"Review of the third quarter
During the third quarter, we delivered strong organic sales growth of 11%, a clear indication that we are relevant for our customers. Our business in
We continue to leverage our pricing power and have been successful in increasing prices and pruning our portfolio to further strengthen our business and market position. These efforts have resulted in another quarter with a growing, positive price/mix contribution of
Within Industrial, organic growth was 8%, driven by industrial distribution, heavy industries and agriculture. The adjusted operating margin was 11%, impacted mainly by material and energy costs, not entirely offset by a positive price/mix contribution. Our leading position in our most significant and profitable business area continues to support our growth ambitions. For example, we have recently extended our full-service agreement with a leading renewable packaging producer in
In Automotive, demand rebounded strongly from last year with an organic growth of 18%, driven by light vehicles. The adjusted operating margin was 3%, mainly driven by material and energy inflation, which was not fully offset by a positive price/mix. Our ceramic bearing offer to the EV industry continues to strengthen, with significant new OEM contracts signed in both
Net cash flow from operations was
Delivering on our strategic transformation
In line with our strategy to drive profitable growth, we have initiated a group wide program to increase flexibility and reduce fixed costs across the Group, especially in
Among the key ongoing actions are the implementation of a simplified operational and sales organization in EMEA, reshaping of support functions, including pruning our IT portfolio and bringing forward the final steps of our finance transformation program. We are increasing the pace of development within Connected Technology by focusing more on external partnerships. Consultancy and indirect expenditure is being reduced across the Group. In addition, we are increasing our targeted efforts to further improve pricing, reduce inventories, drive procurement and logistics.
We continue to invest in our regional manufacturing capabilities and in making our factories more efficient. We are also continuing to consolidate our footprint. As a result, the factories in Avon,
Outlook
Looking into the fourth quarter of 2022 we expect organic sales growth of about 10% and, as a result, we expect organic growth for the full year to end in the upper part of our previously guided range of about 4-8%.
We expect to see continued volatility and geopolitical uncertainty in the markets and as a result, we expect continued high levels of cost inflation, supply chain bottlenecks and volatile demand."
Key figures, MSEK unless otherwise stated | Q3 2022 | Q3 2021 | Jan- | Jan- |
Net sales | 24,975 | 20,146 | 71,572 | 60,746 |
Adjusted operating profit | 2,131 | 2,672 | 7,662 | 8,578 |
Adjusted operating margin, % | 8.5 | 13.3 | 10.7 | 14.1 |
Operating profit | 1,929 | 2,588 | 6,463 | 8,165 |
Operating margin, % | 7.7 | 12.8 | 9.0 | 13.4 |
Adjusted profit before taxes | 1,820 | 2,524 | 6,799 | 8,150 |
Profit before taxes | 1,618 | 2,440 | 5,600 | 7,736 |
Net cash flow from operating activities | 1,268 | 2,514 | 2,290 | 4,017 |
Basic earnings per share | 2.41 | 3.86 | 7.85 | 12.36 |
Adjusted earnings per share | 2.86 | 4.04 | 10.49 | 13.27 |
Net sales, change y-o-y, %, Q3 | Organic1) | Structure | Currency | Total |
11.0 | -2.0 | 15.0 | 24.0 | |
Industrial | 8.3 | -2.0 | 14.0 | 20.3 |
Automotive | 18.4 | -2.2 | 17.8 | 34.1 |
1) Price, mix and volume
Net sales, change y-o-y, %, Jan- | Organic1) | Structure | ,Currency | Total |
7.6 | -1.3 | 11.5 | 17.8 | |
Industrial | 8.4 | -1.3 | 11.3 | 18.4 |
Automotive | 5.7 | -1.3 | 12.2 | 16.6 |
1) Price, mix and volume
Organic sales in local currencies, change y-o-y, %, Q3 | The | |||
9.9 | 12.9 | 5.8 | 23.6 | |
Industrial | +++ | +++ | + | +++ |
Automotive | +++ | +++ | +++ | +++ |
Organic sales in local currencies, change y-o-y, %, Jan- | The | |||
8.7 | 10.0 | -3.6 | 24.3 | |
Industrial | +++ | +++ | +/- | +++ |
Automotive | ++ | +++ | --- | +++ |
Outlook and guidance
Demand for Q4 2022 compared to Q4 2021
For the fourth quarter of 2022 we expect an organic sales growth of about 10%.
Guidance for Q4 2022
Currency impact on the operating profit is expected to be around
Guidance 2022
- For the full year we expect organic growth to end in the upper part of our previously guided range of about 4-8%.
- Tax level excluding effects related to divested businesses: around 28%.
-
Additions to property, plant and equipment: around
SEK 5 billion .
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