SKF (SKF) Q2 2025 earnings summary

Executive summary

• Achieved strong adjusted operating margin of 13.3% year-over-year despite flat organic sales and significant FX headwinds, supported by pricing, portfolio management, and cost control.

• Organic sales were flat year-over-year, with Industrial growth of 2.4% nearly offsetting a 6.2% decline in Automotive.

• Automotive business separation and rightsizing program are progressing, aiming to enhance competitiveness and deliver SEK 2 billion in annual savings by 2027.

• Net cash flow from operations increased to SEK 2.8 billion, up 31% year-over-year, driven by improved working capital.

• Operating profit and net profit declined year-over-year due to restructuring and separation costs.

Financial highlights

• Net sales were SEK 23.2 billion, down 9.6% year-over-year, with an organic decline of 0.2% and significant FX headwinds.

• Adjusted operating margin improved to 13.3% from 13% year-over-year, despite FX headwinds of -4.9 percentage points.

• Gross margin decreased to 24.4% from 26.8% year-over-year.

• Net debt (excluding pensions) decreased to just under SEK 8 billion; leverage at 1.0x adjusted EBITDA.

• Items affecting comparability totaled SEK 1.8 billion, including SEK 2 billion for rightsizing, SEK 300 million for automotive separation, SEK 200 million impairment, and SEK 800 million profit from aerospace divestment.

Outlook and guidance

• Q3 2025 organic sales expected to be relatively unchanged year-over-year amid global economic uncertainty.

• Currency impact on Q3 operating profit projected to be around SEK 500 million negative versus Q3 2024.

• FY 2025 tax rate guidance (excluding divestments) is around 26%; capex guidance is SEK 4.5 billion excluding Automotive separation.