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Gothenburg, 2 February 2016:
Alrik Danielson, President and CEO:
“Customer demand developed in-line with our expectations during the quarter,
with the exception of North America, which saw a sharper decline than
anticipated reflecting both lower demand and destocking in the supply chain.
Sales in local currency declined by 5%, driven mainly by lower sales volumes
within Industrial Market, which could not be counteracted by increased volumes
within Automotive Market.
Faced with challenging market conditions, we focused significant efforts on
strengthening our balance sheet and adjusting our organizational structure and
ways of working during the year.
With that in mind, I am pleased to report continued strong levels of cash flow,
declining net working capital and reduced net debt.
The structural changes implemented during the year have made us leaner and more
focused on supporting our core business: bearings and solutions that support
rotating shaft machinery efficiency. Our cost reduction programme has been
delivered on time, affecting 2 100 employees. In addition, temporary and agency
personnel were reduced by around 400. Activity-based cost reductions continue
across the Group, as do our efforts to divest non-core businesses.
In order to reflect the market conditions, competitive landscape and industrial
activity levels we foresee and the consequential reshaping of the company, the
Group’s financial targets have been adjusted. The new targets are to achieve,
over a business cycle, an organic sales growth of five percent in local
currencies and a reported operating margin of 12 percent, according to IFRS. On
the capital side, we have increased our ambition to manage our working capital
in an efficient manner and the new target is to reach a net working capital of
25 percent of sales. The target for return on capital employed (ROCE) has been
adjusted to 16 percent, as a consequence of the operating margin target. Our
target of achieving a net debt/equity ratio of 80 percent remains unchanged.
Although we have more hard work ahead of us, I believe these targets can be
achieved.
Entering the first quarter of 2016, we expect macro-economic uncertainty to
continue. As a result, we expect demand to be relatively unchanged sequentially
but slightly lower year-on-year.
The markets we operate in remain challenging, but I am convinced that we will
benefit from the structural changes we have implemented and our increased focus
on customer applications.”
Key figures, SEKm Q4 Q4 2015 2014
2015 2014
Net sales 18 215 18 499 75 997 70 975
Operating profit excl. one-time 1 726 2 078 8 655 8 291
items
Operating margin excl. one-time 9.5 11.2 11.4 11.7
items, %
One-time items in operating -687 -470 -1 687 -490
profit
Operating profit 1 039 1 608 6 968 7 801
Operating margin, % 5.7 8.7 9.2 11.0
Profit before taxes, excl. 1 626 1 763 7 857 7 258
operating and financial one-time
items
Profit before taxes 653 1 293 5 834 6 668
Net cash flow after investments 1 966 2 126 6 416 2 137
before financing
Net sales change y-o-y, %: Organic Structure Currency Total
Q4 2015 -5.2 -1.0 4.7 -1.5
Full Year -2.6 -0.5 10.2 7.1
Organic sales change in local Europe North Latin Asia Middle
currencies, per region y-o-y, America America East &
%: Africa
Q4 2015 0.3 -12.7 -0.5 -8.7 10.8
Full Year 0.4 -8.1 0.5 -4.2 13.2
Dividend Proposal
The Board has decided to propose an unchanged dividend of SEK 5.50 per share to
the Annual General Meeting.
Outlook for the first quarter 2016
Demand compared to the first quarter 2015
The demand for SKF’s products and services is expected to be slightly lower for
the Group. Demand for the Automotive Market and Specialty Business is expected
to be relatively unchanged, while demand for the Industrial Market is expected
to be lower. Demand is expected to be relatively unchanged in Europe, slightly
lower in Asia and Latin America and significantly lower in North America.
Demand compared to the fourth quarter 2015
The demand for SKF’s products and services is expected to be relatively
unchanged for the Group. Demand for the Automotive Market is expected to be
higher, demand for Specialty Business to be slightly higher and demand for
Industrial Market is expected to be relatively unchanged. Demand is expected to
be higher in Europe, slightly lower in North America and lower in Latin America
and Asia.
A teleconference will be held on 2 February 2016 at 14:00 (CEST):
SE: +46 8 5065 3937
UK: +44 20 3427 1904
US: +1 646 254 3365
You will find all information regarding the SKF Year-end report 2015 on the IR
website.
Aktiebolaget SKF
(publ)
AB SKF is required to disclose the information provided herein pursuant to the
Securities Markets Act and/or the Financial Instruments Trading Act. The
information was submitted for publication at 13:00 on 2 February 2016.
For further information, please contact:
Press Relations: Theo Kjellberg, +46 31-337 6576; +46 725-776 576;
theo.kjellberg@skf.com
Investor Relations: Patrik Stenberg, +46 31-337 2104; +46 705-472 104;
patrik.stenberg@skf.com
SKF is a leading global supplier of bearings, seals, mechatronics, lubrication
systems, and services which include technical support, maintenance and
reliability services, engineering consulting and training. SKF is represented in
more than 130 countries and has around 15,000 distributor locations worldwide.
Annual sales in 2015 were SEK 70 975 million and the number of employees was 48
593. www.skf.com
® SKF is a registered trademark of the SKF Group.
Correction: SKF Year-end report 2015
| Source: SKF, AB
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