SKF sees softer demand in Q3, kicks off automotive revamp
Resource from: Reuters Likes:219
Jul 16,2015
* SKF Q2 adjusted EBIT 2.58 bln vs forecast 2.74 bln
* Says weak Europe to weigh on demand in Q3
* Says to review automotive product line-up, manufacturing
* Says intends to keep automotive within SKF (Adds detail, background)
STOCKHOLM, July 15 (Reuters) - Sweden's SKF, the world's biggest bearings maker, said it saw demand softening somewhat in the third quarter, dented by sluggish industrial production and weakness in Europe, after posting a core earnings rise short of market expectations.
The company also said it would launch an improvement program in its automotive unit, which has lagged the group in profitability for years, but said it would remain part of the group, dousing speculation it could be sold.
SKF, a manufacturing bellwether with its bearings found in products ranging from skateboards to wind turbines, forecast lower demand in Europe in the third quarter while other regions were seen coming in flat.
"Entering the third quarter we all in all experience a relatively weak industrial production," the company said.
Buoyed by a weaker crown currency, SKF's adjusted operating profit rose to 2.58 billion crowns ($303.1 million) from a year-ago 2.22 billion, undershooting a mean forecast of 2.74 billion in a Reuters poll of analysts.
The company, a rival of Germany's Schaeffler AG and U.S. Timken, also outlined plans for its automotive business, whose weaker margins relative to other units has hampered efforts to boost group profitability.
SKF said it planned for Automotive, which accounts for a quarter of group sales and has been the focus of sell-off speculation for years, to remain part of the company but that a review that included its product portfolio and manufacturing footprint would be carried out.
Chief Executive Alrik Danielson, at the helm since the turn of the year, had made an automotive turnaround one of his first orders of business while also unveiling plans in January to cut 1,500 jobs to push ahead toward a 15 percent margin target.
While the bearings maker has been running at levels close to the overall group target in its main Industrial Market unit for the past two years, Automotive has been stuck at low to mid-single digit profitability for several years. ($1 = 8.5121 Swedish crowns) (Reporting by Niklas Pollard and Johannes Hellstrom; Editing by Alistair Scrutton)
(Reuters)
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