Bearings maker SKF sees deeper sales drop, reassures on margin
SKF sees mid-single digit sales decline for full year and Q4
Previously saw low-single digit sales fall for full year
Markets weak across board, especially China and automotive
Q3 adjusted profit margin rises to 11.9%, above consensus
Shares rise 6%
Reworks lead adding shares, detail, background in paragraph 4, CEO comment in paragraphs 5-6
By Niklas Pollard
STOCKHOLM, Oct 30 (Reuters) - Sweden's SKFSKFb.ST scaled back sales guidance for the full year on Wednesday in the face of broadly weaker markets after efficiency gains helped to deliver forecast-beating profitability in the third quarter, lifting its shares 6%.
SKF, whose bearings are used across a vast range of industries and products, said an expected slump in sales in the final quarter of the year meant it now saw a mid-single digit organic sales decline this year compared to 2023. It had previously expected a low-single digit fall for the year.
Sales fell on a like-for-like basis in nearly all the group's major markets in the third quarter with demand in China and within the automotive sector especially weak, SKF said.
The world's biggest maker of industrial bearings has spent recent quarters focused on pruning a sprawling product portfolio, exiting less profitable segments, raising prices where possible and relocating production.
"We do all these activities with the goal of showing resilience in terms of profitability," CEO Rickard Gustafson told Reuters, after SKF reported an 11.9% adjusted quarterly profit margin, up from 11.5% a year-ago.
Gustafson said uncertainty linked to the impending U.S. presidential election had also affected demand, above all in North America, while activity in anautos sector in upheaval had slumped, especially toward the end of the quarter.
The company, whose bearings are found in products ranging from machine tools to wind turbines, forecast like-for-like sales to fall by mid-single digits in the fourth quarter after sales fell 4.4% organically in the third.
SKF, which competes with the likes of Germany's Schaeffler SHA0.DE, cautioned in July that lacklustre markets and ongoing adjustments of its manufacturing base were expected to dent cost efficiency in the second half of the year.
SKF has spent recent years shifting manufacturing closer to markets on a regional basis to the most cost-efficient sites, also with an eye on geopolitical instability.
The engineering group reported adjusted third-quarter operating earnings of 2.82 billion Swedish crowns ($265 million) compared to 2.96 billion a year ago and a mean forecast of 2.81 billion, according to a LSEG compilation of analyst estimates.
($1 = 10.6396 Swedish crowns)
Reporting by Niklas Pollard; Editing by Stine Jacobsen, Himani Sarkar and Sharon Singleton
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