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SKF Interim / Quarterly Report 2021
2973_10-q_2021-04-22_ce444934-ff55-430d-b62f-cfdad8a1b985.pdf
Interim / Quarterly Report
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EKF®
First-quarter report 2021
Press release 22 April
Strong organic growth and operating profit, while managing cost and currency headwinds
During the first quarter we saw strong sales and demand growth. We also experienced significant headwinds in terms of cost inflation and currency impact, affecting our operating result by SEK 1.3 billion. Despite this, we delivered a very solid adjusted operating result of SEK 2,789 million (SEK 2,572 million), representing an adjusted operating margin of 14% (12.8%).
Organic sales development in the quarter was 8.6%, with net sales of SEK 19,865 million (SEK 20,085 million). Sales were significantly higher in Latin America and Asia and relatively unchanged in Europe and North America.
We are already implementing measures across both Industrial and Automotive to compensate for rising input costs.
The Industrial business delivered strong results, with an adjusted operating margin of 16.3% (15.5%). The Automotive business continues to perform well, with an adjusted operating margin of 8.9% (6.0%).
The first quarter is historically lower in terms of cash flow generation. The sharp increase in demand in the quarter also contributed to increased working capital. As a result, cash flow was SEK -702 million (SEK 1,930 million).
From this quarter, we will be reporting on our sustainability-related targets as an integrated part of our quarterly report. One of SKF's strengths is our ability to support the development of industries that enable a shift towards a low-carbon world. Our investments in industries such as renewable energy, electric vehicles and railway is paying off, with sales to these industries growing from SEK 4 billion to 7 billion in the last two years. We are also making progress on our ambitions to reduce CO2 emissions from our own operations.
We continue to capitalize on new ways of working and digitalizing throughout the organization. The sharp increase in demand in the quarter has necessitated an increase of around 200 temporary workers, predominantly in our factories. Permanent staff numbers were unchanged.
Demand has increased gradually since the trough in the second quarter of 2020.
Net sales is expected to continue to grow, reaching pre-COVID levels in the second quarter of 2021: i.e. in line with levels reported in the second quarter of 2019.
After close to seven years as CEO, this will be my last quarterly report. To all colleagues, customers and stakeholders: thank you for your support during these years, making all we have done possible.
Alrik Danielson
President and CEO
As the Board announced in January, Rickard Gustafson will be joining as President and CEO at the latest by 1 July. Alrik Danielson's last working day with SKF will be 30 April. The Board has appointed Niclas Rosenlew as Interim CEO in addition to his current role as Chief Financial Officer.
Operating margin¹)
Revenue growth²)
Net debt/Equity³)
ROCE¹)
Carbon Neutral by 2030⁴)
SKF's long-term targets shall be achieved over a business cycle
1) Adjusted for items affecting comparability.
2) Including acquisitions, adjusted for divestments.
3) Excluding pension liabilities.
4) Scope 1 & 2 CO₂e from all SKF manufacturing and logistics units.
Cover picture:
Production of a spherical roller bearing at SKF world-class manufacturing site in Gothenburg.
SKF First-quarter report 2021
Key figures
| MSEK unless otherwise stated | Q1 2021 | Q1 2020 |
|---|---|---|
| Net sales | 19,865 | 20,085 |
| Adjusted operating profit | 2,789 | 2,572 |
| Adjusted operating margin, % | 14.0 | 12.8 |
| Operating profit | 2,699 | 2,268 |
| Operating margin, % | 13.6 | 11.3 |
| Adjusted profit before taxes | 2,586 | 1,856 |
| Profit before taxes | 2,495 | 2,160 |
| Net cash flow after investments before financing | -702 | 1,930 |
| Adjusted earnings per share | 4.11 | 3.41 |
| Basic earnings per share | 3.91 | 2.75 |
Financial performance
First quarter 2021
Operating profit for the first quarter was SEK 2,699 million (2,268). Operating profit included items affecting comparability of SEK -91 million (-304) whereof SEK -91 million (-93) related to ongoing restructuring and cost reduction activities and SEK 0 million (-202) related to customer settlements. The adjusted operating profit for the first quarter was SEK 2,789 million (2,572). The adjusted operating profit was positively impacted by sales and manufacturing volumes, sales price and cost reductions. It was negatively impacted by currency effects, material cost and logistic costs.
| Adjusted operating profit bridge, MSEK | Q1 |
|---|---|
| 2020 | 2,572 |
| Currency impact | -761 |
| Organic sales & Manufacturing volumes | 780 |
| Cost development | 198 |
| 2021 | 2,789 |
- Financial income and expense, net in the first quarter was SEK -204 million (-412) where last year was negatively affected by exchange rate differences.
- Taxes in the quarter was SEK -646 million (-549) resulting in an effective tax rate of 25.9% (29.6%).
- Net cash flow after investment before financing in the first quarter was SEK -702 million (1,930). The decrease compared to last year is mainly explained by higher working capital driven by higher volumes.
