SKF Q2 2025: Another quarter of margin resilience

Rhea-AI Summary

SKF (OTC:SKFRY) reported Q2 2025 results showing margin resilience despite challenging market conditions. The company achieved an adjusted operating margin of 13.3% (up from 13.0%), with net sales of MSEK 23,166 and organic growth of -0.2%.

Key highlights include strong Industrial segment performance with a 16.6% margin, while Automotive faced headwinds except in electrical vehicles. The company announced a significant rightsizing program targeting approximately 1,700 positions, primarily in Europe, expecting annual savings of BSEK 2 by 2027. The aerospace business showed notable improvement with 12% annual sales growth and an 8pp margin increase since 2022.

Positive

• Adjusted operating margin improved to 13.3% despite flat organic sales
• Industrial segment margin increased to 16.6% with growth in all regions
• Aerospace business achieved 12% annual sales growth and 8pp margin improvement
• Strong cash flow of BSEK 2.8, up from BSEK 2.2, driven by working capital improvements
• Cost-saving program expected to deliver BSEK 2 in annual savings by 2027

Negative

• Organic sales declined 0.2% year-over-year
• Automotive segment facing challenging global market conditions
• Significant negative currency impact affecting operating profit
• Workforce reduction of 1,700 positions, primarily in Europe
• High Items Affecting Comparability (IAC) costs of BSEK -1.8 in Q2

GOTHENBURG, Sweden, July 18, 2025 /PRNewswire/ --

Q2 2025

• Net sales: MSEK 23,166 (25,606)
• Organic growth: −0.2% (−6.6%), driven by lower market demand within the Automotive market while the Industrial segment reported organic sales growth.
• Adjusted operating profit: MSEK 3,090 (3,324). The decrease was due to significant currency headwind. Solid price/mix contribution, driven by pricing activities and portfolio management, as well as good cost control more than offset lower volumes.
• Adjusted operating margin: 13.3% (13.0%) with Industrial at 16.6% (16.3%) and Automotive at 5.1% (5.3%).
• Net cash flow from operating activities: MSEK 2,817 (2,152).

Financial overview, MSEK unless otherwise stated	Q2 2025	Q2 2024	Half year 2025	Half year 2024
Net sales	23,166	25,606	47,132	50,305
Organic growth, %	−0.2	−6.6	−1.8	−6.8
Adjusted operating profit	3,090	3,324	6,323	6,627
Adjusted operating margin, %	13.3	13.0	13.4	13.2
Operating profit	1,300	2,489	4,185	5,482
Operating margin, %	5.6	9.7	8.9	10.9
Adjusted net profit	2,373	2,498	4,669	4,810
Net profit	583	1,663	2,531	3,665
Net cash flow from operating activities	2,817	2,152	3,794	3,933
Basic earnings per share	1.13	3.36	5.08	7.50
Adjusted earnings per share	5.06	5.19	9.77	10.02

Rickard Gustafson, President and CEO:

"It's encouraging that our adjusted operating margin improved, year-over-year, with relatively flat organic sales and significant currency headwind. We have continued to work hard to create a strong foundation for the future, including our ongoing rightsizing activities.

Margin resilience in markets with mixed demand

Our organic sales declined in the second quarter by -0.2% year-over-year. For our Industrial business, organic sales improved in all regions, especially in Asia where it was partly driven by favorable timing of deliveries. In Europe, sales volumes improved sequentially driven by stronger demand in aerospace, lubrication and magnetics.

Our Automotive business continued to face challenging market conditions globally, except for electrical vehicles, resulting in an organic sales decline, year-over-year.

We delivered a strong adjusted operating margin of 13.3% given the mixed demand and significant negative currency impact. The margin was driven by pricing, portfolio management and good cost control. We largely compensated for increased tariff costs. Given current tariff levels, we expect this to be the case also in the third quarter, with the majority of the net impact in Automotive.

Items affecting comparability (IAC) was high in the quarter. This as the full amount of costs related to the previously indicated rightsizing program were charged. As the Automotive separation is building momentum, IAC also includes sequentially higher separation costs. Furthermore, we reported a capital gain of BSEK 0.8. Due to timing effects, costs related to footprint regionalization were low in the quarter. In total, IAC amounted to BSEK -1.8.

