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SKF Interim / Quarterly Report 2023
2973_10-q_2023-04-27_0c8bf107-91dc-4810-aa30-714184a38fa2.pdf
Interim / Quarterly Report
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SKF
First-quarter report 2023
27 April 2023
Q1 2023
- Net sales of SEK 26,549 million (22,942).
- Organic growth 10.1% (6.5%).
- Adjusted operating profit of SEK 3,478 million (3,058).
- Operating profit SEK 3,379 million (2,953).
- Adjusted operating margin 13.1% (13.3%).
- Industrial 16.9% (16.8%).
- Automotive 3.6% (4.4%).
- Operating margin 12.7% (12.9%).
- Industrial 16.5% (16.3%).
- Automotive 3.2% (4.2%).
- Net cash flow from operations SEK 2,747 million (-271).
- Basic earnings per share SEK 4.55 (4.36).
Financial overview
| MSEK unless otherwise stated | Q1 2023 | Q1 2022 |
|---|---|---|
| Net sales | 26,549 | 22,942 |
| Adjusted operating profit | 3,478 | 3,058 |
| Adjusted operating margin, % | 13.1 | 13.3 |
| Operating profit | 3,379 | 2,953 |
| Operating margin, % | 12.7 | 12.9 |
| Adjusted profit before taxes | 3,041 | 2,990 |
| Profit before taxes | 2,942 | 2,885 |
| Net cash flow from operating activities | 2,747 | -271 |
| Basic earnings per share | 4.55 | 4.36 |
| Adjusted earnings per share | 4.77 | 4.59 |
Operating margin¹)
Revenue growth²)
Net debt/Equity³)
Net debt/Equity³)
ROCE¹)
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.
SKF FIRST-QUARTER REPORT 2023
Strong organic sales and positive margin trend
Review of the first quarter
I'm pleased to report a solid quarter with strong organic sales growth and a record high adjusted operating profit for a first quarter.
In the period, we delivered an organic sales growth of more than 10%, with continued robust demand across all our regions. Most of our targeted high-growth segments contributed with double-digit growth, e.g. railway, renewable energy and aerospace.
The adjusted operating profit improved to SEK 3,478 million (3,058), with an adjusted operating margin of 13.1% (13.3%). Through active and ongoing portfolio management and pricing activities, we have been able to offset cost inflation in the quarter.
Our Industrial business saw strong demand across all regions and most segments, with an especially high demand in India & Southeast Asia. In Europe, Middle East & Africa, price/mix was the main contributor to the overall sales growth. In China & Northeast Asia, demand bounced back in many industries, e.g. wind and industrial distribution. All in all, organic growth came in at 9.5%. The Industrial business, also delivered a robust result of SEK 3,208 million (2,775), with an adjusted operating margin of 16.9% (16.8%). It's very satisfactory to note that all business areas improved their underlying profitability in the quarter, both sequentially and versus the same quarter last year.
Our Automotive business delivered an organic growth of 11.9% and an adjusted operating margin of 3.6% (4.4%). Despite the profitability comparison to last year, it is encouraging to see that the underlying business performance is on a positive trajectory as we progress our ongoing portfolio shift and emphasis on electrical vehicles. Also in this quarter, we have several new customer wins supporting our strategic re-positioning.
Our focus on improving cash efficiency is continuing to show results, with net cash flow from operations exceeding SEK 2.7 billion (-0.3 billion last year). This was driven mainly by the higher operating profit and our efforts to improve net working capital.
Delivering on our strategic transformation
We continue to diligently work on executing our strategy, increasing our efficiency and reducing fixed costs. During the quarter, the total workforce has been reduced by approximately 560 employees.
Our operating model has enabled an accelerated momentum in our prioritized industry segments within each business area. In high-speed machinery for example, our wide range of super precision bearings, with more than 50% of ceramic rolling elements, are growing rapidly. As an example, we won a sizeable contract with a Swiss producer of high-end motor spindles in the quarter.
The first quarter also marked an important milestone for SKF, the celebrations of SKF's 100 years of operations in India. Strong local presence and well-established supply chains are key to take advantage of future growth opportunities in the region. This gives us a strong foundation for future profitable growth.
Another important achievement in the quarter was the approval and validation from the Science Based Targets initiative (SBTi) for our scope 1, 2 and 3 emissions reduction targets for 2030 and 2050. Sustainability is an integrated part of our strategic framework and a competitive advantage for SKF. Our annual cleantech revenues now exceed SEK 10 billion.
The strong financial development and business achievements during the quarter are to a large extent the result of hard work and dedication by our employees. I would like to express my sincere appreciation to all colleagues and partners across the
SKF footprint. Furthermore, I would also like to recognize the co-creation work, by thousands of colleagues, to define our purpose: "Together, we re-imagine rotation for a better tomorrow" Thanks to the efforts by so many people, we're now ready to embark on the journey to become a purpose-driven company.
