SKF first quarter results 2018

“We have had a record start to 2018. Sales grew by 7.5% organically to SEK 20.6 billion and our reported operating profit was 2,625 million, both historical highs for SKF. Operating margin at 12.8% exceeded our target.

The actions we have taken to control and continually review our cost base, increase prices and focus on meeting the specific application needs of our customers are showing results.

We are delivering solid financial performance, with organic growth, operating margin and net debt to equity levels all better than our stated targets that are valid over a business cycle.

The industrial business, with a reported operating margin of 15%, grew by 8.5%, with especially strong growth in Europe and Asia. We grew in almost all industries and saw particular strength in industrial drives and railway applications.

The automotive business, with a reported operating margin of 7.7%, grew by 5.5%, a clear sign that we continue to outpace vehicle production levels. We grew in all geographic regions, with the strongest growth in the truck industry.

Entering the second quarter 2018, we expect to see continued growth year-on-year, in all regions and we expect growth within both industrial and automotive.”

Key figures, SEKm                                                  Q1 2018                     Q1 2017

Net sales                                                                20,560                       19,601

Operating profit                                                        2,625                        2,295

Operating margin, %                                                  12.8                          11.7

Profit before taxes                                                     2,425                        2,125

Net cash flow after investments before financing             259                           64

Basic earnings per share                                               3.77                         3.09

From the first quarter report 2018, SKF will report the Operating profit including Items Affecting Comparability. Any material items included in the result will be commented in the text of the report.

Net sales change y-o-y, %                  Organic            Structure            Currency            Total

SKF Group                                         7.5                   -0.7                    -1.9                 4.9

Industrial                                            8.5                  -1.0                     -1.7                 5.8

Automotive                                        5.5                    0.0                     -2.5                3.0


Organic sales change in local currencies,     Europe    North America    Latin America      Asia Middle   East & Africa

       per region y-o-y, % 
           SKF Group                                    7.6             3.2                  0.7                  13.2             13.0
            

           Industrial                                      +++             +/-                   -                    +++              +++
        

         Automotive                                     +                ++                 ++                   +++              +++
 

Outlook and guidance

Demand for Q2 2018 compared to Q2 2017 
The demand for SKF’s products and services is expected to be higher for the Group, including Industrial and Automotive. Demand is expected to be higher in Europe, significantly higher in Asia-Pacific and relatively unchanged in North America and Latin America.

Demand for Q2 2018 compared to Q1 2018 
From the first quarter report 2018, SKF will not issue a sequential demand outlook.

Guidance Q2 2018 
- Financial net: SEK -200 million. 
- Currency impact on the operating profit is expected to be around SEK -160 million compared with 2017, based on exchange rates per 31 March 2018.

Guidance 2018 
- Tax level excluding effect related to divested businesses: around 29%. 
- Additions to property, plant and equipment: around SEK 2,400 million.

A teleconference will be held on 26 April 2018 at 9:00 (CEST):

SE: +46 (0)8 5065 3942 
UK: +44 (0)330 336 9411 
US: +1 323 994 2083

You will find all information regarding the SKF first quarter results 2018 on the IR website.

Aktiebolaget SKF