FX.co ★ SKF Q1 Results Down, Adj. Margin Rises; Sees Weak Organic Sales In Q2, Backs FY24 View

Swedish manufacturing company SKF, known for producing bearings, seals, lubrication systems, and various services, recently revealed a decline in its first-quarter pre-tax earnings, falling to 2.72 billion Swedish kronor from the previous year's 2.94 billion. Each share's fundamental income also reduced from 4.55 kronor to 4.15.

When adjusted, the pre-tax earnings were slightly less than the previous year's 3.04 billion at 3.03 billion kronor. However, the adjusted earnings for each share increased to 4.83 kronor, 0.6% higher than the previous year.

The company's adjusted operating profit witnessed a slight dip, falling to 3.30 billion kronor from the previous year's 3.48 billion. Despite this, the operating margin saw an adjustment improvement from 13.1% to 13.4%.

During the challenging economic period, net sales saw a reduction from the previous year's 26.55 billion kronor to 24.70 billion. The variation in customer demand was soft across the organisation's sectors as anticipated.

There was an organically driven growth in southeast Asia and India, gaining by 1%, owing to strong performances in heavy industries and light vehicles. However, Middle East, Africa, and European organic sales fell by 5%, mainly driven by widespread negative growth across most industries, except the railway and aerospace sectors, which contributed positively.

Looking forward, SKF predicts a mid single-digit drop in organic sales for the second quarter compared to the previous year. For fiscal 2024, the company anticipates a low single-digit organic sales reduction compared to 2023.

Rickard Gustafson, President and CEO, stated that given the continued market fluctuations and geopolitical unpredictability, the business is prepared to manage varying scenarios.