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Investing.com -- SKF on Friday beat adjusted EBIT estimates in Q1 despite weaker-than-expected revenue growth, driven by cost management and favorable currency effects, but warned of a weaker sales outlook for the coming quarter.
The company reported a 3.5% decline in organic revenues, totaling SEK24 billion, which missed consensus expectations of a 2% organic decline to SEK24.4 billion.
Both of SKF’s key segments underperformed, with Industrial sales dropping 4% organically and Automotive sales down 3%. Regionally, EMEA saw a 7% decline, while China and Northeast Asia reported a 2% increase.
SKF exceeded analysts’ expectations on adjusted EBIT, reporting SEK3,233 million, a 3% beat compared to the consensus estimate of SEK3,126 million.
The profit increase was driven by favorable price and mix effects, along with currency benefits, though offset by lower sales volumes and manufacturing inefficiencies. Cost-reduction efforts helped mitigate the impact of wage inflation and volume-related inefficiencies.
Industrial delivered an adjusted EBIT of SEK2,871 million, 3% higher than expected, while Automotive’s adjusted EBIT was SEK362 million, beating consensus by 7%.
The group’s EBIT margin stood at 13.5%, 70 basis points above the expected 12.8%, with the Industrial margin at 16.9% and Automotive’s at 5.2%.
Net cash flow from operations for the quarter was SEK977 million, down from SEK3,283 million in Q4 2024 and SEK1,781 million in Q1 2024, reflecting weaker cash generation.
For Q2, SKF expects organic sales to weaken year-over-year, diverging from consensus, which forecasts flat sales.
The company also noted that its separation process is progressing, but complexity may extend the timeline, and its target margin for Automotive has been pushed beyond 2025.