SKF Year-end report 2017
Gothenburg, 1 February 2018
Alrik Danielson, President and CEO:
“We have had a strong finish to 2017, a year characterized by strong demand in most markets. In the fourth quarter, net sales, at SEK 19.5 billion, grew organically by over 8%, with near- double-digit growth in Automotive.
Europe and Asia saw strong sales growth, 9% and 10%, respectively, driven by high general levels of industrial activity and a strong automotive market. In North America, sales growth was 5%.
Our focus on raising prices, for both distributors and OEMs, and controlling costs is bearing fruit. Our adjusted operating profit was SEK 2.1 billion in the quarter, an increase of SEK 350 million compared to last year. Our adjusted operating margin also improved, to 10.7% (9.3%).
Within the industrial business, increased sales volumes delivered an adjusted operating margin of 12.9% (11.0%). We have secured several new business wins during the quarter, including a new, multi-year framework agreement with ArcelorMittal. This agreement covers bearings, units, seals and remanufacturing services for 14 steel mills across Europe and Northern Africa.
The development of our Rotating Equipment Performance offer continues, with the launch of the next generation of our Enlight Center cloud-based data collection platform.
The automotive business, which saw improved sales volumes, remains focused on technology development and reducing costs, delivering an adjusted operating profit margin of 5.9% (5.2%) in the seasonally weak fourth quarter. We are also making progress within the powertrain electrification area. Our components have been selected by several automakers, including supplying bearings for the next-generation electric powertrain platform of a leading European OEM.
Continued strengthening of the balance sheet remains a priority for us. Cash flow generation was strong, at SEK 1.7 billion, an improvement of SEK 300 million compared to the previous year. Our net debt to equity ratio, now at 71%, is well below our target of 80%.
Entering the first quarter 2018, we expect to see continued growth in all regions, with particular strength in Asia and Europe.”
|Key figures, SEKm||Q4
|Adjusted operating profit**||2,092||1,741||9,096||7,544|
|Adjusted operating margin, %**||10.7||9.3||11.7||10.4|
|Items affecting comparability**||-75||-155||-504||-17|
|Operating margin, %||10.4||8.5||11.0||10.4|
|Adjusted profit before taxes**||1,859||1,531||8,162||6,756|
|Profit before taxes||1,784||1,376||7,658||6,739|
|Net cash flow after investments before financing||1,704||1,428||4,753||7,717|
|Basic earnings per share||4.12||1.95||12.02||8.75|
* Cash discounts are from January 1, 2017 classified as a reduction of Net sales. Previously published figures have been restated accordingly.
** Please see page 15 of report for definitions
|Net sales change y-o-y, %||Organic||Structure||Currency||Total|
|Organic sales change in local currencies, per region y-o-y, %||Europe||North America||Latin America||Asia||Middle East & Africa|
The Board has decided to propose an unchanged dividend of SEK 5.50 per share to the Annual General Meeting.
Outlook for the first quarter 2018
Demand compared to the first quarter 2017
The demand for SKF’s products and services is expected to be higher for the Group, including Industrial and Automotive. Demand is expected to be higher in Europe, relatively unchanged in North America, significantly higher in Asia and slightly higher in Latin America.
Demand compared to the fourth quarter 2017
The demand for SKF’s products and services is expected to be slightly higher for the Group and Industrial and higher for Automotive. Demand is expected to be higher in Europe, North America and Latin America and lower in Asia.
A teleconference will be held on 1 February 2018 at 14:00 (CET):
SE: +46 (0)8 5033 6574
UK: +44 (0)330 336 9105
US: +1 323 994 2083
You will find all information regarding the SKF Year-end results 2017 on the IR website.
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 1 February 2018 at 13:00
For further information, please contact:
PRESS: Theo Kjellberg, Director, Press Relations
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INVESTOR RELATIONS: Patrik Stenberg, Head of Investor Relations
Patrik Stenberg, 46 31-337 2104; 46 705-472 104; email@example.com
SKF is a leading global supplier of bearings, seals, mechatronics, lubrication systems, and services which include technical support, maintenance and reliability services, engineering consulting and training. SKF is represented in more than 130 countries and has around 17,000 distributor locations worldwide. Annual sales in 2017 were SEK 77,938 million and the number of employees was 45,678. www.skf.com
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