Outlook
Given our strong sales growth in the first quarter, we adjust our full year guidance upwards somewhat. Looking into the second quarter of 2023, as well as the full year, we now foresee high single-digit organic sales growth. However, we expect continued volatility and geopolitical uncertainty impacting the markets in which we operate.
Rickard Gustafson
President and CEO
SKF FIRST-QUARTER REPORT 2023
Financial performance
First quarter 2023
Operating profit for the first quarter was SEK 3,379 million (2,953). Operating profit included items affecting comparability of SEK -99 million (-105), mainly related to ongoing restructuring and cost reduction activities in Europe.
The adjusted operating profit for the first quarter was SEK 3,478 million (3,058). The adjusted operating profit was positively impacted by sales volumes, price, customer mix and currency effects. Adjusted operating profit was negatively impacted by cost increases, mainly related to material costs and wages and salaries.
| Adjusted operating profit bridge, MSEK | Q1 |
|---|---|
| 2022 | 3,058 |
| Currency impact | 135 |
| Divested businesses | 5 |
| Organic sales & Manufacturing volumes | 2,274 |
| Cost development | -1,994 |
| 2023 | 3,478 |
- Financial income and expense, net was SEK -437 million (-68). Exchange rate fluctuations had a more negative effect in the first quarter 2023, compared to the first quarter 2022, and interest expenses was significantly higher in 2023.
- Taxes in the quarter was SEK -783 million (-824) resulting in an effective tax rate of 26.6% (28.6%).
- Net cash flow from operating activities in the first quarter was SEK 2,747 million (-271). The improved cash flow is mainly driven by higher operating profit as well as less negative changes in working capital compared to last year where the most positive impact is coming from changes in inventories.
- Net working capital in percent of annual sales was 32.4% in the first quarter compared to 34.3% in the first quarter 2022. The ratio was positively affected by lower accounts receivable and inventory levels in relation to sales compared to last year.
- Provisions for post-employment benefits net decreased by SEK -155 million (-1,345) in the quarter driven by actuarial gains on gross obligation due to changed discount rates as well as payments made in the quarter.
| Key figures | 31 March 2023 | 31 Dec 2022 | 31 March 2022 |
|---|---|---|---|
| Net working capital, % of 12 months rolling sales | 32.4 | 32.4 | 34.3 |
| ROCE for the 12-month period, %^{1)} | 13.0 | 12.6 | 15.3 |
| Net debt/equity, % | 39.8 | 35.2 | 45.0 |
| Net debt/equity, excluding post-employment benefits, % | 24.0 | 19.3 | 22.5 |
| Net debt/EBITDA, % | 1.7 | 1.5 | 1.4 |
1) Adjusted for items affecting comparability.
SKF FIRST-QUARTER REPORT 2023
Sales
| Net sales, change y-o-y, % | Q1 | |||
|---|---|---|---|---|
| Organic^{1)} | Structure | Currency | Total | |
| SKF Group | 10.1 | -2.0 | 7.6 | 15.7 |
| Industrial | 9.5 | -2.0 | 7.4 | 14.9 |
| Automotive | 11.9 | -2.1 | 8.3 | 18.1 |
1) Price, mix and volume
| Organic sales in local currencies, change y-o-y, % | Q1 | |||
|---|---|---|---|---|
| Europe, Middle East & Africa | The Americas | China & Northeast Asia | India & Southeast Asia | |
| SKF Group | 12.3 | 6.5 | 8.4 | 14.5 |
| Industrial | +++ | ++ | +++ | +++ |
| Automotive | +++ | +++ | - | +++ |
| Customer industries | Q1 | |||
| --- | --- | --- | --- | --- |
| Europe, Middle East & Africa | The Americas | China & Northeast Asia | India & Southeast Asia | |
| Organic sales in local currencies, change y-o-y: | ||||
| Industrial distributors | +++ | +/- | +++ | +++ |
| 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 2023
Net sales by region for Industrial Q1 2023
Net sales by customer industry for Automotive Q1 2023
Net sales by region for Automotive Q1 2023
Net sales by region for Automotive Q1 2023
SKF FIRST-QUARTER REPORT 2023
Industrial
Comments on organic sales in local currencies in the first quarter 2023, compared to the first quarter 2022
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 agriculture, food & beverage with higher sales, other was slightly higher, high-speed machinery & electrical drives were relatively unchanged and renewable energy with significantly lower sales compared to Q1 2022.