- Net working capital in percent of annual sales was 30.2% in the first quarter compared to 29.5% in the first quarter 2020. The increase is mainly related to higher accounts receivable driven by increased volumes partly offset by higher accounts payable.
- Provisions for post-employment benefits net decreased by SEK -1,704 million (+1,521) in the first quarter mainly due to actuarial gains on the gross obligation driven by higher discount rates.
| Key figures | 31 March 2021 | 31 December 2020 | 31 March 2020 |
|---|---|---|---|
| Net working capital, % of 12 months rolling sales | 30.2 | 26.1 | 29.5 |
| ROCE for the 12-month period, %^{1)} | 13.1 | 12.7 | 13.8 |
| Net debt/equity, % | 43.2 | 51.7 | 57.6 |
| Net debt/equity, excluding post-employment benefits, % | 10.2 | 9.3 | 15.2 |
| Net debt/EBITDA | 1.6 | 1.8 | 1.8 |
1) Adjusted for items affecting comparability.
SKF First-quarter report 2021 3
Sales
| Net sales, change y-o-y, % | Organic^{1)} | Structure | Currency | Total |
|---|---|---|---|---|
| SKF Group | 8.6 | 0.0 | -9.7 | -1.1 |
| Industrial | 5.4 | 0.0 | -9.4 | -4.0 |
| Automotive | 16.7 | 0.0 | -10.5 | 6.2 |
1) Price, mix and volume
| Organic sales in local currencies, change y-o-y, % | Q1 | |||
|---|---|---|---|---|
| Europe, Middle East and Africa | North America | Latin America | Asia-Pacific | |
| SKF Group | 1.7 | -0.4 | 17.7 | 26.2 |
| Industrial | +/- | +/- | +++ | +++ |
| Automotive | ++ | - | +++ | +++ |
| Customer industries | Q1 | |||
| --- | --- | --- | --- | --- |
| Europe, Middle East and Africa | North America | Latin America | Asia-Pacific | |
| Organic sales in local currencies, change y-o-y: | ||||
| Light vehicles | + | - | ++ | +++ |
| Trucks | +++ | ++ | +++ | +++ |
| Vehicle aftermarket | +++ | -- | +++ | +++ |
| Aerospace | --- | --- | +++ | |
| Industrial drives | +/- | - | +++ | +++ |
| Energy | +/- | --- | +++ | +++ |
| Heavy industries | ++ | --- | +/- | +/- |
| Off-highway | ++ | +++ | +++ | +++ |
| Railway | +/- | +/- | --- | |
| Agriculture, food and beverage | +/- | +++ | ||
| Marine | --- | +++ | --- | |
| Electrical | +++ | +++ | ||
| Other industrial | -- | -- | --- | +++ |
| Industrial distribution | +++ | +++ | +++ | +++ |
Comments on organic sales in local currencies in Q1 2021, compared to Q1 2020
Europe, Middle East and Africa
Industrial: Overall, sales were relatively unchanged in the quarter. By industry, sales to industrial distribution were significantly higher, sales to heavy industries and to off-highway were higher while sales to the energy, railway, industrial drives and to the agriculture, food & beverage industries were relatively unchanged. Sales to the aerospace and marine industries were significantly lower compared to Q1 2020.
Automotive: Sales in the quarter were higher compared to last year with significantly higher sales to trucks and to the vehicle aftermarket. Sales to light vehicles were slightly higher compared to Q1 2020.
North America
Industrial: Sales were relatively unchanged in the quarter compared to Q1 2020. Sales to industrial distribution, marine and off-highway were significantly higher. Sales to railway were relatively unchanged, sales to industrial drives were slightly lower while sales to all other industries were significantly lower.
Automotive: Sales in the quarter were slightly lower compared to last year with higher sales to trucks, slightly lower sales to light vehicles and lower sales to the vehicle aftermarket.
Asia-Pacific
Industrial: Sales were significantly higher in the quarter. Sales were significantly higher to all industrial segments with the exception of heavy industries which saw relatively unchanged sales and the marine and railway industries where sales were significantly lower compared to Q1 2020.
Automotive: Sales were significantly higher in the quarter. Sales were significantly higher to trucks, light vehicles as well as to the vehicle aftermarket compared to Q1 2020.
Latin America
Industrial: Overall, sales were significantly higher in the quarter. By industry, sales to energy, off-highway, industrial drives and to industrial distribution were all significantly higher. Sales to heavy industries were relatively unchanged compared to Q1 2020.
Automotive: Sales in the quarter were significantly higher compared to last year with significantly higher sales to trucks and to the vehicle aftermarket. Sales to light vehicles were higher compared to Q1 2020.
