Bullish indicating open at $55-$60, IPO prices at $37
Investing.com -- Swedish bearing manufacturer SKF on Friday reported better-than-expected second-quarter results and announced a cost-saving program that will offset expenses related to its planned separation.
Shares in SKF rose over 4% after the results.
The company’s organic revenue declined by 0.2% to SEK23.2 billion, outperforming consensus expectations of a 2.9% organic decline. This performance was partly supported by pre-buying activity in the Chinese wind sector.
SKF’s Industrial division exceeded expectations with 2.4% organic revenue growth, while the Automotive segment underperformed with a 6.2% organic decline.
By region, India and Southeast Asia showed the strongest performance with 5% organic growth, followed by China/Northeast Asia at 4.3%. The Americas saw a slight decline of 0.8%, while Europe, Middle East and Africa (EMEA) experienced a 2.8% drop.
Adjusted operating profit reached SEK3,090 million, 8% above analyst expectations of SEK2,873 million. The company attributed this performance to pricing strategies, portfolio management, and effective cost control.
The group’s adjusted operating margin came in at 13.3%, exceeding consensus estimates by 80 basis points. The Industrial division achieved a 16.6% margin, while Automotive posted 5.1%.
SKF announced a restructuring program that will reduce its workforce by 1,200 positions, generating annual savings of SEK2 billion. This amount surpasses the SEK1.0-1.5 billion previously anticipated and will more than offset the costs associated with the company’s planned separation.
Cash flow from operations strengthened to SEK2,817 million, compared to SEK977 million in the first quarter and SEK2,152 million in the same period last year.
Looking ahead, SKF expects its organic sales in the third quarter to remain relatively unchanged compared to the same period last year. The company plans to provide more details about its restructuring efforts at its Capital Markets Day on November 11.
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