AI assistant
SKF Interim / Quarterly Report 2022
2973_10-q_2022-04-26_6a8ac5bc-1214-41c2-9cd1-6e02f4cdeaf1.pdf
Interim / Quarterly Report
Open in viewerOpens in your device viewer
SKF
First-quarter report 2022
Press release 26 April
Q1 2022
- Net sales of SEK 22,942 million (19,865).
- 6.5% organic growth driven by strong sales in most regions.
- Adjusted operating profit of SEK 3,058 million (2,789).
- 13.3% (14.0%) adjusted operating margin with accelerated price realization.
- Industrial adjusted operating margin 16.5% (16.3%)
- Automotive adjusted operating margin 5.2% (8.9%)
- Net Cash flow from operations SEK -271 million (131) affected by increased inventories driven by buffer stocks, cost inflation, logistics and the Shanghai lockdown.
Financial overview
| MSEK unless otherwise stated | Q1 2022 | Q1 2021 |
|---|---|---|
| Net sales | 22,942 | 19,865 |
| Adjusted operating profit | 3,058 | 2,789 |
| Adjusted operating margin, % | 13.3 | 14.0 |
| Operating profit | 2,953 | 2,699 |
| Operating margin, % | 12.9 | 13.6 |
| Adjusted profit before taxes | 2,990 | 2,586 |
| Profit before taxes | 2,885 | 2,495 |
| Net cash flow from operating activities | -271 | 131 |
| Basic earnings per share | 4.36 | 3.91 |
| Adjusted earnings per share | 4.59 | 4.11 |
Operating margin¹)
Revenue growth²)
Net debt/Equity³)
ROCE¹)
Net zero 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 CO₂s from all SKF manufacturing and logistics units.
SKF First-quarter report 2022
Strong growth with improved industrial margin
In the first quarter, we managed to deliver strong results and growth in an external environment characterized by supply constraints and big uncertainties following the war in Ukraine and the Covid-situation in China.
Organic growth in the quarter was 6.5%, driven by strong sales in most regions. The growth in Industrial was very strong with 11%, while Automotive was down by -3%. Net sales were SEK 22,942 million (19,865). It is encouraging to see that several of the segments that we identified as high-growth areas in our strategic framework had a strong first quarter with double-digit growth. Key examples being high-speed machinery, industrial distribution, agriculture, food & beverage and automation.
The adjusted operating profit improved to SEK 3,058 million (2,789). During the first quarter we were able to successfully compensate for cost increases on raw material and components. I'm pleased with the accelerated price realization we've secured so far, but we will continue to drive price relentlessly to mitigate cost inflation.
Our Industrial business delivered a very strong result, with an improved adjusted operating margin of 16.5% (16.3%). Clearly, our competitive offerings are contributing to strong profitable growth in combination with effective measures to mitigate the cost inflation.
Also, our Automotive business performed relatively well during the quarter given the circumstances. Supply chain volatility and continued OEM production delays resulted in lower sales, reduced productivity, and a build-up of inventories. On the positive side, demand for electrical vehicles and the vehicle aftermarket remained strong. All in all, the adjusted operating margin came in at 5.2% (8.9%), which I consider to be acceptable in a volatile automotive market.
Cash flow from operations in the quarter was SEK -271 million (131), which is not satisfactory and something that we're acting on. The negative development was driven by increased inventories, supply and logistics constraints. In China, for example, we were not able to fully deliver our products to customers due to Covid lockdowns.
We see good progress when it comes to implementing our new strategic framework. During the quarter, there has been an increased demand for magnetic technology and hydrogen solutions. Within our service offering, we've announced a partnership with Amazon Web Services, aiming to take scalability of condition monitoring and data analysis to a new level.
The Russian invasion of Ukraine has a severe effect on our operations in both Ukraine and Russia. As a direct consequence,
we've concluded that it's impossible for us to continue our operations in Russia, as the basis and stability for our business does not exist. Therefore, and as previously communicated, we're planning for a rapid and controlled exit from the Russian market. As a direct consequence, a write down of SKF's financial assets totaling SEK 500 million will be made during the second quarter. In Ukraine we continue to be operational whenever possible given the prevailing circumstances, however at a lower level than normal.
Looking into the second quarter of 2022, there are continued uncertainties with supply constraints, implications from the war in Ukraine and the Covid-situation in China, which will continue to affect our operations. We anticipate organic sales to grow in Industrial, while organic sales in Automotive most likely will decline. We expect organic sales for the second quarter to be relatively unchanged compared to previous year. For the full year 2022, we expect an organic sales growth of about 4-8%, accounting for our planned exit from Russia.
