"During the quarter we continued to see a slowdown in demand from a weakening economic sentiment and customers reducing their inventories. Despite this, our profitability was resilient, and our cash flow remained strong as we continued to manage costs, prune the portfolio and reduce working capital whilst continuing to invest in innovation and further improving our manufacturing footprint as part of our strategic transformation and new decentralized way of working.
Solid performance in a challenging market environment
Net sales increased in the quarter to
Our Business in
The adjusted operating profit in the third quarter was 3.0 billion (2.1) with a margin of 11.5% (8.5%). Pricing, cost management and continuing portfolio pruning actions contributed positively to profitability, offset by declining volumes and some negative business mix effects. As an example, we saw lower growth rates in our high margin Industrial businesses versus our Automotive business.
Our Industrial business remained resilient and delivered an adjusted operating margin of 14% (11%) despite negative organic growth. Our ongoing portfolio re-positioning within our Automotive business continues and the adjusted operating margin improved to 6% compared to 3% in the same quarter last year.
Cash flow from operations was a strong
In the quarter we were also affected by the increased geopolitical tension in the world. In August our factory in Lutsk,
Continuing our strategic journey
In the quarter we continued to implement and execute our strategy. Investments were made in technology and innovation where we have many interesting projects in the pipeline, contributing to the overall profitability and supporting several high-growth segments, such as Railway, Agriculture and Machine Tools.
We also continue to invest in sustainability and further regionalizing of our manufacturing footprint. As an example, our greenfield factory investments in
In many industries, effective monitoring of assets and predictive maintenance are key to unlocking financial and environmental benefits. We see a strong demand for our asset monitoring services, and we recently signed a five-year agreement with the international mining and mineral group,
Previously we announced a strategic review of our Aerospace business. I am pleased to report back the conclusions and outcome from this review. The Aerospace Industry is a high-growth, high-tech industry, where we have a strong and unique position.
To leverage our full potential within this industry, we intend to put even more emphasis on our core segments, Aeroengine bearings and
In our strategic review, we have also identified some high-quality business lines, with strong market positions in their respective niches, but that fall outside of our core Aerospace offering. We will explore strategic options to exit these attractive but non-core business lines, representing annual sales of approximately
I'm convinced, that by focusing on our core business, and seeking strategic options to areas outside of our core, we will unlock the full potential of our Aerospace business.
I would like to thank all
Outlook
Looking into the fourth quarter of 2023, we expect a low single-digit organic sales decline. For the full year, we expect a mid to low single-digit organic sales growth, compared to 2022. Beyond 2023, we expect continued volatility and geopolitical uncertainty where we are preparing the business for different scenarios to be able to act accordingly as the situation develops."
Key figures, MSEK unless otherwise stated | Q3 2023 | Q3 2022 | Jan- | Jan- |
Net sales | 25,771 | 24,975 | 79,443 | 71,572 |
Adjusted operating profit | 2,956 | 2,131 | 10,049 | 7,662 |
Adjusted operating margin, % | 11.5 | 8.5 | 12.6 | 10.7 |
Operating profit | 2,567 | 1,929 | 9,159 | 6,463 |
Operating margin, % | 10.0 | 7.7 | 11.5 | 9.0 |
Adjusted profit before taxes | 2,582 | 1,820 | 8,855 | 6,799 |
Profit before taxes | 2,193 | 1,618 | 7,965 | 5,600 |
Net cash flow from operating activities | 3,435 | 1,268 | 9,846 | 2,290 |
Basic earnings per share | 3.64 | 2.41 | 12.67 | 7.85 |
Adjusted earnings per share | 4.49 | 2.86 | 14.62 | 10.49 |
Net sales, change y-o-y, %, Q3 | Organic1) | Structure | Currency | Total |
-0.6 | 0.1 | 3.7 | 3.2 | |
Industrial | -2.1 | 0.1 | 4.0 | 2.0 |
Automotive | 3.1 | 0.0 | 2.8 | 5.9 |
1) Price, mix and volume
Net sales, change y-o-y, %, Jan- | Organic1) | Structure | Currency | Total |
5.7 | -0.6 | 6.0 | 11.1 | |
Industrial | 4.3 | -0.6 | 5.9 | 9.6 |
Automotive | 9.4 | -0.7 | 6.1 | 14.8 |
1) Price, mix and volume
Organic sales in local currencies, change y-o-y, %, Q3 | The | |||
3.7 | -3.6 | -5.5 | 4.6 | |
Industrial | + | - | -- | + |
Automotive | +++ | +/- | +/- | +++ |
Organic sales in local currencies, change y-o-y, %, Jan- | The | |||
9.1 | 1.7 | 3.5 | 9.5 | |
Industrial | ++ | +/- | + | +++ |
Automotive | +++ | ++ | ++ | +++ |
Outlook and guidance
Demand for Q4 2023 compared to Q4 2022
Looking into the fourth quarter of 2023, we expect a low single-digit organic sales decline.
Guidance for Q4 2023
Currency impact on the operating profit is expected to be around
Guidance 2023
- For the full year, we expect a mid to low single-digit organic sales growth, compared to 2022.
- Tax level excluding effects related to divested businesses: around 25%.
-
Additions to property, plant and equipment: around
SEK 5,5 billion .
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