SKF Q1 2021: Strong organic growth and operating profit, while managing cost and currency headwinds
As the Board announced in January, Rickard Gustafson will be joining as President and CEO at the latest by 1 July. Alrik Danielson’s last working day with SKF will be 30 April. The Board has appointed Niclas Rosenlew as Interim CEO in addition to his current role as CFO.
Gothenburg, 22 April 2021:
Alrik Danielson, President and CEO:
“During the first quarter we saw strong sales and demand growth. We also experienced significant headwinds in terms of cost inflation and currency impact, affecting our operating result by SEK 1.3 billion. Despite this, we delivered a very solid adjusted operating result of SEK 2,789 million (SEK 2,572 million), representing an adjusted operating margin of 14% (12.8%).
Organic sales development in the quarter was 8.6%, with net sales of SEK 19,865 million (SEK 20,085 million). Sales were significantly higher in Latin America and Asia and relatively unchanged in Europe and North America.
We are already implementing measures across both Industrial and Automotive to compensate for rising input costs.
The Industrial business delivered strong results, with an adjusted operating margin of 16.3% (15.5%).
The Automotive business continues to perform well, with an adjusted operating margin of 8.9% (6.0%).
The first quarter is historically lower in terms of cash flow generation. The sharp increase in demand in the quarter also contributed to increased working capital. As a result, cash flow was SEK -702 million (SEK 1,930 million).
From this quarter, we will be reporting on our sustainability-related targets as an integrated part of our quarterly report. One of SKF’s strengths is our ability to support the development of industries that enable a shift towards a low-carbon world. Our investments in industries such as renewable energy, electric vehicles and railway is paying off, with sales to these industries growing from SEK 4 billion to 7 billion in the last two years.
We are also making progress on our ambitions to reduce CO2 emissions from our own operations.
We continue to capitalize on new ways of working and digitalizing throughout the organization. The sharp increase in demand in the quarter has necessitated an increase of around 200 temporary workers, predominantly in our factories. Permanent staff numbers were unchanged.
Demand has increased gradually since the trough in the second quarter of 2020. Net sales is expected to continue to grow, reaching pre-COVID levels in the second quarter of 2021: i.e. in line with levels reported in the second quarter of 2019.
After close to seven years as CEO, this will be my last quarterly report. To all colleagues, customers and stakeholders: thank you for your support during these years, making all we have done possible.”
| Key figures, SEKm | Q1 2021 | Q1 2020 |
| Net sales | 19,865 | 20,085 |
| Adjusted operating profit | 2,789 | 2,572 |
| Adusted operating margin, % | 14.0 | 12.8 |
| Operating profit | 2,699 | 2,268 |
| Operating margin, % | 13.6 | 11.3 |
| Adjusted profit before taxes | 2,586 | 1,856 |
| Profit before taxes | 2,495 | 2,160 |
| Net cash flow after investments before financing | -702 | 1,930 |
| Adjusted earnings per share | 4.11 | 3.41 |
| Basic earnings per share | 3.91 | 2.75 |
|
Net sales change y-o-y, % |
Organic* | Structure | Currency | Total |
| SKF Group | 8.6 | 0.0 | -9.7 | -1.1 |
| Industrial | 5.4 | 0.0 | -9.4 | -4.0 |
| Automotive | 16.7 | 0.0 | -10.5 | 6.2 |
*Price, mix and volume
|
Organic sales in local currencies, change, % |
EMEA | North America | Latin America | Asia |
| SKF Group | 1.7 | -0.4 | 17.7 | 26.2 |
| Industrial | +/- | +/- | +++ | +++ |
| Automotive | ++ | - | +++ |
+++ |
Outlook and guidance
Demand for Q2 2021 compared to Q2 2020
Demand has improved gradually since the trough in the second quarter of 2020. Net sales is expected to continue to grow, reaching pre-COVID levels in the second quarter of 2021, i.e. in line with levels reported in the second quarter of 2019.
Guidance Q2 2021
Currency impact on the operating profit is expected to be around SEK -400 million compared with Q2 2020, based on exchange rates per 31 March 2021.
Guidance 2021
-
Tax level excluding effect related to divested businesses: around 28%.
- Additions to property, plant and equipment: around SEK 3,600 million.
Niclas Rosenlew appointed Interim CEO
As the Board announced in January, Rickard Gustafson will be joining as President and CEO at the latest by 1 July. Alrik Danielson’s last working day with SKF will be 30 April. The Board has appointed Niclas Rosenlew as Interim CEO in addition to his current role as CFO.
A teleconference will be held on 22 April 2021 at 10:00 (CET):
Conference ID: 895705
International: +44 (0) 207 3936 2999
Sweden: +46 (0)10 884 8016
Website: https://investors.skf.com/en
Aktiebolaget SKF
(publ)
The financial 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 22 April 2021 at 08:45.
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
Patrik Stenberg, 46 31-337 2104; 46 705-472 104; patrik.stenberg@skf.com
SKF’s mission is to be the undisputed leader in the bearing business. We do this by offering solutions that reduce friction and CO2 emissions, whilst at the same time increasing machine uptime and performance. Our products and services around the rotating shaft include bearings, seals, lubrication management, artificial intelligence and wireless condition monitoring. SKF is represented in more than 130 countries and has around 17,000 distributor locations worldwide. Annual sales in 2020 were SEK 74 852 million and the number of employees was 40,963. www.skf.com
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