The Americas
Overall, sales were higher in the quarter. By industry, sales to heavy industries and railway were significantly higher, to aerospace and automation it was slightly higher. Sales to industrial distributors, agriculture, food & beverage, material handling and traditional energy were relatively unchanged. To other it was lower while it was significantly lower to high-speed machinery & electrical drives, renewable energy, off-highway and marine compared to Q1 2022.
China & North-East Asia
Overall, sales were significantly higher in the quarter. By industry, sales were significantly higher to industrial distributors, renewable energy, railway, automation, and traditional energy. To material handling it was higher and to heavy industries it was relatively unchanged. Sales to marine were lower while it was significantly lower to high-speed machinery & electrical drives, other, aerospace, agriculture, food & beverage and off-highway compared to Q1 2022.
India & South-East Asia
Overall, sales were significantly higher in the quarter. By industry, sales to industrial distributors, renewable energy, heavy industries, railway, agriculture, food & beverage and material handling were all significantly higher. To high-speed machinery & electrical drives it was higher and to other, aerospace, off-highway, and marine it was relatively unchanged. Sales to automation were significantly lower compared to Q1 2022.
Automotive
Comments on organic sales in local currencies in the first quarter 2023, compared to the first quarter 2022
Europe, Middle East & Africa
Sales in the quarter were significantly higher compared to last year with significantly higher sales to all automotive segments.
The Americas
Sales in the quarter were significantly higher compared to last year, with significantly higher sales to light vehicles and the vehicle aftermarket. Sales to commercial vehicles were relatively unchanged.
China & North-East Asia
Sales were slightly lower in the quarter compared to last year with significantly higher sales to commercial vehicles and significantly lower sales to light vehicles and the vehicle aftermarket.
India & South-East Asia
Sales in the quarter were significantly higher compared to last year with significantly higher sales to light vehicles and slightly higher sales to the vehicle aftermarket. Sales to commercial vehicles were relatively unchanged.
SKF FIRST-QUARTER REPORT 2023
Segment information¹)
MSEK unless otherwise stated
| Industrial | Automotive | |||
|---|---|---|---|---|
| Q1 2023 | Q1 2022 | Q1 2023 | Q1 2022 | |
| Net sales | 18,968 | 16,520 | 7,581 | 6,422 |
| Adjusted operating profit | 3,208 | 2,775 | 270 | 283 |
| Adjusted operating margin, % | 16.9 | 16.8 | 3.6 | 4.4 |
| Operating profit | 3,134 | 2,685 | 245 | 268 |
| Operating margin, % | 16.5 | 16.3 | 3.2 | 4.2 |
¹) Previously published figures for 2022 have been restated to reflect change in responsibilities for factories and Group functions in accordance with new organizational structure.
Industrial
Comments on operating profit 2023, compared to 2022
First quarter 2023
The adjusted operating profit for the first quarter was SEK 3,208 million (2,775). The adjusted operating profit was positively impacted by sales volumes, price, customer mix and currency effects. Adjusted operating profit was negatively impacted by material costs and wages and salaries.
| Adjusted operating profit bridge, MSEK | Q1 |
|---|---|
| 2022 | 2,775 |
| Currency | 127 |
| Divested businesses | 4 |
| Organic sales & Manufacturing volumes | 1,688 |
| Cost development | -1,386 |
| 2023 | 3,208 |
Automotive
Comments on operating profit 2023, compared to 2022
First quarter 2023
The adjusted operating profit for the first quarter was SEK 270 million (283). The adjusted operating profit was positively impacted by sales volumes, price, customer mix and currency effects. Adjusted operating profit was negatively impacted by material costs and wages and salaries.
| Adjusted operating profit bridge, MSEK | Q1 |
|---|---|
| 2022 | 283 |
| Currency | 8 |
| Divested businesses | 1 |
| Organic sales & Manufacturing volumes | 749 |
| Cost development | -771 |
| 2023 | 270 |
SKF FIRST-QUARTER REPORT 2023
SKF FIRST-QUARTER REPORT 2023
Outlook and Guidance
Demand for Q2 2023 compared to Q2 2022
Looking into the second quarter of 2023, we expect high single-digit organic sales growth.
Guidance for Q2 2023
Currency impact on the operating profit is expected to be around SEK 100 million negative compared with the second quarter 2022, based on exchange rates per 31 March 2023.
Guidance 2023
- For the full year, we expect high single-digit organic sales growth, compared to 2022.
- Tax level excluding effects related to divested businesses: around 28%.
- Additions to property, plant and equipment: around SEK 5 billion.
Previous outlook and guidance statement
Demand for Q1 2023 compared to Q1 2022
Looking into the first quarter of 2023, we expect mid single-digit organic sales growth.
Guidance for Q1 2023
Currency impact on the operating profit is expected to be around SEK 300 million positive compared with the first quarter 2022, based on exchange rates per 31 December 2022.
