evolving cost inflation, which has continued to accelerate. In total, we were able to compensate for about SEK 700 million of the SEK 1,660 million cost increase, which is not a satisfactory level.
Given the continued and exceptionally high levels of cost inflation, we are implementing further broad-based price increases and continuing our focus on cost efficiency, in anticipation of continued supply chain challenges and cost inflation during the new year. This is a necessary step to protect our business and allow for continued investment in innovation and product development, so that we can better support our customers.
The Industrial business delivered organic growth of 9% in the quarter. The strong sales development was driven by significantly higher demand in EMEA and Latin America, while demand in North America and Asia grew at a somewhat lower pace. Demand was generally strong across most industries, especially within industrial drives, industrial distribution, off-highway and heavy industries. The Industrial adjusted operating margin was 13.5% (14.6%).
The Automotive business continued to experience volatile demand, with organic growth at -8%. Despite this, it delivered an adjusted operating margin of 3.7% (10.2%) in part due to the mitigating actions that we announced in the previous quarter. Our order book is strong and it’s great to see a continued sharp increase in demand for electric vehicles, where we have a leading position, as well as in the high-margin aftermarket.
Cash flow in the quarter was SEK 823 million (1,901) and included approximately SEK 700 million from real estate sales. The lower cash flow is mainly attributable to higher inventory levels, which increased by SEK 1,279 million in the quarter, compared to an inventory reduction of SEK 862 million last year. Supply chain constraints continue to result in higher levels of goods in transit than what we would normally see.
Taking a long-term view, we continue to invest in strengthening our competitiveness and getting closer to our customers.
A good example of the investments we are making is the expansion of our factory in Xinchang, China. By strengthening our engineering and manufac-turing capability, we are improving our competitiveness towards local and global customers. The factory has the capability to produce a wide range of bearings, including for electric vehicles, agriculture and industrial applications, where we see strong growth on a global scale.
This morning we announced the details of our new strategic framework, which will guide our work as we look to grow our business faster and more profitably than before. SKF has a fantastic position from which to build upon, not least given our wide exposure to so many growing segments and the role our offerings play in enabling the shift towards cleaner industrial solutions.
Looking into the first quarter of 2022, we estimate a low single-digit organic sales growth. Industrial is expected to grow while Automotive is expected to decline. For the full year 2022, we expect an organic sales growth of about 5-10%.
In recognition of our strong performance during the year, the Board has proposed a dividend of SEK 7.00.”
Key figures, SEKm unless otherwise stated Q4 2021 Q4
2020 2021 2020
Net sales 20,986 19,572 81,732 74,852
Adjusted operating profit 2,260 2,582 10,839 9,194
Adjusted operating margin, % 10.8 13.2 13.3 12.3
Operating profit 2,594 2,210 10,758 7,069
Operating margin, % 12.4 11.3 13.2 9.4
Adjusted profit before taxes 1,994 2,515 10,143 8,424
Profit before taxes 2,328 2,144 10,063 6,300
Net cash flow after investments before financing 823 1,901 2,100 5,259
Basicearnings per share 3.74 3.36 16.10 9.44
Adjustedearnings per share 3.01 4.17 16.28 14.11
Net sales change y-o-y, %, Q4 Organic Structure Currency Total
SKF Group 3.8 – 3.4 7.2
Industrial 9.1 – 3.1 12.2
Automotive -7.9 – 4.1 -3.8
Net sales change y-o-y, %, 2021 Organic Structure Currency Total
SKF Group 12.6 – -3.4 9.2
Industrial 12.2 – -3.6 8.6
Automotive 13.7 – -3.0 10.7
Organic sales in local currencies, change y-o-y, %, Q4 EMEA North America Latin America Asia
SKF Group 5.6 3.3 6.4 1.2
Industrial +++ ++ +++ ++
Automotive -- -- --- --
Organic sales in local currencies, change y-o-y, %, 2021 EMEA North America Latin America Asia
SKF Group 13.4 8.6 25.9 10.9
Industrial +++ +++ +++ +++
Automotive +++ ++ +++ +++
Outlook and guidance
Demand for Q1 2022 compared to Q1 2021
Looking ahead, for Q1 2022, we estimate a low single-digit organic sales growth.
Guidance Q1 2022
Currency impact on the operating profit is expected to be around SEK 150 million compared with Q1 2021, based on exchange rates per 31 December 2021.
Guidance 2022
For the full year 2022, we expect an organic sales growth of about 5-10%.
Tax level excluding effects related to divested businesses: around 26%.
Additions to property, plant and equipment: around SEK 5 billion.
SKF’s mission is to be the undisputed leader in the bearing business. We do this by offering solutions that reduce friction and CO2 emissions, whilst at the same time increasing machine uptime and performance. Our products and services around the rotating shaft include bearings, seals, lubrication management, artificial intelligence and wireless condition monitoring. SKF is represented in more than 130 countries and has around 17,000 distributor locations worldwide. Annual sales in 2020 were SEK 74 852 million and the number of employees was 40,963.
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