In these very difficult external circumstances, I'm impressed and proud of all the hard work from SKF employees in all geographies in supporting each other, our customers and safeguarding our business.
Rickard Gustafson
President and CEO
SKF First-quarter report 2022
Financial performance
First quarter 2022
Operating profit for the first quarter was SEK 2,953 million (2,699). Operating profit included items affecting comparability of SEK -105 million (-91), mainly related to ongoing restructuring and cost reduction activities in Europe.
The adjusted operating profit for the first quarter was SEK 3,058 million (2,789). The adjusted operating profit was positively impacted by sales volumes, price and customer mix and currency effects. Operating profit was negatively impacted by cost increases, mainly related to material, logistics and energy costs.
| Adjusted operating profit bridge, MSEK | Q1 |
|---|---|
| 2021 | 2,789 |
| Currency impact | 288 |
| Organic sales & Manufacturing volumes | 1,376 |
| Cost development | -1,395 |
| 2022 | 3,058 |
- Financial income and expense, net was SEK -68 million (-204). Exchange rate fluctuations had a positive effect in the first quarter 2022, while it was negative in 2021.
- Taxes in the quarter was SEK -824 million (-646) resulting in an effective tax rate of 29% (26%).
- Net cash flow from operating activities in the first quarter was SEK -271 million (131). The difference against last year is mainly driven by working capital development related to inventory levels increasing with higher volumes, supply chain and logistic challenges.
- Net working capital in percent of annual sales was 34.3% in the first quarter compared to 30.2% in the first quarter 2021. The ratio was negatively affected by higher inventory levels and currency effects.
- Provisions for post-employment benefits net decreased by SEK -1,345 million (-1,704) driven by actuarial gains on gross obligation due to increased discount rates.
| Key figures | 31 March 2022 | 31 December 2021 | 31 March 2021 |
|---|---|---|---|
| Net working capital, % of 12 months rolling sales | 34.3 | 30.7 | 30.2 |
| ROCE for the 12-month period, %^{1)} | 15.3 | 14.9 | 13.1 |
| Net debt/equity, % | 45.0 | 38.3 | 43.2 |
| Net debt/equity, excluding post-employment benefits, % | 22.5 | 12.5 | 10.2 |
| Net debt/EBITDA | 1.2 | 1.2 | 1.6 |
1) Adjusted for items affecting comparability.
SKF First-quarter report 2022
Sales
| Net sales, change y-o-y, % | Q1 | |||
|---|---|---|---|---|
| Organic^{1)} | Structure | Currency | Total | |
| SKF Group | 6.5 | – | 9.0 | 15.5 |
| Industrial | 10.6 | – | 9.2 | 19.8 |
| Automotive | –2.7 | – | 8.4 | 5.7 |
1) Price, mix and volume
| Organic sales in local currencies, change y-o-y, % | Q1 | |||
|---|---|---|---|---|
| Europe, Middle East & Africa | The Americas | China & North-East Asia | India & South-East Asia | |
| SKF Group | 11.1 | 8.0 | –8.6 | 15.7 |
| Industrial | +++ | +++ | – | +++ |
| Automotive | ++ | +/- | --- | ++ |
| Customer industries | Q1 | |||
| --- | --- | --- | --- | --- |
| Europe, Middle East & Africa | The Americas | China & North-East Asia | India & South-East Asia | |
| Organic sales in local currencies, change y-o-y: | ||||
| Industrial distributor | +++ | +++ | +++ | +++ |
| High-speed machinery & electrical drives | +++ | +++ | +++ | +++ |
| Other | +++ | +++ | +/- | +++ |
| Renewable energy | --- | --- | --- | – |
| Heavy industries | +++ | – | +/- | +++ |
| Aerospace | +/- | --- | --- | +/- |
| Railway | + | +++ | +++ | +++ |
| Agriculture, food and beverage | +++ | +++ | +++ | --- |
| Off-highway | +++ | +/- | ++ | +++ |
| Marine | +++ | +++ | +++ | +++ |
| Material handling | +++ | +++ | --- | --- |
| Automation | +++ | +++ | --- | +++ |
| Traditional energy | -- | +++ | +++ | --- |
| Light vehicles | --- | -- | + | ++ |
| Vehicle aftermarket | +++ | ++ | +++ | + |
| Commercial vehicles | +/- | -- | --- | +++ |
Net sales by customer industry for Industrial Q1 2022
Net sales by region for Industrial Q1 2022
Net sales by customer industry for Automotive Q1 2022
Net sales by region for Automotive Q1 2022
SKF First-quarter report 2022
Segment information¹)
MSEK unless otherwise stated
| Industrial | Automotive | |||
|---|---|---|---|---|
| Q1 2022 | Q1 2021 | Q1 2022 | Q1 2021 | |
| Net sales | 16,520 | 13,788 | 6,422 | 6,077 |
| Adjusted operating profit | 2,722 | 2,250 | 336 | 540 |
| Adjusted operating margin, % | 16.5 | 16.3 | 5.2 | 8.9 |
| Operating profit | 2,632 | 2,179 | 321 | 520 |
| Operating margin, % | 15.9 | 15.8 | 5.0 | 8.6 |
¹) Previously published figures for 2021 have been restated to reflect a change in classification of customers between the segments.