SKF First-quarter report 2021
Segment information¹)
MSEK unless otherwise stated
| Industrial | Q1 2021 | Q1 2020 |
|---|---|---|
| Net sales | 13,788 | 14,364 |
| Adjusted operating profit | 2,247 | 2,230 |
| Adjusted operating margin, % | 16.3 | 15.5 |
| Operating profit | 2,177 | 2,151 |
| Operating margin, % | 15.8 | 15.0 |
| Automotive | Q1 2021 | Q1 2020 |
| --- | --- | --- |
| Net sales | 6,077 | 5,721 |
| Adjusted operating profit | 542 | 342 |
| Adjusted operating margin, % | 8.9 | 6.0 |
| Operating profit | 522 | 117 |
| Operating margin, % | 8.6 | 2.0 |
¹) Previously published figures for 2020 have been restated to reflect a change in classification of customers between the segments.
Net sales by customer industry for Industrial Q1 2021
Net sales by customer industry for Automotive Q1 2021
Net sales by region for Industrial Q1 2021
Net sales by region for Automotive Q1 2021
SKF First-quarter report 2021 5
6 SKF First-quarter report 2021
Outlook and Guidance
Demand for Q2 2021 compared to Q2 2020
Demand has improved gradually since the trough in the second quarter of 2020. Net sales is expected to continue to grow, reaching pre-COVID levels in the second quarter of 2021, i.e. in line with levels reported in the second quarter of 2019.
Guidance Q2 2021
Currency impact on the operating profit is expected to be around SEK -400 million compared with Q2 2020, based on exchange rates per 31 March 2021.
Guidance 2021
- Tax level excluding effects related to divested businesses: around 28%.
- Additions to property, plant and equipment: around SEK 3,600 million.
Highlights
Investing in Airasca, Italy
SKF is investing SEK 400 million in expanding and modernizing its manufacturing facility in Airasca, Italy. The investment will bring the manufacturing of super-precision bearings (SuPBs) for industrial applications into the Group's largest manufacturing site in Italy and enables the consolidation of the Group's existing manufacturing sites in Northern Italy. The factory in Pianezza, currently manufacturing SuPBs, will be consolidated into Airasca. The factory in Villar Perosa will continue to focus on bearings for the railway and aerospace industries while the production of SuPBs will be transferred to Airasca.
Annual General Meeting of AB SKF
Rickard Gustafson was newly elected as Board member. The following Board members were re-elected: Hans Stråberg, Hock Goh, Barb Samardzich, Colleen Repplier, Geert Follens, Håkan Buskhe and Susanna Schneeberger. Hans Stråberg was elected Chairman of the Board of Directors.
Previous outlook statement
Demand for Q1 2021 compared to Q1 2020
We expect to see mid-single digit growth in organic sales in the first quarter of 2021 compared to the first quarter of 2020.
The industries and regions in which SKF operates are still impacted by the effects related to the spread of COVID-19.
Sustainability performance
SKF has been publicly reporting on sustainability performance for many years in the Group's annual report, on skf.com and in various other forums. Reflecting the increasing operational and strategic importance of these issues, the Group is now including certain related KPI's also in the quarterly report. It is anticipated that the scope and depth of this reporting will increase over time.
Cleantech revenues
Cleantech revenues are the aggregated sales to acknowledged cleantech sectors such as renewable energy, electric vehicles, railway, and recycling. The growth of these sectors has far outstripped the organic growth of SKF as a whole – indicating the successful execution of SKF's cleantech strategy.
1) Previously published figures for 2020 have been restated to reflect a change in classification
2) 2021 figures relate to the latest 12 months period.
Accident rate
The Accident rate measures the number of recordable accidents per 100 employees per year. There has been a considerable reduction in the accident rate over the past 5 years.
1) 2021 figures relate to the latest 12 months period.
CO₂ emissions, Equivalent energy
CO₂ emissions¹ for SKF's operations (Scope 1 and 2 according to the Greenhouse Gas protocol) and total energy use for the same scope are presented in the graph. SKF continues to make good progress towards the Group's goal to be Carbon Neutral for these aspects by 2030.
1) Due to external reporting constraints, this data is presented for the end of the previous quarter.
SKF First-quarter report 2021 7
Accounting principles
The consolidated financial statements of the SKF Group were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. The interim report was prepared in accordance with IAS 34 Interim Financial Reporting. The financial statements of the Parent company were prepared in accordance with the "Annual Accounts Act" and the RFR 2 "Accounting for legal entities". SKF Group and the Parent company
applied the same accounting principles and methods of computation in the interim financial statements as compared with the latest annual report. IASB issued several amended accounting standards that were endorsed by EU, effective date 1 January 2021. None of these have a material effect on the SKF Group's financial statements.
Risks and uncertainties in the business
The SKF Group operates in many different industrial and geographical areas that are at different stages of the economic cycle. A general economic downturn at global level, for example caused by a pandemic, or in one of the world's leading economies, could reduce the demand for the Group's products, solutions and services for a period of time. In addition, terrorism and other hostilities, as well as disturbances in worldwide financial markets and natural disasters, could have a negative effect on the demand for the Group's products and services. There are also political and regulatory risks associated with the wide geographical presence.
