SKF (SKF) Spin-off summary

Strategic rationale and objectives

• The separation of the automotive business aims to unlock value, create two independent, global leaders, and enhance management focus, resource allocation, and profitability for both segments.

• The split is driven by distinct business dynamics, end markets, and success drivers between automotive and industrial segments, enabling tailored capital deployment and operational models.

• Automotive will gain agility to adapt to global market changes, pursue independent investments, and accelerate growth, while Industrial will sharpen strategy and reinforce technology leadership.

• The separation is expected to simplify operations, maximize value for shareholders, customers, and employees, and improve efficiency and transformation speed.

• The automotive business is targeted for listing on Nasdaq Stockholm in the first half of 2026 via a Lex Asea tax-exempt distribution.

Business segment profiles and financials

• In 2023, Automotive reported SEK 30 billion revenue, 5.6% adjusted operating margin, and 4,000 employees; Industrial reported SEK 73 billion revenue, 15.4% margin, and 34,000 employees.

• Automotive focuses on powertrain (EV shift), wheel end (low friction), and vehicle aftermarket, leveraging strong market positions and innovation.

• Industrial leverages sustainability trends, innovation, and diversified markets, focusing on clean applications, core industries, and strong aftermarket services.

• Both businesses have shown positive profitability trends and see further upside from increased independence and operational agility.

• SKF Group's total 2023 sales were SEK 103,881 million, with 40,396 employees globally.

Implementation, costs, and operational considerations

• The separation process is expected to complete by end of 2025, with the listing in early 2026, subject to shareholder approval.

• Shareholders will receive Automotive business shares proportional to their SKF holdings, with the distribution expected to be tax-exempt under Lex Asea.

• Cost management and reduction in group overheads will be a focus, with benefits expected to outweigh separation costs.

• Manufacturing and supply chain overlaps are being addressed, with feasibility studies supporting the timeline, and some shared R&D and commercial collaborations may continue post-separation.

• Both businesses are expected to maintain strong cash flow generation, financial stability, and strong balance sheets post-separation.