Industrial
Comments on organic sales in local currencies in first quarter 2022, compared to first quarter 2021
Europe, Middle East & Africa
Overall, sales were significantly higher in the quarter. By industry, sales to most industrial segments were significantly higher. The exceptions were, railway where it was slightly higher, aerospace where it was relatively unchanged, traditional energy where it was lower and renewable energy where sales were significantly lower compared to Q1 last year.
The Americas
Sales were significantly higher in the quarter. By industry, sales to most industrial segments were significantly higher. Except for off-highway where it was relatively unchanged, heavy industries where it was slightly lower and to renewable energy and aerospace where it was significantly lower compared to Q1 last year.
China & North-East Asia
Overall, sales were slightly lower in the quarter. It was significantly higher to industrial distributors, high speed machinery & electrical drives, railway, agriculture, food and beverage as well as to marine and traditional energy. Sales were higher to off-highway, relatively unchanged to other and heavy industries. Sales to renewable energy, aerospace, material handling and automation were significantly lower compared to Q1 last year.
India & South-East Asia
Overall, sales were significantly higher in the quarter. To industrial distributors, high speed machinery & electrical drives, other, heavy industries, railway, off-highway, marine and automation it was significantly higher. To aerospace it was relatively unchanged. To renewable energy it was slightly lower while sales to agriculture, food and beverage, material handling and traditional energy were significantly lower compared to Q1 last year.
First quarter 2022
The adjusted operating profit for the first quarter was SEK 2,722 million (2,250). The adjusted operating profit was positively impacted by sales volumes, price, customer mix and currency effects. Operating profit was negatively impacted by material cost and logistics.
| Adjusted operating profit bridge, MSEK | Q1 |
|---|---|
| 2021 | 2,250 |
| Currency | 213 |
| Organic sales & Manufacturing volumes | 1,288 |
| Cost development | -1,029 |
| 2022 | 2,722 |
Automotive
Comments on organic sales in local currencies in first quarter 2022, compared to first quarter 2021
Europe, Middle East & Africa
Sales in the quarter were higher compared to Q1 last year with significantly higher sales to the vehicle aftermarket, relatively unchanged to commercial vehicles and significantly lower sales to light vehicles.
The Americas
Sales in the quarter were relatively unchanged compared to Q1 last year, with higher sales to the vehicle aftermarket and lower sales to light vehicles and commercial vehicles.
China & North-East Asia
Sales were significantly lower in the quarter compared to Q1 last year with significantly higher sales to the vehicle aftermarket, slightly higher sales to light vehicles and significantly lower sales to commercial vehicles.
India & South-East Asia
Sales in the quarter were higher compared to Q1 last year with slightly higher sales to the vehicle aftermarket, higher sales to light vehicles and significantly higher sales to commercial vehicles.
First quarter 2022
The adjusted operating profit for the first quarter was SEK 336 million (540). The adjusted operating profit was positively impacted by price, customer mix and currency effects. Operating profit was negatively impacted by sales volumes, material cost and logistics.
| Adjusted operating profit bridge, MSEK | Q1 |
|---|---|
| 2021 | 540 |
| Currency | 75 |
| Organic sales & Manufacturing volumes | 88 |
| Cost development | -366 |
| 2022 | 336 |
SKF First-quarter report 2022
Outlook and Guidance
Demand for Q2 2022 compared to Q2 2021
We expect organic sales for the second quarter to be relatively unchanged compared to previous year. However, there are significant uncertainties in the market including Covid-related lock-downs in China.
Guidance for the second quarter 2022
Currency impact on the operating profit is expected to be around SEK 200 million compared with the second quarter 2021, based on exchange rates per 31 March 2022.
Guidance 2022
- For the full year 2022, we expect an organic sales growth of about 4–8%.
- Tax level excluding effects related to divested businesses: around 26%.
- Additions to property, plant and equipment: around SEK 5 billion.
Previous outlook and guidance statement
Demand for Q1 2022 compared to Q1 2021
Looking ahead, for Q1 2022, we estimate a low single-digit organic sales growth.
Guidance 2022
- For the full year 2022, we expect an organic sales growth of about 5–10%.