Regulatory requirements, taxes, tariffs and other trade barriers, price or exchange controls or other governmental policies could limit the SKF Group's operations. The SKF Group is subject to both transaction and translation of currency exposure.
For commercial flows the SKF Group is primarily exposed to the EUR, USD and CNY. As the major part of the profit is made outside Sweden, the Group is also exposed to translational risks in all the major currencies. The financial position of the parent company is dependent on the financial position and development of the subsidiaries. A general decline in the demand for the products and services provided by the Group could mean lower residual profits and lower dividend income for the parent company, as well as a need for writing down values of the shares in the subsidiaries.
SKF is subject to an investigation in Brazil by the General Superintendent of the Administrative Council for Economic Defense, regarding an alleged violation of antitrust rules by several companies active on the automotive aftermarket in Brazil.
Gothenburg, 22 April 2021
Aktiebolaget SKF (publ)
Alrik Danielson
President and CEO
This report has not been reviewed by AB SKF's auditors.
SKF First-quarter report 2021
Condensed consolidated income statements
| MSEK | Jan-Mar 2021 | Jan-Mar 2020 |
|---|---|---|
| Net sales | 19,865 | 20,085 |
| Cost of goods sold | -14,124 | -14,575 |
| Gross profit | 5,741 | 5,510 |
| Research and development cost | -653 | -651 |
| Selling and administrative expenses | -2,423 | -2,708 |
| Other operating income/expenses, net | 34 | 117 |
| Operating profit | 2,699 | 2,268 |
| Financial income and expense, net | -204 | -412 |
| Profit before taxes | 2,495 | 1,856 |
| Taxes | -646 | -549 |
| Net profit | 1,849 | 1,307 |
| Net profit attributable to: | ||
| Shareholders of the parent | 1,782 | 1,250 |
| Non-controlling interests | 67 | 57 |
| Basic earnings per share (SEK) | 3.91 | 2.75 |
| Diluted earnings per share (SEK) | 3.91 | 2.74 |
Condensed consolidated statements of comprehensive income
| MSEK | Jan-Mar 2021 | Jan-Mar 2020 |
|---|---|---|
| Net profit | 1,849 | 1,307 |
| Items that will not be reclassified to the income statement: | ||
| Remeasurements (actuarial gains and losses) | 2,090 | -742 |
| Income taxes | -535 | 125 |
| 1,555 | -617 | |
| Items that may be reclassified to the income statement: | ||
| Exchange differences arising on translation of foreign operations | 1,618 | 1,706 |
| Assets at fair value through other comprehensive income | 11 | -30 |
| Income taxes | -20 | 15 |
| 1,609 | 1,691 | |
| Other comprehensive income, net of tax | 3,164 | 1,074 |
| Total comprehensive income | 5,013 | 2,381 |
| Shareholders of AB SKF | 4,871 | 2,273 |
| Non-controlling interests | 142 | 108 |
SKF First-quarter report 2021
Condensed consolidated balance sheets
| MSEK | March 2021 | December 2020 |
|---|---|---|
| Goodwill | 10,611 | 10,117 |
| Other intangible assets | 6,256 | 6,125 |
| Property, plant and equipment | 19,105 | 18,161 |
| Right of use asset leases | 2,577 | 2,517 |
| Deferred tax assets | 4,372 | 4,800 |
| Other non-current assets | 1,784 | 1,939 |
| Non-current assets | 44,705 | 43,659 |
| Inventories | 16,939 | 15,733 |
| Trade receivables | 14,793 | 12,286 |
| Other current assets | 4,537 | 4,242 |
| Other current financial assets | 15,023 | 14,637 |
| Current assets | 51,292 | 46,898 |
| Total assets | 95,997 | 90,557 |
| Equity attributable to shareholders of AB SKF | 39,169 | 34,309 |
| Equity attributable to non-controlling interests | 1,545 | 1,403 |
| Long-term financial liabilities | 18,366 | 15,089 |
| Provisions for post-employment benefits | 13,465 | 15,170 |
| Provisions for deferred taxes | 926 | 792 |
| Other long-term liabilities and provisions | 1,585 | 2,150 |
| Non-current liabilities | 34,342 | 33,201 |
| Trade payables | 9,190 | 8,459 |
| Short-term financial liabilities | 824 | 3,260 |
