SKF (SKF) Q1 2025 earnings summary

Executive summary

• Adjusted operating margin improved to 13.5% despite a 3.5% organic sales decline, supported by strong pricing, portfolio management, and cost control in a challenging market.

• Net sales were SEK 23,966 million, with cash flow from operations down 45% year-over-year due to higher working capital and negative currency effects.

• The separation of Automotive and Industrial businesses progressed, with finalized organizational and manufacturing structures for Automotive.

• Innovation focus led to new offerings in rail, mining, and advanced bearings, supporting sustainability and customer value.

• Cash flow was weak, with management focused on restoring cash generation.

Financial highlights

• Net sales: SEK 23,966 million, organic growth -3.5% year-over-year.

• Adjusted operating margin: 13.5% (industrial 16.9%, automotive 5.2%), both resilient versus prior year.

• Items affecting comparability: SEK 348 million (restructuring, separation costs, impairment, and profit from Luton facility sale).

• Net cash flow from operations: SEK 1.0 billion, down 45% year-over-year.

• Net debt: SEK 14,933 million as of March 31, 2025, down from SEK 16,472 at the start of the year.

Outlook and guidance

• Q2 2025 expected to see continued volatility and negative volumes, with organic sales to weaken year-over-year.

• Currency impact on Q2 operating profit expected to be around SEK 400 million negative versus Q2 2024.

• Full-year tax and investment guidance unchanged; FY 2025 tax level around 26%, capex around SEK 4.5 billion (excluding Automotive separation).

• Signs of market bottoming out, especially in industrial order intake and customer activity.