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SKF first quarter report 2020: Continuing to deliver strong results and cash flow

SKF have delivered another very strong set of results, despite falling demand connected to the Covid-19 pandemic

Alrik Danielson, President and CEO:

“We have delivered another very strong set of results, despite falling demand connected to the Covid-19 pandemic. Our cash flow generation and financial liquidity continues to be strong. We have continued to invest in innovation, optimize our operations and reduce costs.

Net sales fell organically by almost 9% to SEK 20.1 billion. Sales were 10% lower in Asia, 9% lower in Europe, 12% lower in North America and almost 4% higher in Latin America. Sales were impacted across most regions by both government- imposed closures as well as lower underlying demand.

Despite this development, the adjusted operating margin for the first quarter was very strong, at 12.8%, (12.8% last year), with an adjusted operating profit of SEK 2,572 million (2,720 last year). Cash flow was also strong, at 1,930 million (684).

The Industrial business delivered an adjusted margin of 15.5% (15.8%), despite a drop in organic sales of almost 7%.

The Automotive business, which in Europe was significantly impacted by customer closures from the middle of March, delivered an adjusted margin of 5.7%, in-line with last year’s performance, despite a fall in organic sales of over 13%.

Precautionary measures by authorities and lower overall demand is impacting many of the regions and industries in which SKF operates. This was particularly visible during the last two weeks of March when we experienced a sharp drop in sales of 25% compared to last year.

In India and Southeast Asia, for instance, our factories have been closed, in accordance with government guidelines. Some of our factories in Italy have also been closed, with exceptions for those supplying critical industries. Factories in most other countries have remained operational, albeit at a lower capacity, taking lower demand levels into account.

We continue to work diligently to ensure our sites remain safe places to work, with increased focus on personal hygiene and wellbeing. Our colleagues around the world have done a great job in continuing to keep our customers in focus, despite exceptionally challenging circumstances in many economies and societies.

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