Highlights
25 January 2022 – Grant from the European Commission
SKF has been awarded a EUR 1.62 million grant from the European Commission to install and operate a stand-alone processing plant for regeneration of industrial oils in Tudela, Spain. The project will use the innovative Double Separation Technology developed by SKF RecondOil to remove contaminants from used oils.
3 February 2022 – SKF presented new strategic framework
SKF has presented a new strategic framework, including a decentralized operating model, that will result in a different SKF than today. By 2030, the goal is to:
- Grow faster and double the business, at improved margins.
- Be more focused and efficient.
- Be the technical partner of choice among customers.
- Lead the development of sustainable solutions.
24 March 2022 – Annual General Meeting of AB SKF
The following Board members were re-elected: Hans Stråberg, Hock Goh, Colleen Repplier, Geert Follens, Håkan Buskhe, Susanna Schneeberger and Rickard Gustafson. Hans Stråberg was elected Chairman of the Board.
Changes to Group Management as of 15 February 2022
- Joakim Landholm was appointed Senior Vice President, Operations and Digital Transformation.
- Manish Bhatnagar was appointed President Industrial Region India and South-East Asia.
- David Johansson was appointed President Automotive.
- Erik Nelander, President Industrial Sales Europe Middle East & Africa left Group Management.
Changes to Group Management as of 29 March 2022
- Victoria van Camp, CTO and Senior Vice President, SKF Technology Development left Group Management.
- Senior Vice President, SKF Technology Development has been assumed on an interim basis by Andrew Bell, Director, Product Development & Engineering
SKF First-quarter report 2022
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, recycling industry and bearing remanufacturing. 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) 2022 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) 2022 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 net zero 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 2022
Notes
Note 1 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.
Disclosure as required by IAS 34 p. 16 A is provided in the notes to the financial statements as well as in other parts of the interim report. 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.
Note 2 Transactions with relates parties
No significant change is present for transactions with related parties in relation to disclosure provided in Annual Report 2021.
Note 3 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.
SKF's operations are affected by the ongoing conflict in Ukraine. SKF operates in both Ukraine and Russia with approximately 1,100 and 250 employees, respectively.
Sales in Ukraine amounted to less than 0.5% of SKF's total sales and sales in Russia amounted to approximately 2% of SKF's total sales in 2021. SKF's factory in Lutsk, Ukraine, accounted for a production volume of approximately 1% of SKF's total production volume in 2021. The factory in Ukraine has been producing whenever possible due to prevailing circumstances however at lower level than normal. SKF has concluded that it is impossible to continue operations in Russia and consequently the operations have been stopped.
SKF has taken measures to replace the supply of raw material from the region.
Note 4 Subsequent events
SKF has decided to cease all business and operations in Russia. The intention is to divest the business. A write-down of approximately SEK 500 million will be recognized in the second quarter.
Gothenburg, 26 April 2022
Aktiebolaget SKF (publ)
Rickard Gustafson
President and CEO
This report has not been reviewed
by AB SKF's auditors.
SKF First-quarter report 2022
Condensed consolidated income statements
| MSEK | Jan-Mar 2022 | Jan-Mar 2021 |
|---|---|---|
| Net sales | 22,942 | 19,865 |
| Cost of goods sold | -16,453 | -14,124 |
| Gross profit | 6,489 | 5,741 |
| Research and development cost | -765 | -653 |
| Selling and administrative expenses | -2,779 | -2,423 |