| Other short-term liabilities and provisions | 10,927 | 9,925 |
| Current liabilities | 20,941 | 21,644 |
| Total equity and liabilities | 95,997 | 90,557 |
Condensed consolidated statements of changes in shareholders' equity
| MSEK | Jan-Mar 2021 | Jan-Mar 2020 |
|---|---|---|
| Opening balance 1 January | 35,712 | 37,366 |
| Total comprehensive income | 5,013 | 2,381 |
| Cost for performance share programmes, net | -17 | -36 |
| Transactions with non-controlling interests, other | -1 | - |
| Other | 7 | 13 |
| Total cash dividends | - | -1 |
| Closing balance | 40,714 | 39,723 |
SKF First-quarter report 2021
Condensed consolidated statements of cash flow
| MSEK | Jan-Mar 2021 | Jan-Mar 2020 |
|---|---|---|
| Operating activities: | ||
| Operating profit | 2,699 | 2,268 |
| Non-cash items: | ||
| Depreciation, amortization and impairment | 796 | 866 |
| Net loss/gain (-) on sales of PPE and businesses | – | –47 |
| Other non-cash items | –676 | 347 |
| Income taxes paid | –453 | –310 |
| Other | –446 | 188 |
| Changes in working capital: | –1,789 | –539 |
| Inventories | –598 | –544 |
| Accounts receivable | –2,043 | –291 |
| Accounts payable | 466 | 635 |
| Other operating assets/liabilities | 386 | –339 |
| Net cash flow from operations | 131 | 2,773 |
| Investing activities: | ||
| Payments for intangible assets, PPE, businesses and equity securities | –835 | –926 |
| Sales of PPE, businesses and equity securities | 2 | 83 |
| Net cash flow used in investing activities | –833 | –843 |
| Net cash flow after investments before financing | –702 | 1,930 |
| Financing activities: | ||
| Proceeds from short- and long-term loans | 3,079 | 174 |
| Repayments of short- and long-term loans | –2,111 | –250 |
| Repayment leases | –183 | –212 |
| Cash dividends | – | –1 |
| Investments in short-term financial assets | –20 | –259 |
| Sales of short-term financial assets | 52 | 3,788 |
| Net cash flow used in financing activities | 817 | 3,240 |
| Net cash flow | 115 | 5,170 |
| Change in cash and cash equivalents: | ||
| Cash and cash equivalents at 1 January | 14,050 | 6,430 |
| Cash effect excl. acquired/sold business | 115 | 5,170 |
| Cash effect of acquired/sold businesses | – | – |
| Exchange rate effect | 290 | –178 |
| Cash and cash equivalents at 31 March | 14,455 | 11,422 |
| Change in Net debt | Closing balance 31 March 2021 | Other non cash changes |
| --- | --- | --- |
| Loans, long- and short-term | 16,391 | -66 |
| Post-employment benefits, net | 13,433 | -1,872 |
| Lease liabilities | 2,644 | 139 |
| Financial assets, others | -437 | – |
| Cash and cash equivalents | -14,455 | – |
| Net debt | 17,576 | -1,799 |
Number of shares
| Jan-Mar 2021 | Jan-Mar 2020 | |
|---|---|---|
| Total number of shares: | 455,351,068 | 455,351,068 |
| - whereof A shares | 31,319,602 | 32,397,042 |
| - whereof B shares | 424,031,466 | 422,954,026 |
| Weighted average number of shares in: | ||
| - basic earnings per share | 455,351,068 | 455,351,068 |
| - diluted earnings per share | 455,440,172 | 455,585,942 |
SKF First-quarter report 2021
Condensed consolidated financial information
MSEK unless otherwise stated
| Q2/19 | Q3/19 | Q4/19 | Q1/20 | Q2/20 | Q3/20 | Q4/20 | Q1/21 | |
|---|---|---|---|---|---|---|---|---|
| Net sales | 22,488 | 21,039 | 21,208 | 20,085 | 16,599 | 18,596 | 19,572 | 19,865 |
| Cost of goods sold | -16,150 | -15,330 | -15,717 | -14,575 | -12,895 | -13,759 | -14,118 | -14,124 |
| Gross profit | 6,338 | 5,709 | 5,491 | 5,510 | 3,704 | 4,837 | 5,454 | 5,741 |
| Gross margin, % | 28.2 | 27.1 | 25.9 | 27.4 | 22.3 | 26.0 | 27.9 | 28.9 |
| Research and development cost | -691 | -642 | -684 | -651 | -652 | -553 | -660 | -653 |
| Selling and administrative expenses | -3,103 | -2,918 | -2,993 | -2,708 | -2,569 | -2,317 | -2,659 | -2,423 |
| - as % of sales | 13.8 | 13.9 | 14.1 | 13.5 | 15.5 | 12.5 | 13.6 | 12.2 |
| Other, net | -5 | 139 | 96 | 117 | 186 | -45 | 75 | 34 |
