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Investing.com -- SKF shares plunged on Tuesday after the Swedish bearings maker announced new long-term financial targets and warned of high restructuring and separation costs tied to the planned spin-off of its Automotive division.
The stock was down 8% in Stockholm as of 10:45 GMT.
For its Industrial business, SKF is targeting 4% annual organic growth, an adjusted operating margin above 17% in the mid-term and over 19% in the long term, as well as a 60% cash conversion ratio.
These goals are broadly in line with existing forecasts, with consensus expecting 3.9% organic growth and an average adjusted operating margin of 16.7% for 2025–2028, according to RBC Capital Markets.
The company also guided for total optimization and separation costs of about SEK 6.5 billion between the fourth quarter of 2025 and 2028, including SEK 5 billion in cash costs. This is roughly double the consensus expectation of around SEK 3 billion for the same period, RBC notes.
The brokerage said this implies a margin impact of about 200 basis points during the restructuring phase—slightly higher than SKF’s historical average of 170 basis points between 2020 and 2024.
This “indicates that charges will not taper off in coming years for the core business,” analysts led by Sebastian Kuenne said.
Analysts called the new performance targets “realistic” but “already baked into consensus,” while warning that the significantly higher restructuring and separation charges could weigh on sentiment.
“We consider this a negative today,” they wrote, adding that it remains unclear whether these costs will be front-end loaded or spread evenly across the period.