Alrik Danielson, President and CEO:
“The expected weakening of market demand that we flagged for in July materialised and gathered pace during the quarter, especially in Asia and North America. As a result, sales in local currency declined by 5%. Production rates were reduced during the quarter and inventories were kept under control. Our financial performance was impacted by the lower sales volumes.
Agreements have been reached with almost all of the 1 500 white-collar staff that is part of our cost reduction programme. Given current market conditions, these actions alone are, however, not sufficient and we will continue our cost reduction activities across the Group.
In Europe, we saw growth in the railway sector but significantly weaker demand in both the energy and metals sectors. In North America and Asia, overall industrial demand was significantly lower, with the exception of the energy sector in Asia, which saw significant growth.
Our automotive business grew in line with overall market development in Europe but not in North America.
The Automotive Market profit improvement programme is progressing, with a more detailed update to be presented at our upcoming Capital Markets Day.
Divestments of non-core businesses continued, with the sale of Canfield Technologies. The proceeds are being used to strengthen the balance sheet and to be reinvested in our core business.
Entering the fourth quarter, we expect the macro-economic uncertainty to continue and as a consequence we expect demand in the fourth quarter to be slightly lower sequentially and lower year-over-year. We are adjusting our production levels accordingly.”
|Key figures, SEKm||Q3 2015||Q3 2014||YTD 2015||YTD 2014|
|Net sales||18 367||17 787||57 782||52 476|
|Operating profit excl. one-time items||1 976||2 092||6 929||6 214|
|Operating margin excl. one-time items, %||10.8||11.8||12.0||11.8|
|One-time items in operating profit||-151||-19||-1 000||-21|
|Operating profit||1 825||2 073||5 929||6 193|
|Operating margin, %||9.9||11.7||10.3||11.8|
|Profit before taxes, excl. operating and financial one-time items||1 629||1 846||6 231||5 496|
|Profit before taxes||1 348||1 827||5 181||5 375|
|Net cash flow after investments before financing||1 808||1 476||4 450||11|
|Key figures||30 Sep|
|Net working capital, % of annual sales||29.7||30.9||32.4|
|ROCE for the 12-month period, %||11.9||12.6||8.5|
|Net debt/equity, %||114.2||113.4||132.5|
|Net sales change y-o-y, %:||Organic||Structure||Currency||Total|
|Organic sales change in local currencies,|
per region y-o-y, %:
Outlook for the fourth quarter 2015
Demand compared to the fourth quarter 2014
The demand for SKF’s products and services is expected to be lower for the Group where demand for the Auto motive Market is expected to be relatively unchanged, while demand for the Specialty Business is expected to be slightly lower and demand for the Industrial Market is expected to be lower. Split by markets, demand is expected to be relatively unchanged in Europe and Latin America and significantly lower in North America and Asia.
Demand compared to the third quarter 2015
The demand for SKF’s products and services is expected to be slightly lower for the Group where demand for the Industrial Market and the Automotive Market is expected to be slightly lower while demand for the Specialty Business is expected to be relatively unchanged. Split by markets, demand is expected to be relatively unchanged in Europe and slightly lower in North America, Latin America and Asia.