Cash flow increased to BSEK 2.8 (2.2) due to improved working capital, where accounts payable contributed positively.

A more competitive Industrial business

Strengthened operational and commercial excellence are key pillars to create significant customer value in targeted markets.

As part of improving our operational excellence, we have managed to swiftly adapt our organization to the rapidly changing market conditions in recent years, contributing to our margin resilience.

To further enhance our competitiveness, the previously announced rightsizing of our Industrial business, enabled by the Automotive separation, comprise of a gross reduction of approximately 1,700 positions, primarily staff positions in Europe. With re-hires related to our ongoing strategic footprint shift, the net reduction is approximately 1,200 positions. These actions are difficult to take, but necessary to secure our future competitiveness. The savings are estimated at approximately BSEK 2 and will more than compensate for dissynergies related to the Automotive separation. The full annual run-rate saving is expected to be achieved in 2027, with a fairly linear pace between 2026-2027. The savings also include a reduction of consultants and other cost-saving activities. Restructuring costs are fully charged to this quarter as IAC and amount to BSEK 2, while the cash flow impact is primarily expected in 2026. The ongoing organizational review, including manning activities, of our Automotive business and its associated effects will be presented on our Capital Markets Day on 11 November.

One targeted market, where we have improved our performance through commercial excellence including portfolio prioritization and pricing activities, is aerospace. Following the strategic review we started in 2023, our aerospace business has had 12% annual sales growth and an increased adjusted operating margin of 8pp between 2022 and 2025. We're now well positioned for future profitable growth from attractive long-term contracts with major customers, an increased aftermarket presence, and an operational setup to serve our customers effectively. We are doing similar commercial initiatives in other parts of our industrial business to cater for long-term value creation.

Outlook

While the global economic development makes the outlook uncertain, we expect organic sales to be relatively unchanged in Q3, year-over-year."

Outlook and guidance

Outlook

• Q3 2025: While the global economic development makes the outlook uncertain, we expect organic sales to be relatively unchanged, year-over-year.

Guidance Q3 2025

• Currency impact on the operating profit is expected to be around MSEK 500 negative compared to the third quarter 2024, based on exchange rates per 30 June 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 18 July 2025 at 09:00 (CEST):
Sweden: +46 (0)8 5051 0031
UK/International: +44 (0)207 107 0613

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 half year report presented in this press release contains financial and inside information that AB SKF is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication through the agency of the contact person set out above on 18 July 2025 at 07.30 CEST.

This information was brought to you by Cision http://news.cision.com

https://news.cision.com/skf/r/skf-q2-2025--another-quarter-of-margin-resilience,c4208589

The following files are available for download:

https://mb.cision.com/Main/637/4208589/3584513.pdf	Q2_2025_Eng
https://news.cision.com/skf/i/aerospace,c3457114	Aerospace
https://news.cision.com/skf/i/rickard-gustafson-jpg-highpreview-800,c3457113	Rickard Gustafson jpg highpreview 800

 

 

 

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SOURCE SKF

FAQ

What were SKF's key financial metrics for Q2 2025?

SKF reported net sales of MSEK 23,166, adjusted operating profit of MSEK 3,090, and an adjusted operating margin of 13.3%. The company achieved an organic growth of -0.2% and operating cash flow of MSEK 2,817.

How much cost savings does SKF expect from its rightsizing program?

SKF expects annual savings of approximately BSEK 2 from its rightsizing program, with full annual run-rate savings to be achieved by 2027. The program involves a gross reduction of 1,700 positions, with a net reduction of 1,200 positions.

What is SKF's outlook for Q3 2025?

SKF expects organic sales to be relatively unchanged year-over-year in Q3 2025, with an expected negative currency impact of around MSEK 500 on operating profit compared to Q3 2024.

How did SKF's Automotive segment perform in Q2 2025?

SKF's Automotive segment faced challenging market conditions globally, except for electrical vehicles, resulting in an organic sales decline. The segment reported an operating margin of 5.1%, down from 5.3% in Q2 2024.

What improvements did SKF's aerospace business achieve?

SKF's aerospace business achieved 12% annual sales growth and an increased adjusted operating margin of 8 percentage points between 2022 and 2025, driven by portfolio prioritization and pricing activities.