SKF to Book 3 Billion-Krona Provision to Cover Possible Fine
SKF AB (SKFB), the world’s largest maker of ball bearings, said it will book a 3 billion-krona ($455 million) provision to cover a potential fine for anti-competitive behavior.
The European Commission is investigating “infringements of European competitive law by certain bearing manufacturers” and SKF believes it may be in line for a fine in 2014, the Swedish company said in a statement today. The provision will be booked in the fourth quarter, alongside an additional 250 million-kronor written down on the value of inventories at its Kaydon unit, and 100 million kronor in restructuring costs.
“We have previously advised that the likely fine will materially affect our result and cash flow and have taken our best estimate of a possible fine into the result,” Chief Executive Officer Tom Johnstone said in the statement.
The charges will add to sluggish volumes that are weighing on earnings in the fourth quarter, SKF said. Manufacturing has been “slightly lower” than planned, though sales were “broadly in line” with management expectations, it said.
SKF paid $1.25 billion for Kaydon to expand in the U.S. market for industrial shock absorbers, gas springs and vibration isolation systems.
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