Guidance 2023
- For the full year, we expect mid single-digit organic sales growth, compared to 2022.
- Tax level excluding effects related to divested businesses: around 28%.
- Additions to property, plant and equipment: around SEK 5 billion.
Significant events
2 February 2023
Increased regionalization in North America
Investments totaling SEK 700 million are being made in locating engineering and manufacturing capabilities in a new, greenfield facility in Monterrey, Mexico. The factory will produce products for electric vehicle drivetrain and commercial vehicle markets in North America, as well as a range of products for industrial applications.
9 March 2023
Science Based Targets initiative
SKF has received validation of its Scope 1, 2 and 3 emissions reduction targets from the Science Based Targets initiative (SBTi). The SBTi validation means that SKF's targets comply with their criteria and that targets are in line with both climate science and the goals of the Paris Agreement.
23 March 2023
Annual General Meeting of AB SKF
Hans Stråberg, Hock Goh, Geert Follens, Håkan Buskhe, Susanna Schneeberger and Rickard Gustafson were re-elected as Board members. Beth Ferreira, Therese Friberg, Richard Nilsson and Niko Pakalén were newly elected as Board members. Hans Stråberg was elected Chair of the Board. The Board appointed Håkan Buskhe as Vice Chair of the Board.
New Sustainability and Ethics Committee
The Board of Directors has established a new Board Committee; the Sustainability and Ethics Committee. The Sustainability and Ethics Committee shall oversee the Company's strategy related to sustainability and ethics as well as the sustainability reporting processes.
SKF FIRST-QUARTER REPORT 2023
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.
Cleantech revenues
Cleantech includes revenues from key areas, such as: renewable energy, electric vehicles, electric railway, recycling industry, bearing remanufacturing, RecondOil and magnetic bearing solutions.
1) Previously published figures have been restated based on adaptation of the scope to better reflect and align with the sectors in the EU Taxonomy.
2) 2023 figures relate to the latest 12 months period.
Accident rate
The accident rate measures the number of recordable accidents per 100 employees per year.
1) 2023 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 have decarbonized operations by 2030.
1) Due to external reporting constraints, this data is presented for the end of the previous quarter.
SKF FIRST-QUARTER REPORT 2023
Condensed consolidated income statements
| MSEK | Jan-Mar 2023 | Jan-Mar 2022 |
|---|---|---|
| Net sales | 26,549 | 22,942 |
| Cost of goods sold | -19,428 | -16,453 |
| Gross profit | 7,121 | 6,489 |
| Research and development cost | -806 | -765 |
| Selling and administrative expenses | -2,941 | -2,779 |
| Other operating income/expenses, net | 5 | 8 |
| Operating profit | 3,379 | 2,953 |
| Financial income and expense, net | -437 | -68 |
| Profit before taxes | 2,942 | 2,885 |
| Taxes | -783 | -824 |
| Net profit | 2,159 | 2,061 |
| Net profit attributable to: | ||
| Shareholders of AB SKF | 2,073 | 1,984 |
| Non-controlling interests | 86 | 77 |
| Basic earnings per share (SEK)1) | 4.55 | 4.36 |
1) Shares from the Performance Share Programme are not considered dilutive, therefore, diluted earnings per share is equal to basic earnings per share.