| Other operating income/expenses, net | 8 | 34 |
| Operating profit | 2,953 | 2,699 |
| Financial income and expense, net | -68 | -204 |
| Profit before taxes | 2,885 | 2,495 |
| Taxes | -824 | -646 |
| Net profit | 2,061 | 1,849 |
| Net profit attributable to: | ||
| Shareholders of AB SKF | 1,984 | 1,782 |
| Non-controlling interests | 77 | 67 |
| Basic earnings per share (SEK) | 4.36 | 3.91 |
Condensed consolidated statements of comprehensive income
| MSEK | Jan-Mar 2022 | Jan-Mar 2021 |
|---|---|---|
| Net profit | 2,061 | 1,849 |
| Items that will not be reclassified to the income statement: | ||
| Remeasurements (actuarial gains and losses) | 1,530 | 2,090 |
| Income taxes | -394 | -535 |
| 1,136 | 1,555 | |
| Items that may be reclassified to the income statement: | ||
| Exchange differences arising on translation of foreign operations | 819 | 1,618 |
| Assets at fair value through other comprehensive income | -23 | 11 |
| Income taxes | 1 | -20 |
| 797 | 1,609 | |
| Other comprehensive income, net of tax | 1,933 | 3,164 |
| Total comprehensive income | 3,994 | 5,013 |
| Shareholders of AB SKF | 3,900 | 4,871 |
| Non-controlling interests | 94 | 142 |
SKF First-quarter report 2022
Condensed consolidated balance sheets
| MSEK | March 2022 | December 2021 |
|---|---|---|
| Goodwill | 11,124 | 10,924 |
| Other intangible assets | 6,060 | 6,018 |
| Property, plant and equipment | 21,566 | 20,723 |
| Right of use asset leases | 2,625 | 2,661 |
| Deferred tax assets | 3,534 | 3,839 |
| Other non-current assets | 1,638 | 1,674 |
| Non-current assets | 46,547 | 45,839 |
| Inventories | 23,354 | 20,997 |
| Trade receivables^{1)} | 16,487 | 13,972 |
| Other current assets | 5,872 | 5,163 |
| Other current financial assets^{1)} | 8,991 | 13,657 |
| Current assets | 54,704 | 53,789 |
| Total assets | 101,251 | 99,628 |
| Equity attributable to shareholders of AB SKF | 44,419 | 43,645 |
| Equity attributable to non-controlling interests | 1,803 | 1,720 |
| Long-term financial liabilities^{1)} | 15,613 | 15,472 |
| Provisions for post-employment benefits | 10,440 | 11,781 |
| Provisions for deferred taxes | 1,190 | 1,040 |
| Other long-term liabilities and provisions | 1,333 | 1,445 |
| Non-current liabilities | 28,576 | 29,738 |
| Trade payables^{1)} | 10,765 | 9,881 |
| Short-term financial liabilities^{1)} | 4,024 | 3,864 |
| Other short-term liabilities and provisions | 11,664 | 10,780 |
| Current liabilities | 26,453 | 24,525 |
| Total equity and liabilities | 101,251 | 99,628 |
1) Valuation principles and classifications of the financial instruments, as described in SKF Annual report 2021, have been consistently applied throughout the reporting period. There are no major changes in fair value during the period.
Condensed consolidated statements of changes in shareholders' equity
| MSEK | Jan-Mar 2022 | Jan-Mar 2021 |
|---|---|---|
| Opening balance 1 January | 45,364 | 35,712 |
| Net profit | 2,061 | 1,848 |
| Hyperinflation adjustments | 53 | 26 |
| Components of other comprehensive income | ||
| Currency translation adjustments | 819 | 1,619 |
| Change in FV OCI assets and cash flow hedges | -23 | 11 |
| Remeasurements | 1,530 | 2,090 |
| Income taxes | -393 | -555 |
| Other | - | -19 |
| Transactions with shareholders | ||
| Non-controlling interest | - | -1 |
| Cost for Performance Share Programmes, net | 9 | -17 |
| Dividends | -3,198 | - |
| Closing balance 31 March | 46,222 | 40,714 |
SKF First-quarter report 2022
Condensed consolidated statements of cash flow
| MSEK | Jan-Mar 2022 | Jan-Mar 2021 |
|---|---|---|
| Operating activities: | ||
| Operating profit | 2,953 | 2,699 |
| Non-cash items: | ||
| Depreciation, amortization and impairment | 860 | 796 |
| Net loss/gain (-) on sales of PPE and businesses | -1 | - |
| Other non-cash items | 188 | -676 |
| Income taxes paid | -489 | -453 |
| Interest received | 1 | -3 |
| Interest paid | -65 | -63 |
| Other | -257 | -380 |
| Changes in working capital: | -3,461 | -1,789 |
| Inventories | -1,913 | -598 |
