SKF (SKF) Q2 2025 earnings summary

Executive summary

• Adjusted operating margin improved to 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% offsetting a 6.2% decline in Automotive.

• Automotive business separation and rightsizing program are progressing, aimed at long-term competitiveness and annual savings of SEK 2 billion by 2027.

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

• Net profit fell to SEK 583 million (SEK 1.13 per share) from SEK 1,663 million (SEK 3.36 per share) year-over-year.

Financial highlights

• Net sales were SEK 23.2 billion, down 9.6% year-over-year; organic sales declined 0.2%.

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

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

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

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

Outlook and guidance

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

• FX impact for Q3 anticipated to be around SEK 500 million negative.

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

• Tariff and cost increases expected to be largely offset by pricing and surcharges, with net impact mainly in automotive.