SKF First-quarter report 2024

A more resilient and competitive SKF

GÖTEBORG, Sweden, April 26, 2024 /PRNewswire/ -- 

Rickard Gustafson, President and CEO:

"Our first quarter performance marked another step towards a more resilient and competitive SKF. In soft market conditions, we delivered a strong adjusted operating margin of 13.4%, somewhat ahead of Q1 2023. The margin improvement clearly demonstrates our improved resilience in a situation where organic growth shifted from +10% in Q1 last year to -7% this year.

The improved performance is explained by our active and ongoing focus on business cycle management, in combination with a continued execution of our ongoing strategic initiatives, such as supply chain and footprint optimization, portfolio management, and enhanced sustainability leadership. All in all, we are well-positioned to capture profitable growth opportunities once demand bounces back again.

Strong margin despite sales decline in Q1

Net sales in the first quarter were SEK 24,699 million in a more challenging economic environment. As expected, we saw a soft customer demand in the quarter with large variations across our different industries. We continued to perform well within our targeted high-growth segments. For example, aerospace, railway, and electric vehicles maintained strong growth rates, fueled by innovative solutions developed in close collaboration with our customers.

Organic growth in India and Southeast Asia (ISEA) was 1% driven by a strong performance in heavy industries and light vehicles. In Europe, Middle East and Africa (EMEA) the organic sales decline was -5%, with negative growth in most industries, while aerospace and railway contributed positively.

Organic growth in China and Northeast Asia (CNEA) was -11% in the quarter, which is mainly explained by the slowdown in wind sales. We don't expect a short-term recovery in wind and, consequently, we are increasing our focus on other industries, such as heavy industries. Excluding wind, growth in CNEA was relatively flat and we saw a positive development in railway and marine with double-digit growth rates. In the Americas, the sales decline was -10%, driven by the continued negative trend with OEM customers destocking, but also due to our efforts in phasing out lower profit businesses. We are now striving to broaden our customer base in certain industrial verticals and thereby increasing our resilience towards shifting economic cycles. This is a top priority for our new leadership in the region that was announced early in the quarter.