The decision to close our factory in Busan is very difficult to take but it is absolutely vital for us to be close to our customers in order to serve them even better.
We continued to manage costs, prune the portfolio and reduce working capital whilst continuing to invest in innovation and further improving our manufacturing footprint as part of our strategic transformation and new decentralized way of working.
By focusing on our core business and seeking strategic options to areas outside of our core, we will unlock the full potential of this business.
Investing in engineering and manufacturing capabilities in the strategically located Monterrey will make us stronger and more flexible and increase our competitiveness in the Americas.
I’m pleased to report that our strategic transformation continues at a high pace, clearly reflected by a strong set of numbers in the second quarter. In the quarter, we saw record high net sales, adjusted operating profit, and cash flow.
This agreement is a critical step forward in our strategy. It also demonstrates our commitment to the cleantech industry and support for the growth of the renewable energy industry.
These investments, coming with a clear frame, will help us reach our goal to decarbonize our own operations by 2030. To achieve this is an absolute key element of our strategy.
The new SKF Microlog Analyzer dBX together with our analytic software is providing best in class information and insights of customers’ rotating asset health.
I’m pleased to report a solid quarter with strong organic sales growth and a record high adjusted operating profit for a first quarter.
SKF and CAKE share a common heritage and sustainability ambition. Our expertise as a market leading actor in the two-wheeler market, coupled with our knowledge and experience in producing bearings with minimal environmental impact, means that we can make a tangible contribution towards realizing CAKE and Vattenfall's vision of a clean dirt bike. We are proud to join like-minded industry colleagues who share the determination that change is urgently needed for a sustainable future. Leveraging our combined expertise, we can trigger and accelerate the creation of products that contributes to this industry transformation.
When Vattenfall and CAKE embarked on this journey, we knew that we were facing a challenge and were determined to build the Cleanest Dirt Bike Ever – from the materials used in its production to its emissions. Down the road, we have inspired industry giants to come along with us and push their limits when it comes to decarbonization of production, making an impact lasting beyond the dirt bike. This is what the project is about – creating a fossil free mindset in every part of the production phase – and that is why we are happy to announce that SKF, one of the world’s largest and most advanced bearing manufacturers, is now joining in.
By setting targets that align with the latest scientific research, we can help mitigate climate change, protect natural resources, and create a better future for all.
Validation from the SBTi is of great importance to SKF and increases accountability and credibility of our climate action through their monitoring, reporting and verification framework.
In 2022, we reached an additional major milestone in our journey towards Net Zero. For the first time, more than half of all electricity used in our operations around the world was generated from renewable energy sources like wind and solar.
2022 was a year in which we accelerated our strategic development in earnest.
During the third quarter, we delivered strong organic sales growth of 11%, a clear indication that we are relevant for our customers.
SKF continues to create sustainable and low-carbon products and solutions for the industry and has a solid goal to achieve net-zero emissions in production and operation by 2030 and Net Zero emissions in the entire supply chain by 2050. We are closely aligned with Goldwind in our sustainability credentials and ambitions and close collaboration and partnerships of this kind are vital if the world is to achieve Net Zero in time to avoid disastrous climate change. By focusing on practical and rapid action, Goldwind and SKF are making a significant contribution to lowering greenhouse gas emissions right now and into the future.
Henry’s leadership skills, experience and regional knowledge will help us accelerate our successful development across China and Northeast Asia.
With the certification from DNV, our customer can now rely on the fact that the GBLM is independently quality assured and that SKF solutions really contribute to increased reliability.
Issuing our second Green Bond further emphasizes the integration of sustainability into our strategic framework and day to day running of the business.
The industry’s journey towards net zero bearing production is accelerating and this milestone illustrates both our leading position and the importance of collaboration.
I’m happy to welcome Annika back to SKF and look forward to working with her as we continue to strengthen our technology development efforts for traditional and future applications around the rotating shaft.
“Optimized service structures and new business models in factories – seen as eco-systems – will play a central role for all companies. Our collaboration will make reduction of CO2 a reality for the industry, with improved smart factory services, improved process stability, reduced throughput and cycle time resulting in a significant cost reduction.”
