Alrik Danielson, President and CEO:
“The third quarter developed as anticipated, with continued growth in both our industrial and automotive businesses. Sales grew organically by 7%, to stand at SEK 21.3 billlion. Our operating profit was SEK 2.6 billion, 0.6 billion higher than last year and the highest operating profit we have ever recorded in a third quarter.
Cash flow was SEK 1.6 billion, compared to SEK 0.7 billion the previous year. This was supported by our continued efforts to reduce finished goods inventories, whilst maintaining good customer service levels.
The industrial business continues its strong performance, with an operating margin of 14% and organic growth of 9%. We saw significantly higher sales volumes in our three largest regions: Europe, North America and Asia, driven by continued broad-based investments and activities in most of the industries in which we operate.
The automotive business delivered an operating margin of 7%. Despite a drop in European car sales, resulting from the implementation of new test cycles (WLTP) and a slow-down in truck sales in Asia the business delivered an organic sales growth of 2% in the quarter.
At the end of July we announced the divestment of our linear and actuation business for a total consideration of SEK 2.75 billion. The deal is expected to close during the fourth quarter. Following a total of eight divestments in the past three years, we have strengthened our financial position and focused our business portfolio. We continue to invest in research and development with a number of new market offerings being launched in the coming months, including solutions for the rail, food and beverage and agriculture industries.
Entering the fourth quarter of 2018, we expect to see higher demand within industrial and slightly lower demand within automotive.”
|Key figures, SEKm||Q3 2018||Q3 2017||Jan-Sep 2018||Jan-Sep 2017|
|Operating margin, %||12.2||10.5||12.6||11.2|
|Profit before taxes||2,344||1,692||7,552||5,874|
|Net cash flow after investments before financing||1,626||681||4,067||3,049|
|Basic earnings per share||3.35||2.29||11.37||7.89|
|Net sales change y-o-y, %, Q3||Organic||Structure||Currency||Total|
|Net sales change y-o-y, %, Jan-Sep 2018||Organic||Structure||Currency||Total|
|Organic sales change in local currencies, per region y-o-y, %, Q3||Europe||North America||Latin America||Asia||Middle East & Africa|
|Organic sales change in local currencies, per region y-o-y, %, Jan-Sep 2018||Europe||North America||Latin America||Asia||Middle East & Africa|
Outlook and guidance
Demand for Q4 2018 compared to Q4 2017
The demand for SKF’s products and services is expected to be slightly higher for the Group, including higher demand for Industrial and slightly lower demand for Automotive. Demand is expected to be significantly higher in North America, higher in Asia, relatively unchanged in Europe and slightly higher in Latin America.
Guidance Q4 2018
- Financial net: SEK -225 million
- Currency impact on the operating profit is expected to be relatively unchanged compared with 2017, based on exchange rates per 30 September 2018
- Tax level excluding effect related to divested businesses: around 28%
- Additions to property, plant and equipment: around SEK 2,600 million. Previous guidance around SEK 2,400 million.
A teleconference will be held on 25 October 2018 at 14:00 (CET):
SE: +46 (0)8 5065 3942
UK: +44 (0)330 336 9411
US: +1 929 477 0402
The information in this press release is information which AB SKF is required to disclose under the EU Market Abuse Regulation (EU) No 596/2014 The information was provided by the above contact persons for publication on 25 October 2018 at 13:00.