SKF Jumps as First-Quarter Earnings Beat Market Expectations
Resource from: CBCC Likes:2956
Apr 19,2010
SKF AB shares rose to their highest level in almost three years today as the world’s biggest maker of ball bearings said first-quarter earnings and sales exceeded analysts’ estimates.
SKF rose as much as 8.4 percent, and was up 9.9 kronor, or 7.4 percent at 143.8 kronor at 10:41 a.m. in Stockholm trading. Shares of SKF have gained 16 percent so far this year, more than the 11 percent gain of the OMX 30 benchmark index.
SKF is a bellwether for industrial demand because its ball- bearings are used in cars, household appliances and factory equipment. A typical western household uses about 130 different SKF bearings in various products, according to the company. It is scheduled to publish full first-quarter earnings on April 20.
“The margin development is the big surprise here and the share reaction is cautious considering the size of the news,” Alandsbanken Equities analyst Anders Roslund said. “People would like to know more next week, because they can’t maintain the same margins in the second and third quarters, so there may be some one-off’s here,” he said. Roslund has a “buy” recommendation on the stock.
Pretax profit almost tripled from a year earlier to 1.5 billion kronor ($209 million) from 531 million kronor, while sales fell 3 percent 14.45 billion kronor, the Gothenburg, Sweden-based company said in a statement after the market had closed on April 15. Analysts surveyed by Bloomberg had predicted pretax profit of 1.17 billion kronor on sales of 14.2 billion kronor. The company said its operating margin rose to 11.8 percent in the quarter from 5.2 percent a year earlier.
“Since our results are well ahead of market estimates we have decided to release key figures for the quarter before our regular report next week,” Chief Executive Officer Tom Johnstone said in the statement.
Shares in other Swedish industrial companies such as Sandvik AB and Trelleborg AB rose as much as 6 percent and 7 percent respectively in Stockholm trading.
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