Alrik Danielson, President and CEO:
”Demand in the quarter was largely in line with guidance, with reported sales in local currency declining with 1.5 percent, excluding structural change. We saw a good growth in railways except for China and in energy except for Europe. A weaker demand was seen in heavy industry and the distributor segment in North America as well as an underlying weaker demand in China. The automotive business in North America was also slow during the quarter.
The operating margin increased to 12.9 percent excluding one-time items and the balance sheet strengthened during the quarter. The cost-reduction programme progressed well and at the end of the quarter agreements have been reached covering 60 percent of the concerned individuals.
Within the Automotive Market a profit improvement programme was launched. A number of activities were initiated with the aim to improve productivity and the competitiveness of the business. The structure has been simplified and focused initiatives are being carried out through the value-chain.
In line with our ambition to focus efforts and resources on bearings, our main business and to strengthen our balance sheet, we have divested three non-core businesses: Erin Engineering and Research Inc., Purafil, and Kaydon Custom Filtration with a total consideration close to SEK 1 000 million on a cash-free and debt-free basis.
During the first-half year we saw a weak development of the global industrial production. Lately the uncertainty regarding the market demand in China has increased further. Entering the third quarter we all in all experience a relatively weak industrial production. Looking forward we expect demand to be sequentially slightly lower and relatively unchanged year-over-year.’’
| Key figures | Q2 2015 |
Q2 2014 |
YTD 2015 |
YTD 2014 |
| Net sales, SEKm | 19 961 | 17 955 | 39 415 | 34 689 |
| Operating profit, SEKm | 2 383 | 2 096 | 4 104 | 4 120 |
| Operating margin, % | 11.9 | 11.7 | 10.4 | 11.9 |
| One-time items, SEKm | -194 | -119 | -849 | -2 |
| Operating profit excl. one-time items, SEKm | 2 577 | 2 215 | 4 953 | 4 122 |
| Operating margin excl. one-time items % | 12.9 | 12.3 | 12.6 | 11.9 |
| Profit before taxes, SEKm | 2 241 | 1 761 | 3 833 | 3 548 |
| Net profit, SEKm | 1 706 | 1 187 | 2 871 | 2 462 |
| Basic earnings per share, SEK | 3.65 | 2.54 | 6.11 | 5.26 |
| Net cash flow after investments before financing | 1 654 | -1 402 | 2 642 | -1 465 |
Operating profit in Q2 included one-time items of -194 million (-119), whereof -224 million (-98) related to the ongoing cost-reduction programme and the remainder +30 million
included profit on sold businesses as well as impairment and write-off of assets. In Q2 2014, the cash flow after investments before financing excluding the EU payment
was +1 423 million.
| Key figures | 30 June 2015 | 31 March 2015 | 30 June 2014 |
| Net working capital, % of annual sales | 30.9 | 32.1 | 32.7 |
| ROCE for the 12-month period, % | 12.6 | 12.6 | 8.7 |
| Net debt/equity, % | 113.4 | 122.2 | 143.7 |
| Net debt/EBITDA | 2.8 | 3.2 | 4.7 |
| Net sales change y-o-y, %: | Organic | Structure | Currency | Total |
| Q2 2014 | -1.5 | -0.2 | 12.9 | 11.2 |
| YTD | -0.2 | -0.1 | 13.9 | 13.6 |
| Organic sales change in local currencies, per region y-o-y, %: |
Europe | North America |
Latin America |
Asia | Middle East & Africa |
| Q2 2015 | 0.7 | -5.7 | 4.6 | -3.7 | 15.7 |
| YTD | 0.8 | -4.1 | 1.5 | 0.6 | 15.0 |
Outlook for the third quarter 2015
Demand compared to the third quarter 2014
The demand for SKF’s products and services is expected to be relatively unchanged for the Group, Europe and Asia. For North America it is expected to be lower and for Latin America higher. For all business areas it is expected to be relatively unchanged.
Demand compared to the second quarter 2015
The demand for SKF’s products and services is expected to be slightly lower for the Group. For Europe it is expected to be lower and for all other regions it is expected to be relatively unchanged. For Industrial Market and Specialty Business it is expected to be relatively unchanged and for Automotive Market it is expected to be lower.
