SKF Year-end Report for 1999

Press release SKF Year-end Report for 1999 SKF's profit improved continually during the year. The operating margin for 1999 amounted to 6.9% (-2.7) and for the fourth quarter to 9.2% (- 17.0). Excluding non-recurring items, the margin was 5.8% for the full year and 7.3% for the fourth quarter. The improvement in the margin was attributable mainly to internal restructuring, cost reductions, improved efficiency, better prices and the elimination of losses. Towards the end of 1999, market demand improved, and the upturn is expected to become more significant this year. The production level was increased during the fourth quarter and further increases are planned for this year. * Profit for 1999 after financial income and expense was MSEK 1 769 (- 2 063). Profit for the fourth quarter was MSEK 693 (-1 816). * The operating profit for the year amounted to MSEK 2 520 (-999). The figure for the fourth quarter was MSEK 851 (-1 601). The figure for the whole year was positively affected by non-recurring earnings of MSEK 388. The fourth quarter had non-recurring earnings of MSEK 175, as mainly excess restructuring provisions were released. The operating result for 1998 was affected by restructuring provisions of MSEK 3 025. * Net sales in 1999 amounted to MSEK 36 693 (37 688), a decrease of 2.6% compared with the 1998 figure. Net sales for the fourth quarter were MSEK 9 300 (9 442). * The decrease in net sales was attributable to volume -5.0%, price/mix +0.5%, and currency effects +2.0%. * The Group's cash flow after investments before financing amounted to MSEK 2 271 (-964). * The net profit amounted to MSEK 1 111 (-1 642) and earnings per share to SEK 9.76 (-14.40). * The Board proposes that a dividend of SEK 4.00 (2.00) per share be paid for the 1999 financial year. The Group's financial net for 1999 was MSEK -751 (-1 064). The improvement was due mainly to a lower net debt as loans had been reduced. Interest- bearing loans at year-end totalled MSEK 5 976 (8 179), while pension liabilities amounted to MSEK 6 478 (7 139). At year-end, the Group had financial assets of MSEK 2 894 (3 237), including short-term financial assets of MSEK 1 976 (2 353). Group solvency at year-end 1999 was 33.8% (29.0). SKF's additions to tangible assets totalled MSEK 1 230 (2 148). Of the Group's total additions to tangible assets, approximately MSEK 98 (149) was invested in measures to improve the environment both internally and externally. Investments in research and development, directly related to product and process development, totalled MSEK 756 (702), corresponding to 2.1% (1.9) of annual sales. The average number of employees was 40 747 (44 958) and the registered number of employees was 40 637 (45 436). The implementation of the cost-reduction programme and the restructuring programme during the year led to a gradual rise in the Group's profitability. The two programmes together reduced the number of employees by approximately 7 000, which is some 1 000 more than was announced in 1998. The loss-making businesses were mainly eliminated through divestment. The Group's sales in Western Europe were weak during the major part of the year. Low levels of investment in the capital goods industry, destocking in the aftermarkets and low manufacturing growth led to a drop in the demand for SKF's products. Towards the end of the year, however, market demand started to improve. In North America, with the exception of the automotive industry, the market demand was slow throughout the year. Sales in the Asia-Pacific region developed positively throughout the year. Sales grew continuously at a good pace and the recovery was particularly strong in South-East Asia. Thanks to the manufacturing base that SKF developed in this area from 1995 to 1997, the Group is in an excellent position today to benefit from the healthier economic situation in the region. Sales in Latin America, Central and Eastern Europe as well as Africa and the Middle East were weak during the year, a reflection of the economic development in these regions. Improvements were seen in Latin America and Central and Eastern Europe during the second half of the year. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/2000/01/26/20000126BIT00520/bit0001.doc http://www.bit.se/bitonline/2000/01/26/20000126BIT00520/bit0002.pdf