SKF nine-months report 2000

SKF nine-months report 2000 Further margin improvement The operating margin for the SKF Group for the first nine months of 2000 amounted to 9.3 % (6.1), and for the third quarter to 9.4% (7.9). Excluding capital gains, the operating margin was 9.0% (5.3), and 9.4% (6.3) respectively. Market demand continued to increase in Europe during the third quarter 2000. Demand in North America and in Asia has weakened. The SKF Group's sales are expected to remain on a high level during the final quarter of the year as well. SKF has now started to prepare, however, for a period of weaker market demand. * The SKF Group doubled its profit before tax for the first nine months of the year to MSEK 2 241 (1 076). Profit before tax for the third quarter was MSEK 732 (458). Excluding capital gains of MSEK 133 in the third quarter of 1999, this represents an increase of 125%. * Operating profit for the first nine months of 2000 amounted to MSEK 2 733(1 669). The figure for the third quarter was MSEK 891 (666). * Cash flow after investments before financing amounted to MSEK 1 792 (1 802). Cash flow for the third quarter was MSEK 706 (971). * Net sales amounted to MSEK 29 389 (27 393), an increase of 7.3% compared with the figure for the corresponding period in 1999. Net sales for the third quarter amounted to MSEK 9 495 (8 473), an increase of 12.1% * The increase in net sales was attributable to: structure -0.6% volume +5.6%, price/mix +1.5% and currency effect +0.8%. * Net profit amounted to MSEK 1 430 (695) and earnings per share after tax to SEK 12.56 (6.10). Net profit for the third quarter was MSEK 506 (320). * During the third quarter, SKF posted non-recurring gains of MSEK 367, made up of the MSEK 250 bonus allocated to SKF by the Swedish insurance company, SPP, and the profit from the sale of several small properties. A provision of MSEK 367, with the purpose of writing down assets in the Steel Division, was posted in the third quarter. The Group's financial net for the first nine months of 2000 was MSEK -492 (-593). Additions to tangible assets totalled MSEK 925 (877). At the end of September, the Group's inventories amounted to 23.5% (23.7) of annual sales. Group solvency was 35.6% (31.7). Return on capital employed for the 12-month period ended September 30 was 15.8% (1.2). Return on equity was 15.7% (-4.7). The average number of employees was 39 519 (41 362) and the registered number of employees was 40 512 (40 864). Divisions The result by Divisions is based on SKF management reporting. The Industrial Division's external sales for the first nine months amounted to MSEK 6 350 (6 073), an increase of 4.6%. Total sales (sales and deliveries to external and internal customers) were MSEK 10 663. The Division's operating result for the first nine months was MSEK 1 200 with an operating margin of 11.3%. Sales in Europe continued to strengthen during the third quarter of 2000. In North America, however, demand weakened. During the third quarter, a new bogie-monitoring system for railway cars, developed by SKF and the Swiss company, Sécheron, was introduced. The aim of the system is to improve train safety while decreasing the cost of maintenance. The first deliveries of TBUs (tapered bearing units), including axlebox housings for ore-freight cars, were made during the quarter. The contract is with Transwerk in South Africa. Transwerk is the company that manufactures the cars for LKAB in Sweden. The deliveries are part of a new contract for 668 ore-freight cars, including options. During the quarter, SKF also acquired all the outstanding shares in Revolve Magnetic Bearings Inc. in Canada. The company is a leader in the development, application and production of magnetic bearing systems in the industrial rotating equipment market. The Automotive Division's external sales for the first nine months amounted to MSEK 6 623 (6 373), an increase of 3.9%. Total sales were MSEK 7 370. The Division's operating result for the first nine months was MSEK 311 with an operating margin of 4.2%. In Europe, sales to the car segment started to slow down during the quarter. Sales to the truck business continued at record high levels. Sales to the car segment in North America were strong during the first six months of the year, but are now on the decline. Sales to the truck segment continued to fall owing to the low demand for heavy trucks. The Electrical Division's external sales for the first nine months amounted to MSEK 1 179 (1 125), an increase of 4.8%. Total sales were MSEK 4 629. The Division's operating result for the first nine months was MSEK 352 with an operating margin of 7.6%. Sales continued to develop positively in most markets for the two-wheeler segment. The demand was particularly strong in the Asia-Pacific area. Sales to manufacturers of electric motors and to electrical components weakened somewhat during the quarter. The Service Division's external sales for the first nine months amounted to MSEK 9 377 (8 327), an increase of 12.6%. Total sales were MSEK 10 068. The Division's operating result for the first nine months was MSEK 745 with an operating margin of 7.4%. Sales in North America continued to grow during the third quarter. Sales also developed well in Africa, the Middle East and in Central and Eastern Europe. Sales in Western Europe begun to flatten out during the quarter. In the Asia-Pacific area demand slowed down. During the period under review, a wireless sensor system for monitoring vibrations in rotating equipment in the process and manufacturing industries was launched. New maintenance contracts were also signed. In Brazil, the Votorantim Group, a leading industrial group in paper, cement and metallurgy, signed two contracts that included SKF condition monitoring hardware and software for data collection, monitoring and control. Another leading Brazilian company, Companhia Vale do Rio Doce, decided to outsource its predictive maintenance at one of its terminals, the contract for which was gained by SKF. The value of the three contracts is close on MSEK 50. The Seals Division's external sales for the first nine months amounted to MSEK 3 124 (2 837), an increase of 10.1%. Total sales were MSEK 3 570. The Division's operating result for the first nine months was MSEK 128 with an operating margin of 3.6%. The Division's large exposure to both the North American market and the automotive segment in this region had a negative impact on the Division's profit for the third quarter. The Steel Division's external sales for the first nine months amounted to MSEK 1 354 (1 179), an increase of 14.8%. Total sales were MSEK 3 350. The Division's operating result for the first nine months was MSEK 151 with an operating margin of 4.5%. The market demand for steel and forging products continued to be good during the third quarter as well. Ovako Steel's steel production was substantially reduced during the third quarter owing to technical problems with the power supply. The problem was solved and steel production is now at record high levels. endorsia.com endorsia.com - SKF's market place for industrial components is now operating in 20 countries. Implementation has accelerated, and there is at present a register of 353 distributors. Some 1 200 users are connected. Göteborg, October 19, 2000 Aktiebolaget SKF (publ.) Sune Carlsson President Enclosures: Consolidated financial information Consolidated balance sheets Consolidated statements of cash flow Consolidated financial information - yearly and quarterly comparisons (Group and Divisions) This report has not been audited by the Company's auditors. SKF's report on the full year of 2000 will be published on Monday, Jauary 29, 2001. Further information can be obtained from: Lars G Malmer, Group Communication, tel +46-705-371541, e-mail: lars.g.malmer@skf.com Marita Björk, Investor Relations, tel +46-705-181994, e-mail: marita.bjork@skf.com Aktiebolaget SKF, SE-415 50 Göteborg, Sweden telephone +46-31-3371000, fax +46-31-3372832, www.skf.com ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/10/19/20001019BIT00310/bit0001.doc The full report http://www.bit.se/bitonline/2000/10/19/20001019BIT00310/bit0002.pdf The full report