| Accounts receivable | -2,210 | -2,043 |
| Accounts payable | 711 | 466 |
| Other operating assets/liabilities | -49 | 386 |
| Net cash flow from operating activities | -271 | 131 |
| Investing activities: | ||
| Payments for intangible assets, PPE, businesses and equity securities | -1,110 | -835 |
| Sales of PPE, businesses and equity securities | 3 | 2 |
| Net cash flow used in investing activities | -1,107 | -833 |
| Net cash flow after investments before financing | -1,378 | -702 |
| Financing activities: | ||
| Proceeds from short- and long-term loans | 16 | 3,079 |
| Repayments of short- and long-term loans | -52 | -2,111 |
| Repayment leases | -180 | -183 |
| Cash dividends | -3,198 | - |
| Other financing items | - | - |
| Investments in short-term financial assets | -16 | -20 |
| Sales of short-term financial assets | 23 | 52 |
| Net cash flow used in financing activities | -3,407 | 817 |
| Net cash flow | -4,785 | 115 |
| Change in cash and cash equivalents: | ||
| Cash and cash equivalents at 1 January | 13,219 | 14,050 |
| Cash effect excl. acquired/sold business | -4,793 | 115 |
| Cash effect of acquired/sold businesses | 8 | - |
| Exchange rate effect | 20 | 290 |
| Cash and cash equivalents at 31 March | 8,454 | 14,455 |
| Change in Net debt | Closing balance 31 March 2022 | Other non-cash changes |
| --- | --- | --- |
| Loans, long- and short-term | 16,495 | 22 |
| Post-employment benefits, net | 10,367 | -1,243 |
| Lease liabilities | 2,728 | 97 |
| Financial assets, others | -349 | - |
| Cash and cash equivalents | -8,454 | - |
| Net debt | 20,787 | -1,124 |
SKF First-quarter report 2022
Condensed consolidated financial information
MSEK unless otherwise stated
| Q2/20 | Q3/20 | Q4/20 | Q1/21 | Q2/21 | Q3/21 | Q4/21 | Q1/22 | |
|---|---|---|---|---|---|---|---|---|
| Net sales | 16,599 | 18,596 | 19,572 | 19,865 | 20,735 | 20,146 | 20,986 | 22,942 |
| Cost of goods sold | -12,895 | -13,759 | -14,118 | -14,124 | -14,441 | -14,582 | -15,310 | -16,453 |
| Gross profit | 3,704 | 4,837 | 5,454 | 5,741 | 6,294 | 5,564 | 5,676 | 6,489 |
| Gross margin, % | 22.3 | 26.0 | 27.9 | 28.9 | 30.4 | 27.6 | 27.0 | 28.3 |
| Research and development cost | -652 | -553 | -660 | -653 | -683 | -648 | -766 | -765 |
| Selling and administrative expenses | -2,569 | -2,317 | -2,659 | -2,423 | -2,706 | -2,385 | -2,736 | -2,779 |
| - as % of sales | 15.5 | 12.5 | 13.6 | 12.2 | 13.1 | 11.8 | 13.0 | 12.1 |
| Other, net | 186 | -45 | 75 | 34 | -27 | 57 | 420 | 8 |
| Operating profit | 669 | 1,922 | 2,210 | 2,699 | 2,878 | 2,588 | 2,594 | 2,953 |
| Operating margin, % | 4.0 | 10.3 | 11.3 | 13.6 | 13.9 | 12.8 | 12.4 | 12.9 |
| Adjusted operating profit | 1,565 | 2,475 | 2,582 | 2,789 | 3,118 | 2,672 | 2,260 | 3,058 |
| Adjusted operating margin, % | 9.4 | 13.3 | 13.2 | 14.0 | 15.0 | 13.3 | 10.8 | 13.3 |
| Financial net | -89 | -202 | -66 | -204 | -77 | -148 | -266 | -68 |
| Profit before taxes | 580 | 1,720 | 2,144 | 2,495 | 2,801 | 2,440 | 2,328 | 2,885 |
| Profit margin before taxes, % | 3.5 | 9.2 | 11.0 | 12.6 | 13.5 | 12.1 | 11.1 | 12.6 |
| Taxes | -249 | -487 | -541 | -646 | -661 | -618 | -559 | -824 |
| Net profit | 331 | 1,233 | 1,603 | 1,849 | 2,140 | 1,822 | 1,769 | 2,061 |
| Net profit attributable to | ||||||||
| Shareholders of AB SKF | 342 | 1,179 | 1,527 | 1,782 | 2,089 | 1,756 | 1,705 | 1,984 |
| Non-controlling interests | -11 | 54 | 76 | 67 | 51 | 66 | 64 | 77 |
Reconciliation of profit before taxes for the Group
| MSEK | Q2/20 | Q3/20 | Q4/20 | Q1/21 | Q2/21 | Q3/21 | Q4/21 | Q1/22 |
|---|---|---|---|---|---|---|---|---|
| Operating profit: | ||||||||
| Industrial1) | 1,283 | 1,596 | 1,664 | 2,179 | 2,407 | 2,420 | 2,313 | 2,632 |
| Automotive1) | -614 | 326 | 546 | 520 | 470 | 169 | 281 | 321 |
| Financial net | -89 | -202 | -66 | -204 | -77 | -148 | -266 | -68 |
| Profit before taxes for the Group | 580 | 1,720 | 2,144 | 2,495 | 2,801 | 2,440 | 2,328 | 2,885 |
1) Previously published figures for 2020 and 2021 have been restated to reflect a change in classification of customers between the segments.
