SKF First-quarter report 2024

A more resilient and competitive SKF - Seite 2

In total, the adjusted operating profit was SEK 3,303 million (3,478 million), corresponding to an adjusted operating margin of 13.4% (13.1%). A strong performance given the decline in net sales. A key contributor has been our ongoing strategic transformation initiatives, including investments in regionalization and in building competitive value chains to ensure that we quickly can ramp up production once demand bounces back. In parallel, we have continued to execute tactical activities to manage the business cycle, where decentralized accountability for pricing, portfolio pruning, and cost management have been vital.

Due to all these activities, our Industrial business continued to perform well in the first quarter and maintained an adjusted operating margin above 16%, while the margin for our Automotive business improved to above 6%.

Cash flow from operations was fairly normal for a first quarter and was SEK 1.8 billion. We continue our active work across all business areas to further improve the net working capital performance with a special focus on inventory reduction.

Continued execution of ongoing strategic initiatives

We continue to diligently work on implementing and executing our strategy, increasing our efficiency, and reducing fixed costs. Key focus areas in 2024 are further optimization of our supply chain and footprint, managing and restructuring our portfolio, and gearing up for intelligent and clean growth. A common theme across these priorities is innovation, where we, together with our customers, develop products and solutions that create significant value. This enables us to defend or increase our market share in many important industrial segments, and thereby re-enforce our position as a leader in the industry.

As a global leader within railway, representing 5% of our total sales and outgrowing the market in recent years, we constantly drive innovation in close cooperation and partnership with our customers, both OEMs and operators, to develop solutions for enhanced fleet efficiency and reliability. As an example, we recently developed new high speed ceramic deep groove ball bearings for railway drives.

To gear up for intelligent and clean growth, investments in decarbonization, high speed rotation and low-friction products and services are key. We have developed a bearing tailored for the robotics industry, with a reduced manufacturing CO2 footprint of 70%, enabling an additional 20% CO2 reduction in the end customer application. This is a great example of how SKF, together with our customers, are laying a foundation for a more sustainable future. I am also encouraged that we have received the Platinum Medal for the fourth year running in the sustainability rating from EcoVadis and the top Climate Change rating available from CDP.