In the second quarter we saw organic revenue growth above 5%, driven by a general strong demand in most regions, especially within targeted high-growth segments, a somewhat higher automotive sales than anticipated and continued price realization.
Ultimately, improving the sustainability performance of a customer application requires the understanding of the full life cycle based on specific application data. I believe the tool we are launching will make it easier and more tangible for our customers to understand and accelerate this journey.
When DST-regeneration is combined with lubrication management and condition monitoring, oil can be circulated and re-used for much longer. Sometimes, it can be circulated indefinitely, allowing a circular use of oil.
In the first quarter, we managed to deliver strong results and growth in an external environment characterized by supply constraints and big uncertainties following the war in Ukraine and the Covid-situation in China.
The third quarter saw continued solid demand. Our Industrial business, which represents approximately 75% of sales, maintained its strong momentum, despite challenges from logistics constraints and cost inflation.
Having already made significant progress on our journey to reducing emissions from our own operations to net zero by 2030, we are today committing to an even more ambitious goal, spanning our full supply chain.
Design verification, using real load data, is enabling Sulzer to further improve its pump designs, and enable product design verification with real time data rather than calculated scenarios. It improves physical test confidence and reduces time to market.
Research at the University of Twente in recent years has increased our understanding of the role of grease in bearings. With this knowledge we can reduce energy losses and increase the lifetime of grease lubricated contacts that contributes to a more sustainable society.
The next phase of the investment will allow us to serve our customers even better, across wider applications and with a wider product range.
We have delivered another very strong set of results, despite falling demand connected to the Covid-19 pandemic.
Our cash flow generation and financial liquidity continues to be strong.
This latest addition to our ongoing collaboration with SKF adds great value for our mutual customers. This will allow them to assess their bearings within the context of full system level models in MASTA, while benefiting from the proprietary life calculations of SKF.
By offering customers in the steel industry the opportunity to work with us on a fee-basis, we give them access to our full competence around the rotating shaft, in order to improve productivity.
Our products help to reduce friction, energy and water consumption. Our offerings have always had an impact in these areas and by making sure our financing structure also contributes to a more sustainable world, we are taking the next step in our sustainability strategy.
Commercializing our product will create an entirely new global market for power generation equipment and services, and we are delighted to be working with SKF
We have almost a decade’s worth of experience of being a technical partner to developers of advanced tidal turbine technologies. By now taking the step from being a mechanical component supplier to supplying fully integrated power trains, we strengthen our position and focus on supporting selected cleantech industries.
SKF has managed the business well in a weakening economic environment and our efforts to reduce costs are contributing to a strong and stable operating margin in the quarter with an underlying margin of 11.3%.
More and more customers are becoming open to new, fee-based business models
The value of digitalization and automation within manufacturing lies in the insights it creates for machine owners and operators. By giving end-users real-time insights into the performance of their spindles using bearing trend development and diagnostics, we can help them make better decisions about maintenance. Simply put, this enables higher and more reliable performance
As well as reducing costs and increasing profitability, our REP fee-based approach reduces waste in the value chain and lowers environmental impacts. REP contributes to the circular economy through remanufacturing or recycling of bearings, and filtration and regeneration of lubricants. It also lowers material and energy consumption more generally thanks to longer-lasting components and more efficient machine performance. This is all good news for the future of businesses and our planet.
The SKF Silent Series feature a new and innovative polyamide cage centred on the balls that minimises this 'cage rattling' during rotation. Their silent operation increases the confidence of the end-user in the quality of spindles.
Our experts are here to help our customers make better product choices based on the value they want to create for their businesses. We also provide bearing calculation tools such as SimPro spindle, which makes it easier for our customers to design and choose the right bearings for their spindles.
Our efforts to keep costs under control are showing results, in a market with lower demand.
Gothia Cup is one of the world’s largest sporting events and a great way for use to showcase our support for young people and the city of Gothenburg.
The acquisition is also in-line with our ambition to develop and offer solutions that help customers reduce the environmental impact of their own operations.
SKF has always been at the forefront of developing new methods for calculating bearing life. GBLM is a giant leap for bearing science and will enable better choices to be made when selecting bearings for a wide variety of applications.
Through this investment we will increase our competitiveness in Asia.