Condensed consolidated statements of comprehensive income
| MSEK | Jan-Mar 2023 | Jan-Mar 2022 |
|---|---|---|
| Net profit | 2,159 | 2,061 |
| Items that will not be reclassified to the income statement: | ||
| Remeasurements (actuarial gains and losses) | 210 | 1,530 |
| Income taxes | -41 | -394 |
| 169 | 1,136 | |
| Items that may be reclassified to the income statement: | ||
| Exchange differences arising on translation of foreign operations | 115 | 819 |
| Assets at fair value through other comprehensive income | 18 | -23 |
| Income taxes | - | 1 |
| 133 | 797 | |
| Other comprehensive income, net of tax | 302 | 1,933 |
| Total comprehensive income | 2,461 | 3,994 |
| Shareholders of AB SKF | 2,381 | 3,900 |
| Non-controlling interests | 80 | 94 |
SKF FIRST-QUARTER REPORT 2023
Condensed consolidated balance sheets
| MSEK | March 2023 | December 2022 |
|---|---|---|
| Goodwill | 12,330 | 12,351 |
| Other intangible assets | 5,664 | 5,842 |
| Property, plant and equipment | 25,841 | 24,897 |
| Right of use asset leases | 3,123 | 3,084 |
| Deferred tax assets | 3,262 | 3,173 |
| Other non-current assets | 1,872 | 1,781 |
| Non-current assets | 52,092 | 51,128 |
| Inventories | 26,130 | 26,052 |
| Trade receivables | 18,704 | 16,905 |
| Other current assets | 5,820 | 5,614 |
| Other current financial assets | 8,916 | 11,224 |
| Current assets | 59,570 | 59,795 |
| Total assets | 111,662 | 110,923 |
| Equity attributable to shareholders of AB SKF | 51,263 | 51,927 |
| Equity attributable to non-controlling interests | 2,197 | 2,116 |
| Long-term financial liabilities | 21,377 | 21,219 |
| Provisions for post-employment benefits | 8,606 | 8,748 |
| Provisions for deferred taxes | 1,294 | 1,365 |
| Other long-term liabilities and provisions | 1,199 | 1,108 |
| Non-current liabilities | 32,476 | 32,440 |
| Trade payables | 12,259 | 11,594 |
| Short-term financial liabilities | 821 | 916 |
| Other short-term liabilities and provisions | 12,646 | 11,930 |
| Current liabilities | 25,726 | 24,440 |
| Total equity and liabilities | 111,662 | 110,923 |
Condensed consolidated statements of changes in shareholders' equity
| MSEK | Jan-Mar 2023 | Jan-Mar 2022 |
|---|---|---|
| Opening balance 1 January | 54,043 | 45,364 |
| Net profit | 2,159 | 2,061 |
| Hyperinflation adjustments | 137 | 53 |
| Components of other comprehensive income | ||
| Currency translation adjustments | 115 | 819 |
| Change in FV OCI assets and cash flow hedges | 18 | -23 |
| Remeasurements | 210 | 1,530 |
| Income taxes | -41 | -393 |
| Other | - | - |
| Transactions with shareholders | ||
| Non-controlling interest | - | - |
| Cost for Performance Share Programmes, net | 6 | 9 |
| Dividends | -3,187 | -3,198 |
| Other | - | - |
| Closing balance 31 March | 53,460 | 46,222 |
SKF FIRST-QUARTER REPORT 2023
Condensed consolidated statements of cash flow
| MSEK | Jan-Mar 2023 | Jan-Mar 2022 |
|---|---|---|
| Operating activities: | ||
| Operating profit | 3,379 | 2,953 |
| Non-cash items: | ||
| Depreciation, amortization and impairment | 998 | 860 |
| Net loss/gain (-) on sales of PPE and businesses | -29 | -1 |
| Other non-cash items | 348 | 188 |
| Income taxes paid | -636 | -489 |
| Interest received | 55 | 1 |
| Interest paid | -154 | -65 |
| Other | -255 | -257 |
| Changes in working capital: | -959 | -3,461 |
| Inventories | -58 | -1,913 |
| Accounts receivable | -1,764 | -2,210 |
| Accounts payable | 598 | 711 |
| Other operating assets/liabilities | 265 | -49 |
| Net cash flow from operating activities | 2,747 | -271 |
| Investing activities: | ||
| Payments for intangible assets, PPE, businesses and equity securities | -1,502 | -1,110 |
| Sales of PPE, businesses and equity securities | 68 | 3 |
| Net cash flow used in investing activities | -1,434 | -1,107 |
