SKF Q1 2025: Strong margin in turbulent markets
Rhea-AI Summary
SKF (SKFRY) reported Q1 2025 results with net sales of MSEK 23,966, showing a -3.5% organic decline due to lower market demand across regions and industries, except for aerospace. The adjusted operating margin improved slightly to 13.5% (from 13.4%), with Industrial at 16.9% and Automotive at 5.2%.
The company maintained margin resilience through pricing actions, portfolio management, and cost control, despite weak demand. Net cash flow from operating activities decreased to MSEK 977 from MSEK 1,781. The separation of the Automotive business continues with 16 factories finalized, though complexity may extend the timeline.
For Q2 2025 outlook, SKF expects continued volatility and weakening organic sales year-over-year, with a negative currency impact of approximately MSEK 400 on operating profit.
Positive
- Adjusted operating margin improved to 13.5% from 13.4%
- Industrial segment margin increased to 16.9%
- Effective execution of pricing and cost reduction initiatives
- China and Northeast Asia posted first positive organic growth in seven quarters
Negative
- Organic sales declined 3.5% year-over-year
- Net cash flow decreased to MSEK 977 from MSEK 1,781
- Automotive margin declined to 5.2% from 6.0%
- 8% automotive margin target delayed beyond 2025
- Q2 2025 expected to show weakening organic sales
News Market Reaction
On the day this news was published, SKFRY gained 2.10%, reflecting a moderate positive market reaction.
Data tracked by StockTitan Argus on the day of publication.
Q1 2025
- Net sales: MSEK 23,966 (24,699)
- Organic growth: −
3.5% (−7.0% ), driven by lower market demand across regions and industries, except for aerospace showing continuous growth. - Adjusted operating profit: MSEK 3,233 (3,303). Continued strong price/mix contribution, driven by pricing actions and active portfolio management, as well as good cost control which largely offset the lower volumes.
- Adjusted operating margin:
13.5% (13.4% ) with Industrial at16.9% (16.4% ) and Automotive at5.2% (6.0% ). - Net cash flow from operating activities: MSEK 977 (1,781).
Financial overview, MSEK unless otherwise stated | Q1 2025 | Q1 2024 |
Net sales | 23,966 | 24,699 |
Organic growth, % | −3.5 | −7.0 |
Adjusted operating profit | 3,233 | 3,303 |
Adjusted operating margin, % | 13.5 | 13.4 |
Operating profit | 2,885 | 2,993 |
Operating margin, % | 12.0 | 12.1 |
Adjusted net profit | 2,296 | 2,312 |
Net profit | 1,948 | 2,002 |
Net cash flow from operating activities | 977 | 1,781 |
Basic earnings per share | 3.95 | 4.15 |
Adjusted earnings per share | 4.71 | 4.83 |
Rickard Gustafson, President and CEO:
"In a volatile environment, I'm pleased that we maintained our resilient performance and improved our adjusted operating margin year-over-year. We continue to execute our strategy including the creation of two independent and fit for purpose businesses and thereby creating strong foundations for the future.
Margin resilience despite continued weak demand
In the first quarter we saw continued weak demand resulting in an organic sales decline of −
The adjusted operating margin was strong at
The adjusted operating margin for our Industrial business increased to
Cash flow was not satisfactory at close to BSEK 1, mainly driven by increased working capital, including high accounts receivables generated by a strong quarter end, and negative currency effects.
Creating two fit for purpose businesses
The separation of the Automotive business continues at high pace, where the operating model and organizational design now have been concluded. Automotive's global manufacturing footprint has also been finalized with 16 factories. The overall separation process progresses according to plan, but the complexity of the separation, including the IT structure, may stretch the overall time plan.
The initiated organizational review is progressing well, rightsizing both organizations to create strong foundations for the future and to withstand turbulent markets. More focused businesses with less complexity allow for leaner organizational structures resulting in sizeable reductions in staff positions, not least within
Outlook
Lately, the business environment has experienced significant volatility driven by increased geopolitical uncertainty including trade and tariff turmoil. We are preparing the business for different scenarios and remain confident that our strategy, in combination with our decentralized organization and effective cost management, will provide us with the agility and flexibility to navigate through these turbulent times. So far, we have largely compensated for increased tariff costs through price adjustments and we expect to continue to do so also in the second quarter, given current tariff levels. However, today's market uncertainty may influence demand and the prerequisites for certain products and markets.
We expect continued volatility and, even if we have seen signs of markets bottoming out, we plan for another quarter with negative volumes and expect organic sales to weaken somewhat in Q2, year-over-year."
Outlook and guidance
Outlook
- Q2 2025: We expect continued volatility and, even if we have seen signs of markets bottoming out, we plan for another quarter with negative volumes and expect organic sales to weaken somewhat in Q2, year-over-year.
Guidance Q2 2025
- Currency impact on the operating profit is expected to be around MSEK 400 negative compared to the second quarter 2024, based on exchange rates per 31 March 2025.
Guidance FY 2025
- Tax level excluding effects related to divested businesses: around
26% . - Additions to property, plant and equipment: around BSEK 4.5 excluding separation of the Automotive business.
A webcast will be held on 25 April 2025 at 09:00 (CEST):
https://investors.skf.com
Aktiebolaget SKF
(publ)
For further information, please contact:
Press Relations: Carl Bjernstam, +46 31-337 2517; +46 722 201 893; carl.bjernstam@skf.com
Investor Relations: Sophie Arnius, +46 31-337 8072; +46 705 908072; sophie.arnius@skf.com
The financial information in this press release contains inside information that AB SKF is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication through the agency of the contact person set out above on 25 April 2025 at 07.30 CEST.
This information was brought to you by Cision http://news.cision.com
https://news.cision.com/skf/r/skf-q1-2025--strong-margin-in-turbulent-markets,c4140309
The following files are available for download:
Q1_2025_eng | |
Clip032 1 | |
https://news.cision.com/skf/i/rickard-gustafson-jpg-highpreview-800,c3402326 | Rickard Gustafson jpg highpreview 800 |
FAQ
What was SKF's (SKFRY) organic growth rate in Q1 2025?
How did SKF's (SKFRY) operating margin perform in Q1 2025?
What is SKF's (SKFRY) outlook for Q2 2025?
What is the status of SKF's (SKFRY) Automotive business separation?
How much did SKF's (SKFRY) operating cash flow decline in Q1 2025?