| Operating profit | 2,539 | 2,288 | 1,910 | 2,268 | 669 | 1,922 | 2,210 | 2,699 |
| Operating margin, % | 11.3 | 10.9 | 9.0 | 11.3 | 4.0 | 10.3 | 11.3 | 13.6 |
| Adjusted operating profit | 2,856 | 2,380 | 2,181 | 2,572 | 1,565 | 2,475 | 2,582 | 2,789 |
| Adjusted operating margin, % | 12.7 | 11.3 | 10.3 | 12.8 | 9.4 | 13.3 | 13.2 | 14.0 |
| Financial net | -278 | -244 | -188 | -412 | -89 | -202 | -66 | -204 |
| Profit before taxes | 2,261 | 2,044 | 1,722 | 1,856 | 580 | 1,720 | 2,144 | 2,495 |
| Profit margin before taxes, % | 10.1 | 9.7 | 8.1 | 9.2 | 3.5 | 9.2 | 11.0 | 12.6 |
| Taxes | -682 | -693 | -641 | -549 | -249 | -487 | -541 | -646 |
| Net profit | 1,579 | 1,351 | 1,081 | 1,307 | 331 | 1,233 | 1,603 | 1,849 |
| Net profit attributable to | ||||||||
| Shareholders of the parent company | 1,511 | 1,293 | 1,035 | 1,250 | 342 | 1,179 | 1,527 | 1,782 |
| Non-controlling interests | 68 | 58 | 46 | 57 | -11 | 54 | 76 | 67 |
Reconciliation of profit before taxes for the Group
| MSEK | Q2/19 | Q3/19 | Q4/19 | Q1/20 | Q2/20 | Q3/20 | Q4/20 | Q1/21 |
|---|---|---|---|---|---|---|---|---|
| Operating profit: | ||||||||
| Industrial1) | 2,227 | 2,172 | 1,879 | 2,151 | 1,282 | 1,595 | 1,663 | 2,177 |
| Automotive1) | 312 | 116 | 31 | 117 | -613 | 327 | 547 | 522 |
| Financial net | -278 | -244 | -188 | -412 | -89 | -202 | -66 | -204 |
| Profit before taxes for the Group | 2,261 | 2,044 | 1,722 | 1,856 | 580 | 1,720 | 2,144 | 2,495 |
1) Previously published figures for 2019 and 2020 have been restated to reflect a change in classification of customers between the segments.
SKF First-quarter report 2021
Key figures
Definitions, see page 15
| Q2/19 | Q3/19 | Q4/19 | Q1/20 | Q2/20 | Q3/20 | Q4/20 | Q1/21 | |
|---|---|---|---|---|---|---|---|---|
| EBITDA, MSEK | 3,425 | 3,134 | 2,840 | 3,134 | 1,543 | 2,734 | 3,059 | 3,494 |
| EBITA, MSEK | 2,691 | 2,443 | 2,063 | 2,421 | 822 | 2,069 | 2,369 | 2,841 |
| Adjusted operating profit | 2,856 | 2,380 | 2,181 | 2,572 | 1,565 | 2,475 | 2,582 | 2,789 |
| Adjusted operating margin, % | 12.7 | 11.3 | 10.3 | 12.8 | 9.4 | 13.3 | 13.2 | 14.0 |
| Basic earnings per share, SEK | 3.32 | 2.84 | 2.27 | 2.75 | 0.75 | 2.59 | 3.36 | 3.91 |
| Adjusted earnings per share, SEK | 4.02 | 3.04 | 2.86 | 3.41 | 2.72 | 3.80 | 4.17 | 4.11 |
| Diluted earnings per share, SEK | 3.32 | 2.84 | 2.27 | 2.74 | 0.75 | 2.59 | 3.35 | 3.91 |
| Dividend per share, SEK | 6.00 | - | - | - | 3.00 | - | - | - |
| Net worth per share, SEK | 74 | 76 | 78 | 83 | 76 | 77 | 75 | 86 |
| Share price at the end of the period, SEK | 170.8 | 162.7 | 189.4 | 136.7 | 173.2 | 185.7 | 213.4 | 248.2 |
| NWC, % of 12 months rolling sales | 30.1 | 29.9 | 27.7 | 29.5 | 30.0 | 28.7 | 26.1 | 30.2 |
| ROCE for the 12-month period, % | 16.0 | 15.0 | 13.2 | 12.5 | 9.8 | 9.3 | 9.8 | 10.5 |
| ROE for the 12-month period, % | 20.1 | 18.9 | 15.7 | 14.3 | 10.9 | 10.6 | 12.1 | 13.7 |
| Gearing, % | 49.3 | 48.9 | 47.1 | 47.4 | 49.7 | 50.2 | 48.0 | 44.4 |
| Equity/assets ratio, % | 37.6 | 37.8 | 39.7 | 39.4 | 38.7 | 38.1 | 39.4 | 42.4 |
| Additions to property, plant and equipment, MSEK | 684 | 967 | 1,154 | 917 | 670 | 796 | 949 | 819 |
| Net debt/equity, % | 67.6 | 67.0 | 59.3 | 57.6 | 62.5 | 59.8 | 51.7 | 43.2 |
| Net debt, MSEK | 24,103 | 24,548 | 22,176 | 22,877 | 22,866 | 21,868 | 18,460 | 17,576 |
| Net debt/EBITDA | 1.8 | 1.8 | 1.7 | 1.8 | 2.1 | 2.1 | 1.8 | 1.6 |
| Registered number of employees | 43,700 | 43,687 | 43,360 | 43,134 | 41,835 | 41,174 | 40,963 | 41,151 |
SKF applies the guidelines issued by ESMA (European Securities and Markets Authority) on APMs (Alternative Performance Measures). These key figures are not defined or specified in IFRS but provide complementary information to investors and other stakeholders on the company's performance. The definition of each APM is presented at the end of the interim report. For the reconciliation of each APM against the most reconcilable line item in the financial statements, see investors.skf.com/en.