| Net cash flow after investments before financing | 1,313 | -1,378 |
| MSEK | Jan-Mar 2023 | Jan-Mar 2022 |
| --- | --- | --- |
| Financing activities: | ||
| Proceeds from short- and long-term loans | 27 | 16 |
| Repayments of short- and long-term loans | -66 | -52 |
| Repayment leases | -190 | -180 |
| Cash dividends | -3,187 | -3,198 |
| Other financing items: | ||
| Investments in short-term financial assets | -229 | -16 |
| Sales of short-term financial assets | 103 | 23 |
| Net cash flow used in financing activities | -3,542 | -3,407 |
| Net cash flow | -2,229 | -4,785 |
| Change in cash and cash equivalents: | ||
| Cash and cash equivalents at 1 January | 10,255 | 13,219 |
| Cash effect excl. acquired/sold businesses | -2,229 | -4,793 |
| Cash effect of acquired/sold businesses | - | 8 |
| Exchange rate effect | -72 | 20 |
| Cash and cash equivalents at 31 March | 7,954 | 8,454 |
| Change in Net debt | Closing balance 31 March 2023 | Other non-cash changes |
| --- | --- | --- |
| Loans, long- and short-term | 18,507 | -10 |
| Post-employment benefits, net | 8,466 | 59 |
| Lease liabilities | 2,962 | 230 |
| Financial assets, others | -678 | 30 |
| Cash and cash equivalents | -7,954 | - |
| Net debt | 21,303 | 309 |
SKF FIRST-QUARTER REPORT 2023
Condensed consolidated financial information
MSEK unless otherwise stated
| Q2/21 | Q3/21 | Q4/21 | Q1/22 | Q2/22 | Q3/22 | Q4/22 | Q1/23 | |
|---|---|---|---|---|---|---|---|---|
| Net sales | 20,735 | 20,146 | 20,986 | 22,942 | 23,655 | 24,975 | 25,361 | 26,549 |
| Cost of goods sold | -14,441 | -14,582 | -15,310 | -16,453 | -17,777 | -19,223 | -19,012 | -19,428 |
| Gross profit | 6,294 | 5,564 | 5,676 | 6,489 | 5,878 | 5,752 | 6,349 | 7,121 |
| Gross margin, % | 30.4 | 27.6 | 27.0 | 28.3 | 24.9 | 23.0 | 25.0 | 26.8 |
| Research and development cost | -683 | -648 | -766 | -765 | -806 | -779 | -827 | -806 |
| Selling and administrative expenses | -2,706 | -2,385 | -2,736 | -2,779 | -3,094 | -2,831 | -3,319 | -2,941 |
| - as % of sales | 13.1 | 11.8 | 13.0 | 12.1 | 13.1 | 11.3 | 13.1 | 11.1 |
| Other, net | -27 | 57 | 420 | 8 | -397 | -213 | -134 | 5 |
| Operating profit | 2,878 | 2,588 | 2,594 | 2,953 | 1,581 | 1,929 | 2,069 | 3,379 |
| Operating margin, % | 13.9 | 12.8 | 12.4 | 12.9 | 6.7 | 7.7 | 8.2 | 12.7 |
| Adjusted operating profit | 3,118 | 2,672 | 2,260 | 3,058 | 2,473 | 2,131 | 2,542 | 3,478 |
| Adjusted operating margin, % | 15.0 | 13.3 | 10.8 | 13.3 | 10.5 | 8.5 | 10.0 | 13.1 |
| Financial net | -77 | -148 | -266 | -68 | -484 | -311 | -376 | -437 |
| Profit before taxes | 2,801 | 2,440 | 2,328 | 2,885 | 1,097 | 1,618 | 1,693 | 2,942 |
| Profit margin before taxes, % | 13.5 | 12.1 | 11.1 | 12.6 | 4.6 | 6.5 | 6.7 | 11.1 |
| Taxes | -661 | -618 | -559 | -824 | -511 | -394 | -709 | -783 |
| Net profit | 2,140 | 1,822 | 1,769 | 2,061 | 586 | 1,224 | 984 | 2,159 |
| Net profit attributable to | ||||||||
| Shareholders of AB SKF | 2,089 | 1,756 | 1,705 | 1,984 | 493 | 1,099 | 893 | 2,073 |
| Non-controlling interests | 51 | 66 | 64 | 77 | 93 | 125 | 91 | 86 |
SKF FIRST-QUARTER REPORT 2023
Reconciliation of profit before taxes for the Group
| MSEK | Q2/21 | Q3/21 | Q4/21 | Q1/22 | Q2/22 | Q3/22 | Q4/22 | Q1/23 |
|---|---|---|---|---|---|---|---|---|
| Operating profit: | ||||||||
| Industrial^{1)} | 2,358 | 2,439 | 2,433 | 2,685 | 1,702 | 1,716 | 1,771 | 3,134 |
| Automotive^{1)} | 520 | 149 | 161 | 268 | -121 | 213 | 298 | 245 |
| Financial net | -77 | -148 | -266 | -68 | -484 | -311 | -376 | -437 |
| Profit before taxes for the Group | 2,801 | 2,440 | 2,328 | 2,885 | 1,097 | 1,618 | 1,693 | 2,942 |
1) Previously published figures for 2021 and 2022 have been restated to reflect change in responsibilities for factories and Group functions in accordance with new organizational structure.