Number of shares
| Jan-Mar 2022 | Jan-Mar 2021 | |
|---|---|---|
| Total number of shares: | 455,351,068 | 455,351,068 |
| - whereof A shares | 29,403,933 | 31,319,602 |
| - whereof B shares | 425,947,135 | 424,031,466 |
| Weighted average number of shares in: | ||
| - basic earnings per share | 455,351,068 | 455,351,068 |
SKF First-quarter report 2022
Key figures
Definitions, see page 16
| Q2/20 | Q3/20 | Q4/20 | Q1/21 | Q2/21 | Q3/21 | Q4/21 | Q1/22 | |
|---|---|---|---|---|---|---|---|---|
| EBITDA, MSEK | 1,543 | 2,734 | 3,059 | 3,494 | 3,852 | 3,239 | 3,479 | 3,814 |
| EBITA, MSEK | 822 | 2,069 | 2,369 | 2,841 | 3,024 | 2,733 | 2,742 | 3,104 |
| Adjusted operating profit | 1,565 | 2,475 | 2,582 | 2,789 | 3,118 | 2,672 | 2,260 | 3,058 |
| Adjusted operating margin, % | 9.4 | 13.3 | 13.2 | 14.0 | 15.0 | 13.3 | 10.8 | 13.3 |
| Basic earnings per share, SEK | 0.75 | 2.59 | 3.36 | 3.91 | 4.59 | 3.86 | 3.74 | 4.36 |
| Adjusted earnings per share, SEK | 2.72 | 3.80 | 4.17 | 4.11 | 5.11 | 4.04 | 3.01 | 4.59 |
| Dividend per share, SEK | 3.00 | - | - | - | 6.50 | - | - | 7.00 |
| Net worth per share, SEK | 76 | 77 | 75 | 86 | 83 | 89 | 96 | 98 |
| Share price at the end of the period, SEK | 173.2 | 185.7 | 213.4 | 248.2 | 217.9 | 207.6 | 214.5 | 153.9 |
| NWC, % of 12 months rolling sales | 30.0 | 28.7 | 26.1 | 30.2 | 30.7 | 30.5 | 30.7 | 34.3 |
| ROCE for the 12-month period, % | 9.8 | 9.3 | 9.8 | 10.5 | 13.6 | 14.5 | 14.8 | 15.1 |
| ROE for the 12-month period, % | 10.9 | 10.6 | 12.1 | 13.7 | 18.4 | 19.3 | 18.8 | 18.3 |
| Gearing, % | 49.7 | 50.2 | 48.0 | 44.4 | 44.7 | 43.1 | 40.5 | 39.0 |
| Equity/assets ratio, % | 38.7 | 38.1 | 39.4 | 42.4 | 41.6 | 43.2 | 45.5 | 45.7 |
| Additions to property, plant and equipment, MSEK | 670 | 796 | 949 | 819 | 895 | 969 | 1,138 | 1,023 |
| Net debt/equity, % | 62.5 | 59.8 | 51.7 | 43.2 | 50.1 | 44.0 | 38.3 | 45.0 |
| Net debt, MSEK | 22,866 | 21,868 | 18,460 | 17,576 | 19,809 | 18,541 | 17,360 | 20,787 |
| Net debt/EBITDA | 2.1 | 2.1 | 1.8 | 1.6 | 1.5 | 1.4 | 1.2 | 1.4 |
| Registered number of employees | 41,835 | 41,174 | 40,963 | 41,151 | 41,433 | 42,139 | 42,602 | 42,763 |
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 | Q2/20 | Q3/20 | Q4/20 | Q1/21 | Q2/21 | Q3/21 | Q4/21 | Q1/22 |
|---|---|---|---|---|---|---|---|---|
| Net sales | 13,080 | 12,979 | 13,489 | 13,788 | 14,889 | 14,747 | 15,135 | 16,520 |
| Adjusted operating profit | 1,833 | 2,046 | 1,964 | 2,250 | 2,676 | 2,465 | 2,044 | 2,722 |
| Adjusted operating margin, % | 14.0 | 15.8 | 14.6 | 16.3 | 18.0 | 16.7 | 13.5 | 16.5 |
| Operating profit | 1,283 | 1,596 | 1,664 | 2,179 | 2,407 | 2,420 | 2,313 | 2,632 |
| Operating margin, % | 9.8 | 12.3 | 12.3 | 15.8 | 16.2 | 16.4 | 15.3 | 15.9 |
| Assets and liabilities, net | 49,696 | 47,594 | 40,560 | 42,389 | 42,620 | 42,170 | 43,176 | 46,883 |
| Registered number of employees | 33,916 | 33,400 | 33,157 | 33,446 | 33,572 | 34,283 | 34,702 | 34,898 |
| Automotive | Q2/20 | Q3/20 | Q4/20 | Q1/21 | Q2/21 | Q3/21 | Q4/21 | Q1/22 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Net sales | 3,519 | 5,617 | 6,083 | 6,077 | 5,846 | 5,399 | 5,851 | 6,422 |
| Adjusted operating profit | -268 | 429 | 618 | 540 | 441 | 207 | 216 | 336 |
| Adjusted operating margin, % | -7.6 | 7.6 | 10.2 | 8.9 | 7.5 | 3.8 | 3.7 | 5.2 |
| Operating profit | -614 | 326 | 546 | 520 | 470 | 169 | 281 | 321 |
| Operating margin, % | -17.4 | 5.8 | 9.0 | 8.6 | 8.0 | 3.1 | 4.8 | 5.0 |
| Assets and liabilities, net | 11,488 | 9,881 | 9,535 | 10,798 | 11,125 | 11,191 | 10,992 | 12,718 |
| Registered number of employees | 6,499 | 6,362 | 6,351 | 6,292 | 6,416 | 6,391 | 6,421 | 6,409 |
1) Previously published figures for 2020 and 2021 have been restated to reflect a change in classification of customers between the segments.
