SKF Profit Beats Estimates as It Trims Production to Meet Demand
SKF AB (SKFB), the world’s largest maker of bearings, reported fourth-quarter profit that beat analysts’ estimates and said it sees relatively unchanged demand in the current period compared with the end of last year.
Net income fell to 983 million kronor ($154.6 million) from 1.17 billion kronor a year earlier, the company said in a statement today. Analysts had expected profit of 800 million kronor, according to the average of 13 estimates compiled by Bloomberg. Sales declined 7.8 percent to 15 billion kronor after the company reduced manufacturing to offset weaker demand in Europe, the Middle East, Asia and Africa. Analysts had forecast sales of 15.1 billion kronor.
SKF said Jan. 14 the company will cut about 2,500 jobs and move production from western Europe to faster-growing countries in eastern Europe, Asia and Latin America to help save 3 billion kronor. Gothenburg, Sweden-based SKF is considered a barometer for the health of global industrial orders because its products are used by customers in construction and automotive and aviation manufacturing. The company said it plans to run its manufacturing broadly in line with sales in the current quarter.
“The overall macro environment is difficult to read with still a lot of uncertainty,” Chief Executive Officer Tom Johnstone said in the statement. “However, at this point we expect demand in the first quarter for the group to continue at the same level as the fourth quarter but still lower year over year.”
SKF’s shares gained 1.1 percent in Stockholm trading as of 1:22 p.m., giving the company a market value of 75.7 billion kronor.
The cost cuts announced earlier this month are an expansion of an October 2010 program when SKF set new financial targets, including an ambition to reach an operating margin of 15 percent. Fourth-quarter results include restructuring costs of 200 million kronor and 100 million kronor in impairments and writedowns of assets.
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