SKF First-Quarter Profit Drops on Lower Europe, Asia Demand
SKF AB (SKFB), the world’s biggest maker of bearings, reported a decline in first-quarter net income on weakened demand outside of Latin America.
Net income declined to 793 million kronor ($124 million) from 1.28 billion kronor a year earlier, Gothenburg-based SKF said today in a statement. That fell short of the 914 million krona average of seven analyst estimates compiled by Bloomberg. Sales declined to 15.2 billion kronor versus an estimate of 15.7 billion kronor.
SKF predicted a slow start to the year with gradual improvement in the Americas and Asia, Chief Executive Officer Tom Johnstone said in the Annual Report released March 12. The company is considered a barometer for the health of global industrial orders as its products are used by customers in construction, automotive and aviation manufacturing.
“There is continued uncertainty and cautiousness in the market place and this impacted our sales more than expected especially in our industrial businesses and in North America,” SKF said in the report. “Going forward, it is not easy to give a demand outlook due to all the mixed signals in the economy.”
SKF forecast demand to be “relatively unchanged” in the current quarter compared with the first quarter for the group as a whole and for Europe, Asia and North America. Latin America may see an increase in demand, SKF said. Manufacturing is also seen “relatively unchanged” compared with the first quarter.
“I feel that as we go through the quarter we will start to see a slowly improving business,” Johnstone said.
The company booked a 250 million-kronor cost in the quarter related to a program that involves cutting 2,500 jobs and moving production from Western Europe to faster-growing countries. The program targets annual cost cuts of 3 billion kronor by the end of 2015. SKF said Jan. 30 it will book the remaining 1.3 billion kronor cost for the program this year.
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