Number of shares
| Jan-Mar 2023 | Jan-Mar 2022 | |
|---|---|---|
| Total number of shares: | 455,351,068 | 455,351,068 |
| - whereof A shares | 29,403,933 | 29,403,933 |
| - whereof B shares | 425,947,135 | 425,947,135 |
| Weighted average number of shares in: | ||
| - basic earnings per share | 455,351,068 | 455,351,068 |
SKF FIRST-QUARTER REPORT 2023
Key figures
Definitions, see page 19
| Q2/21 | Q3/21 | Q4/21 | Q1/22 | Q2/22 | Q3/22 | Q4/22 | Q1/23 | |
|---|---|---|---|---|---|---|---|---|
| EBITDA, MSEK | 3,852 | 3,239 | 3,479 | 3,814 | 2,478 | 2,906 | 3,118 | 4,377 |
| EBITA, MSEK | 3,024 | 2,733 | 2,742 | 3,104 | 1,741 | 2,094 | 2,234 | 3,541 |
| Adjusted operating profit, MSEK | 3,118 | 2,672 | 2,260 | 3,058 | 2,473 | 2,131 | 2,542 | 3,478 |
| Adjusted operating margin, % | 15.0 | 13.3 | 10.8 | 13.3 | 10.5 | 8.5 | 10.0 | 13.1 |
| Basic earnings per share, SEK | 4.59 | 3.86 | 3.74 | 4.36 | 1.08 | 2.41 | 1.96 | 4.55 |
| Adjusted earnings per share, SEK | 5.11 | 4.04 | 3.01 | 4.59 | 2.90 | 2.86 | 3.00 | 4.77 |
| Dividend per share, SEK | 6.50 | - | - | 7.00 | - | - | - | 7.00 |
| Net worth per share, SEK | 83 | 89 | 96 | 98 | 109 | 117 | 114 | 113 |
| Share price at the end of the period, SEK | 217.9 | 207.6 | 214.5 | 153.9 | 150.5 | 150.3 | 159.2 | 204.0 |
| NWC, % of 12 months rolling sales | 30.7 | 30.5 | 30.7 | 34.3 | 35.7 | 35.6 | 32.4 | 32.4 |
| ROCE for the 12-month period, % | 13.6 | 14.5 | 14.8 | 14.8 | 12.7 | 11.5 | 10.6 | 11.0 |
| ROE for the 12-month period, % | 18.4 | 19.3 | 18.8 | 18.3 | 13.8 | 11.7 | 9.5 | 9.4 |
| Gearing, % | 44.7 | 43.1 | 40.5 | 39.0 | 35.2 | 36.6 | 35.6 | 35.9 |
| Equity/assets ratio, % | 41.6 | 43.2 | 45.5 | 45.7 | 48.2 | 47.7 | 48.7 | 47.9 |
| Additions to property, plant and equipment, MSEK | 895 | 969 | 1,138 | 1,023 | 1,372 | 1,288 | 1,347 | 1,498 |
| Net debt/equity, % | 50.1 | 44.0 | 38.3 | 45.0 | 37.7 | 35.2 | 35.2 | 39.8 |
| Net debt, MSEK | 19,809 | 18,541 | 17,360 | 20,787 | 19,444 | 19,441 | 19,034 | 21,303 |
| Net debt/EBITDA, % | 1.5 | 1.4 | 1.2 | 1.4 | 1.5 | 1.5 | 1.5 | 1.7 |
| Registered number of employees | 41,433 | 42,139 | 42,602 | 42,763 | 42,602 | 42,885 | 42,641 | 42,083 |
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.
SKF FIRST-QUARTER REPORT 2023
Segment information – quarterly figures $^{1)}$
MSEK unless otherwise stated
| Industrial | Q2/21 | Q3/21 | Q4/21 | Q1/22 | Q2/22 | Q3/22 | Q4/22 | Q1/23 |
|---|---|---|---|---|---|---|---|---|
| Net sales | 14,889 | 14,747 | 15,135 | 16,520 | 17,114 | 17,735 | 18,147 | 18,968 |
| Adjusted operating profit | 2,627 | 2,485 | 2,164 | 2,775 | 2,372 | 1,907 | 2,159 | 3,208 |
| Adjusted operating margin, % | 17.6 | 16.9 | 14.3 | 16.8 | 13.9 | 10.8 | 11.9 | 16.9 |
| Operating profit | 2,358 | 2,439 | 2,433 | 2,685 | 1,702 | 1,716 | 1,771 | 3,134 |
| Operating margin, % | 15.8 | 16.5 | 16.1 | 16.3 | 9.9 | 9.7 | 9.8 | 16.5 |
| Assets and liabilities, net | 41,944 | 41,893 | 43,410 | 47,426 | 49,450 | 52,016 | 50,469 | 53,584 |
| Registered number of employees | 34,552 | 35,215 | 35,539 | 35,700 | 35,845 | 36,166 | 35,991 | 35,571 |
| Automotive | Q2/21 | Q3/21 | Q4/21 | Q1/22 | Q2/22 | Q3/22 | Q4/22 | Q1/23 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Net sales | 5,846 | 5,399 | 5,851 | 6,422 | 6,541 | 7,240 | 7,214 | 7,581 |
| Adjusted operating profit | 491 | 187 | 96 | 283 | 101 | 224 | 383 | 270 |
| Adjusted operating margin, % | 8.4 | 3.5 | 1.6 | 4.4 | 1.5 | 3.1 | 5.3 | 3.6 |
| Operating profit | 520 | 149 | 161 | 268 | -121 | 213 | 298 | 245 |
| Operating margin, % | 8.9 | 2.8 | 5.0 | 4.2 | -1.8 | 2.9 | 4.1 | 3.2 |
| Assets and liabilities, net | 10,645 | 10,828 | 10,591 | 12,236 | 14,852 | 15,951 | 15,177 | 15,288 |
| Registered number of employees | 3,972 | 3,941 | 3,989 | 3,983 | 4,027 | 4,063 | 4,023 | 4,002 |
1) Previously published figures for 2021 and 2022 have been restated to reflect change in responsibilities for factories and Group functions in accordance with new organizational structure.
