GOTHENBURG, Sweden, Feb. 4, 2020 /PRNewswire/ -- Alrik Danielson, President and CEO:
"2019 has been a solid year for SKF. We saw stable demand during the first half of the year. During the last six months, we maintained a strong operating result, despite falling demand. A consistent focus on cost reduction, especially during the fourth quarter, where cost reductions more than compensated for cost inflation, has allowed us to continue to deliver solid results, whilst continuing to invest in our factories and in R&D.
During the fourth quarter, we delivered a strong underlying operating margin of 10.3% (10.4% last year) and an underlying operating profit of SEK 2,181 million (2,197).
We saw a drop in organic sales of 2.9%, with net sales of SEK 21.2 billion. Sales were higher in Asia, driven by strong demand in China, slightly lower in Europe, significantly lower in North America and significantly higher in Latin America.
The industrial business delivered an underlying margin of 13.3%, higher than last year (12.9%), despite a drop in organic sales of 1.2%. Sales were significantly higher in Asia, relatively unchanged in Europe and Latin America and significantly lower in North America.
The automotive business delivered an underlying margin of 2.4% (3.8% last year), due to a fall in organic sales of 7.5%. Sales were significantly lower in Europe and North America, lower in Asia and significantly higher in Latin America.
During the fourth quarter we have taken steps to create a more efficient structure for our support functions. The new way of working and resulting organizational changes are being implemented during 2020-2021 and will see the creation of regional centers of excellence.
Investments supporting our regional manufacturing strategy continue as planned and the recently announced ball bearing factory in Xinchang is ramping up production during the first quarter, as announced in June 2019.
The testing of our bearings with fibre optical load sensors has moved over to the next stage, with equipped large-size bearings soon to be deployed to a mine in northern Sweden. These bearings analyze loads in real-time, giving customers and SKF even more insights into the performance of rotating machinery.
In the first quarter of 2020, we expect to see lower volumes for the Group, slightly lower for Industrial and lower for Automotive, compared to Q1 2019.
SKF is well-positioned for the future. We have a track record of strong financial performance, which has enabled us to pay down debt and increase investments in manufacturing and R&D during 2019. In recognition of this, the Board has proposed to increase the dividend to SEK 6.25 per share."
Key figures, SEKm | Q4 2019 | Q4 2018 | 2019 | 2018 |
Net sales | 21,208 | 21,192 | 86,013 | 85,713 |
Operating profit | 1,910 | 2,902 | 9,395 | 11,049 |
Operating margin, % | 9.0 | 13.7 | 10.9 | 12.9 |
Profit before taxes | 1,722 | 2,636 | 8,469 | 10,188 |
Net cash flow after investments before | 701 | 4,259 | 4,953 | 8,326 |
Basic earnings per share | 2.27 | 4.63 | 12.2 | 16.0 |
Net sales change y-o-y, %, Q4 | Organic | Structure | Currency | Total |
SKF Group | -2.9 | -1.8 | 4.8 | 0.1 |
Industrial | -1.2 | -2.6 | 4.6 | 0.8 |
Automotive | -7.3 | 0.2 | 5.3 | -1.8 |
Net sales change y-o-y, %, 2019 | Organic | Structure | Currency | Total |
SKF Group | -2.0 | -2.3 | 4.7 | 0.4 |
Industrial | 0.1 | -3.3 | 4.7 | 1.5 |
Automotive | -6.8 | 0.1 | 4.3 | -2.4 |
Organic sales change in local currencies, | Europe | North America | Latin America | Asia | Middle East & Africa |
SKF Group | -3.0 | -15.9 | 8.2 | 4.3 | 13.4 |
Industrial | +/- | --- | +/- | +++ | +++ |
Automotive | --- | --- | +++ | -- | +++ |
Organic sales change in local currencies, | Europe | North America | Latin America | Asia | Middle East & Africa |
SKF Group | -1.9 | -7.8 | 5.6 | 0.7 | 1.8 |
Industrial | +/- | -- | +/- | + | +/- |
Automotive | -- | --- | +++ | -- | +++ |
Outlook and guidance
Demand for Q1 2020 compared to Q1 2019
The demand for SKF's products and services is expected to be lower for the Group, including slightly lower demand for Industrial and lower demand for Automotive. Demand is expected to be slightly higher in Asia, lower in Europe, significantly lower in North America and significantly higher in Latin America.
Guidance Q1 2020
- Financial net: SEK -225 million
- Currency impact on the operating profit is expected to be around SEK +60 million compared with Q1 2019, based on exchange rates per 31 December 2019.
Guidance 2019
- Tax level excluding effect related to divested businesses: around 28%.
- Additions to property, plant and equipment: around SEK 3,300 million.
A teleconference will be held on 4 February 2020 at 14:00 (CET):
Conference ID: SKF or 3662219
Standard International: +44 (0) 2071 928000
Sweden: +46 (0)8 5069 2180
United States: +1-631-510-7495
Website: http://investors.skf.com/en/result-centre
Aktiebolaget SKF
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 4 February 2020 at 13:00.
CONTACT:
For further information, please contact:
PRESS:
Theo Kjellberg,
Director, Press Relations
tel: 46-31-337-6576
mobile: 46-725-776576
e-mail: theo.kjellberg@skf.com
INVESTOR RELATIONS:
Patrik Stenberg,
Head of Investor Relations
+46-31-337-2104; +46-705-472-104;
patrik.stenberg@skf.com
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