SKF First-quarter report 2022
Parent Company condensed income statements
| MSEK | Jan-Mar 2022 | Jan-Mar 2021 |
|---|---|---|
| Revenue | 1,903 | 1,532 |
| Cost of goods sold | -1,514 | -1,215 |
| General management and administrative expenses | -389 | -360 |
| Other operating income/expenses, net | 15 | 1 |
| Operating result | 15 | -42 |
| Financial income and expense, net | 7 | -5 |
| Profit before taxes | 22 | -47 |
| Appropriations | - | - |
| Taxes | -27 | 12 |
| Net profit | -5 | -35 |
Parent Company condensed statements of comprehensive income
| MSEK | Jan-Mar 2022 | Jan-Mar 2021 |
|---|---|---|
| Net profit | -5 | -35 |
| Items that may be reclassified to the income statement: | ||
| Assets at fair value through other comprehensive income | -23 | 11 |
| Other comprehensive income, net of tax | -23 | 11 |
| Total comprehensive income | -28 | -24 |
Parent Company condensed balance sheets
| MSEK | March 2022 | December 2021 |
|---|---|---|
| Intangible assets | 1,336 | 1,371 |
| Investments in subsidiaries | 22,074 | 22,074 |
| Receivables from subsidiaries | 13,136 | 13,022 |
| Other non-current assets | 906 | 891 |
| Non-current assets | 37,452 | 37,358 |
| Receivables from subsidiaries | 6,358 | 6,958 |
| Other receivables | 357 | 273 |
| Current assets | 6,715 | 7,231 |
| Total assets | 44,167 | 44,589 |
| Shareholders' equity | 22,449 | 25,683 |
| Provisions | 575 | 445 |
| Non-current liabilities | 13,137 | 13,023 |
| Current liabilities | 8,006 | 5,438 |
| Total shareholders' equity, provisions and liabilities | 44,167 | 44,589 |
SKF First-quarter report 2022
Alternative performance measures and definitions
Adjusted operating profit
Operating profit excluding items affecting comparability.
Adjusted operating margin
Operating profit margin excluding items affecting comparability.
Adjusted earnings/loss per share in SEK
Basic earnings per share excluding items affecting comparability.
Basic earnings/loss per share in SEK (as defined by IFRS)
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.
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.
For reconciliations of other Key Ratios, see investors.skf.com/en.
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 2022
SKF Headquarters, Gökaholm, in Gothenburg, Sweden.
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 2021: SEK 81,732 million
42,602 employees
15 technical centers
87 manufacturing sites
More than 17,000 distributors
AB SKF (publ)
Postal address: SE-415 50 Gothenburg, Sweden
Visiting address: Sven Wingquists Gata 2
tel. +46 31 337 10 00
www.skf.com
Company reg.no. 556007-3495
For further information, please contact:
INVESTOR RELATIONS: Patrik Stenberg, Director,
SKF Group Investor Relations and Mergers & Acquisitions
tel: 46 31 337 2104 mobile: 46 705 472 104
e-mail: [email protected]
PRESS: Carl Bjernstam, Corporate Communication
tel: 46 31 337 2517 mobile: 46 722 201 893
e-mail: [email protected]
Webcast
26 April at 09:00 (CEST), 08.00 (UK)
https://investors.skf.com/en
Sweden +46 10 884 80 16
UK / International +44 203 936 2999
Passcode: 410557
Calendar 2022
20 July, Q2 report
25 October, Q3 report
2 February 2023, Q4 report
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 26 April 2022 at 08.00 CEST.
SKF is a registered trademark of the SKF Group. © SKF Group 2022 - 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 2022.