SKF FIRST-QUARTER REPORT 2023
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 2022. None of these have a material effect on the SKF Group's financial statements.
Valuation principles and classifications of the financial instruments, as described in SKF Annual report 2022, have been consistently applied throughout the reporting period. There are no major changes in fair value during the period.
Note 2 Transactions with relates parties
No significant change is present for transactions with related parties in relation to disclosure provided in Annual Report 2022.
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.
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 Ukraine with approximately 1,100 employees. Sales in Ukraine amounted to less than 0.1% of SKF's total sales in 2022. SKF's factory in Lutsk, Ukraine, accounted for a production volume of approximately 0.5% of SKF's total production volume in 2022. The factory in Ukraine has been producing whenever possible due to prevailing circumstances however at a lower level than normal.
For a more detailed description of risks and uncertainties, please see the Risk Management section on pages 37-39 in the SKF Annual Report 2022.
Gothenburg, 27 April 2023
Aktiebolaget SKF (publ)
Rickard Gustafson
President and CEO
This report has not been reviewed
by AB SKF's auditors.
SKF FIRST-QUARTER REPORT 2023
Parent Company condensed income statements
| MSEK | Jan-Mar 2023 | Jan-Mar 2022 |
|---|---|---|
| Revenue | 1,959 | 1,903 |
| Cost of goods sold | -1,651 | -1,514 |
| General management and administrative expenses | -411 | -389 |
| Other operating income/expenses, net | 4 | 15 |
| Operating result | -99 | 15 |
| Financial income and expense, net | 4 | 7 |
| Profit before taxes | -95 | 22 |
| Appropriations | - | - |
| Taxes | 4 | -27 |
| Net profit | -91 | -5 |
Parent Company condensed statements of comprehensive income
| MSEK | Jan-Mar 2023 | Jan-Mar 2022 |
|---|---|---|
| Net profit | -91 | -5 |
| Items that may be reclassified to the income statement: | ||
| Assets at fair value through other comprehensive income | 18 | -23 |
| Other comprehensive income, net of tax | -73 | -23 |
| Total comprehensive income | -73 | -28 |
Parent Company condensed balance sheets
| MSEK | March 2023 | December 2022 |
|---|---|---|
| Intangible assets | 1,182 | 1,234 |
| Investments in subsidiaries | 22,441 | 22,441 |
| Receivables from subsidiaries | 18,578 | 18,388 |
| Other non-current assets | 1,062 | 927 |
| Non-current assets | 43,263 | 42,990 |
| Receivables from subsidiaries | 3,319 | 5,555 |
| Other receivables | 336 | 358 |
| Current assets | 3,655 | 5,913 |
| Total assets | 46,918 | 48,903 |
| Shareholders' equity | 22,839 | 26,117 |
| Provisions | 755 | 666 |
| Non-current liabilities | 18,575 | 18,386 |
| Current liabilities | 4,749 | 3,734 |
| Total shareholders' equity, provisions and liabilities | 46,918 | 48,903 |
SKF FIRST-QUARTER REPORT 2023
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.
Gross margin
Gross income as a percentage of net sales.
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.
Organic growth
Sales excluding effects of currency and acquired and divested businesses.
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 2023
SKF is a key manufacturer in the growing Machine Tool segment, offering a wide range of super precision bearings where more than 50% include ceramics.
Webcast
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Calendar 2023
19 July Q2 report
27 October Q3 report
9 February 2024, Q4 report
© SKF is a registered trademark of AB SKF (publ). © SKF Group 2022. All rights reserved. Please note that this publication may not be copied or distributed, in whole or in part, 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 2023.
This is SKF
SKF is a world-leading provider of innovative solutions that help industries become more competitive and sustainable. By making products lighter, more efficient, longer lasting, and repairable, we help our customers improve their rotating equipment performance and reduce their environmental impact. Our offering around the rotating shaft includes bearings, seals, lubrication management, condition monitoring, and services.
Quick facts
Founded 1907
Represented in more than 129 countries
Net sales in 2022: SEK 96,933 million
42,641 employees
15 technical centers
91 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]
The financial information in this report 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 27 April 2023 at 08.00 CEST.
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