Segment information – quarterly figures
MSEK unless otherwise stated
| Industrial | Q2/19 | Q3/19 | Q4/19 | Q1/20 | Q2/20 | Q3/20 | Q4/20 | Q1/21 |
|---|---|---|---|---|---|---|---|---|
| Net sales | 15,909 | 14,971 | 15,232 | 14,364 | 13,080 | 12,979 | 13,489 | 13,788 |
| Adjusted operating profit | 2,499 | 2,078 | 2,022 | 2,230 | 1,832 | 2,045 | 1,963 | 2,247 |
| Adjusted operating margin, % | 15.7 | 13.9 | 13.3 | 15.5 | 14.0 | 15.8 | 14.6 | 16.3 |
| Operating profit | 2,227 | 2,172 | 1,879 | 2,151 | 1,282 | 1,595 | 1,663 | 2,177 |
| Operating margin, % | 14.0 | 14.5 | 12.3 | 15.0 | 9.8 | 12.3 | 12.3 | 15.8 |
| Assets and liabilities, net | 42,864 | 43,717 | 42,949 | 45,898 | 43,384 | 41,713 | 38,508 | 41,472 |
| Registered number of employees | 35,951 | 36,067 | 35,839 | 35,478 | 33,916 | 33,400 | 33,157 | 33,446 |
| Automotive | Q2/19 | Q3/19 | Q4/19 | Q1/20 | Q2/20 | Q3/20 | Q4/20 | Q1/21 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Net sales | 6,579 | 6,068 | 5,976 | 5,721 | 3,519 | 5,617 | 6,083 | 6,077 |
| Adjusted operating profit | 357 | 303 | 159 | 342 | -267 | 430 | 619 | 542 |
| Adjusted operating margin, % | 5.4 | 5.0 | 2.7 | 6.0 | -7.6 | 7.7 | 10.2 | 8.9 |
| Operating profit | 312 | 116 | 31 | 117 | -613 | 327 | 547 | 522 |
| Operating margin, % | 4.7 | 1.9 | 0.5 | 2.0 | -17.4 | 5.8 | 9.0 | 8.6 |
| Assets and liabilities, net | 12,738 | 12,915 | 11,954 | 11,909 | 11,184 | 10,313 | 9,358 | 10,645 |
| Registered number of employees | 7,106 | 6,958 | 6,850 | 6,741 | 6,499 | 6,362 | 6,351 | 6,292 |
1) Previously published figures for 2019 and 2020 have been restated to reflect a change in classification of customers between the segments.
SKF First-quarter report 2021
Parent company condensed income statements
| MSEK | Jan-Mar 2021 | Jan-Mar 2020 |
|---|---|---|
| Revenue | 1,532 | 1,200 |
| Cost of goods sold | -1,215 | -1,224 |
| General management and administrative expenses | -360 | -332 |
| Other operating income/expenses, net | 1 | -9 |
| Operating result | -42 | -365 |
| Financial income and expense, net | -5 | -17 |
| Profit before taxes | -47 | -382 |
| Taxes | 12 | 74 |
| Net profit | -35 | -308 |
Parent company condensed statements of comprehensive income
| MSEK | Jan-Mar 2021 | Jan-Mar 2020 |
|---|---|---|
| Net profit | -35 | -308 |
| Items that may be reclassified to the income statement: | ||
| Assets at fair value through other comprehensive income | 11 | -30 |
| Other comprehensive income, net of tax | 11 | -30 |
| Total comprehensive income | -24 | -338 |
Parent company condensed balance sheets
| MSEK | March 2021 | December 2020 |
|---|---|---|
| Intangible assets | 1,479 | 1,528 |
| Investments in subsidiaries | 22,496 | 22,496 |
| Receivables from subsidiaries | 15,998 | 12,750 |
| Other non-current assets | 1,022 | 970 |
| Non-current assets | 40,995 | 37,744 |
| Receivables from subsidiaries | 2,395 | 5,971 |
| Other receivables | 3,096 | 163 |
| Current assets | 5,491 | 6,134 |
| Total assets | 46,486 | 43,878 |
| Shareholders' equity | 25,709 | 25,801 |
| Provisions | 468 | 468 |
| Non-current liabilities | 15,998 | 12,750 |
| Current liabilities | 4,311 | 4,859 |
| Total shareholders' equity, provisions and liabilities | 46,486 | 43,878 |
SKF First-quarter report 2021
Definitions
Adjusted operating profit
Operating profit excluding items affecting comparability.
Adjusted operating margin
Operating profit margin excluding items affecting comparability.
Basic earnings/loss per share in SEK
Profit/loss after taxes less non-controlling interests divided by the ordinary number of shares.
Currency impact on operating profit
The effects of both translation and transaction flows based on current assumptions and exchange rates compared to the corresponding period last year.
Debt
Loans and net provisions for post-employment benefits.
Diluted earnings per share
Diluted earnings per share is calculated using the weighted average number of shares outstanding during the period adjusted for all potential dilutive ordinary shares.
EBITA
(Earnings before interest, taxes and amortization). Operating profit before amortizations.
EBITDA
(Earnings before interest, taxes, depreciation and amortization)
Operating profit before depreciations, amortizations, and impairments.
Equity/assets ratio
Equity as a percentage of total assets.
Gearing
Debt as a percentage of the sum of debt and equity.
Items affecting comparability
Significant income/expenses that affect comparability between accounting periods. This includes, but is not limited to, restructuring costs, impairments and write-offs, currency exchange rate effects caused by devaluations and gains and losses on divestments of businesses.
Net debt
Debt less short-term financial assets excluding derivatives.
Net debt/EBITDA
Net debt, as a percentage of twelve months rolling EBITDA.
Net debt/equity
Net debt, as a percentage of equity.
Net worth per share (Equity per share)
Equity excluding non-controlling interests divided by the ordinary number of shares.
Net working capital as % of 12 month rolling sales (NWC)
Trade receivables plus inventory minus trade payables as a percentage of twelve months rolling net sales.
Operating margin
Operating profit/loss, as a percentage of net sales.
Operational performance
Operational performance includes the effects on operating profit related to changes in organic sales, changes in manufacturing volumes and manufacturing costs and changes in selling and administrative expenses.
Revenue growth
Sales excluding effects of currency and divested businesses.
Registered number of employees
Total number of employees included in SKF's payroll at the end of the period.
Return on capital employed (ROCE)
Operating profit/loss plus interest income, as a percentage of twelve months rolling average of total assets less the average of non-interest bearing liabilities.
Return on equity (ROE)
Profit/loss after taxes as a percentage of twelve months rolling average of equity.
SKF demand outlook
The demand outlook for SKF's products and services represents management's best estimate based on current information about the future demand from our customers. The demand outlook is the expected volume development in the markets where our customers operate.
Cautionary statement
This report contains forward-looking statements that are based on the current expectations of the management of SKF. Although management believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those implied in the forward-looking statements as a result of, among other factors, changes in economic, market and competitive conditions, changes in the regulatory environment and other government actions, fluctuations in exchange rates and other factors mentioned in SKF's latest annual report (available on investors.skf.com/en), including under the Administration Report; "Risk management" and in this report under "Risks and uncertainties in the business."
SKF First-quarter report 2021 15
This is SKF
SKF is a leading global supplier of bearings, seals, lubrication systems and services, which include technical support, maintenance and reliability services, engineering consulting and training.
Quick facts
Founded 1907
Represented in more than 130 countries
Net sales in 2020: SEK 74,852 million
40,963 employees
15 technical centers
91 manufacturing sites
More than 17,000 distributors
AB SKF (publ)
Postal address: SE-415 26 Gothenburg, Sweden
Visiting address: Sven Wingquists Gata 2
tel. +46 31 337 10 00
www.skf.com
Company reg.no. 556007-3495
Vision
SKF works to reduce friction, make things run faster, longer, cleaner and more safely. Doing this in the most effective, productive and sustainable way contributes to the vision
– A world of reliable rotation.
Mission
To be the undisputed leader in the bearing business.
Strategic focus areas
Based on SKF's vision and mission, the company focuses on six strategic areas:
1. Digital sales
2. New business models
3. Innovation
4. World-class manufacturing
5. Future workforce
6. Cleantech
For further information, please contact:
INVESTOR RELATIONS: Patrik Stenberg, Director, SKF Group Investor Relations and Mergers & Acquisitions
tel: 46 31-337 2104; 46 705-472 104
e-mail: [email protected]
PRESS: Theo Kjellberg, Director, SKF Group Communication
tel: 46 31 337 6576, mobile: 46 725-776576
e-mail: [email protected]
Webcast
22 April at 10:00 (CEST), 09.00 (UK)
https://investors.skf.com/en
Sweden +46 10 884 8016
UK / International +44 20 3936 2999
Passcode: 895705
Calendar
20 July, Q2 report 2021
26 October, Q3 report 2021
The financial information in this press release is information which AB SKF is required to disclose under the EU Market Abuse Regulation (EU) No 596/2014. The information was provided by the above contact persons for publication on 22 April 2021 at 08.45 CEST.
© SKF is a registered trademark of the SKF Group. - © SKF Group 2021 - The contents of this publication are the copyright of the publisher and may not be reproduced (even extracts) unless prior written permission is granted. Every care has been taken to ensure the accuracy of the information contained in this publication but no liability can be accepted for any loss or damage whether direct, indirect or consequential arising out of the use of the information contained herein. - April 2021