SKF Year-end report 2020 – I wish I had more to offer

GOTHENBURG, Sweden, Feb. 2, 2021 /PRNewswire/ —

Alrik Danielson, President and CEO:

“I would like to thank everyone in SKF for contributing to making 2020 the year in which we delivered on our strategy in earnest, a fact which is reflected in yet another very strong set of results, not least during the fourth quarter. This achievement is so much more impressive given the exceptional external circumstances faced during the last 12 months.

We delivered a very strong underlying operating profit of SEK 2,582 million (2,181 last year), representing an adjusted operating margin of 13.2% (10.3%), despite flat demand and a negative currency impact of SEK 645 million.

Organic sales development in the quarter was -0.1%, with net sales of SEK 19.6 billion (SEK 21.2 billion last year). Sales were significantly higher in Latin America, higher in Asia, and lower in both North America and Europe.

The Industrial business delivered an adjusted operating margin of 14.5% (13.3%), despite an organic sales drop of 4.4%.

The Automotive business delivered a very strong adjusted operating margin of 10.1% (2.3%), driven by continued ability to control costs as well as an organic sales increase of 11.1%.

Since coming back to SKF in 2015, I have highlighted our ability to generate strong cash flow as one of our key strengths and the fourth quarter was no exception.

Cash flow during the quarter was SEK 1,901 million (SEK 701 million), driven mainly by a strong operating income and reduction of working capital. We continue to invest in the business, with a total of SEK 3.3 billion invested in our factories (up from SEK 1.9 billion in 2016) and pay down our debt, positioning the business well for the future.

Capitalizing on new ways of working, ensuring we create and maintain simplified organizational structures and always keep the customer’s needs at heart has enabled us to continually reduce our headcount during the year, with a further head-count reduction in the quarter of 200.

Investments in and consolidation of our factories continued during the quarter, including the announcement of a consolidation of our slewing bearing manufacturing and supporting functions in France.

SKF has over 110 years of history of innovation around the rotating shaft. The pace of innovation has never been faster, especially when it comes to artificial intelligence and the ability to analyze and act based on the vast amounts of data generated by machines. This competence – which we are leading the development of – in combination with our existing offers around the rotating shaft, puts us in a very strong position to help customers get better performance from their machines and at the same time reduce waste and environmental impact. This is the true differentiator of SKF’s offer.

Our solid performance during the year is reflected in the Board’s proposal of a SEK 6.50 dividend (SEK 3.00).”

Key figures, SEKm	Q4 2020	Q4 2019	2020	2019


Net Sales	19,572	21,208	74,852	86,013
Adjusted operating profit	2,582	2,181	9,194	10,136
Adjusted operating margin, %	13.2	10.3	12.3	11.8
Operating profit	2,210	1,910	7,069	9,395
Operating margin, %	11.3	9	9.4	10.9
Adjusted profit before taxes	2,515	1,992	8,424	9,210
Profit before taxes	2,144	1,722	6,300	8,469
Net cash flow after investments before financing	1,901	701	5,259	4,953
Adjusted earnings per share	4.17	2.86	14.11	13.8
Basic earnings per share	3.36	2.27	9.44	12.2

Net sales change y-o-y, %, Q4	Organic	Structure	Currency	Total
SKF Group	-0.1	0	-7.6	-7.7
Industrial	-4.4	0	-6.9	-11.3
Automotive	11.1	0	-9.3	1.8

Net sales change y-o-y, %, 2020	Organic	Structure	Currency	Total
SKF Group	-10	0.0	-3.0	-13.0
Industrial	-8.8	0.0	-2.8	-11.6
Automotive	-12.8	0.0	-3.7	-16.5

Organic sales change in local currencies, per region y-o-y, %, Q4	Europe	North America	Latin America	Asia	Middle East &
	Europe	North America		Asia	Africa
SKF Group	-6.5	-4.3	12.3	7.7	3.8
Industrial	—	—	+++	+	++
Automotive	++	++	+++	+++	+

Organic sales change in local currencies, per region y-o-y, %, 2020	Europe	North America	Latin America	Asia	Middle east & Africa
SKF Group	-15	-14.8	-4.9	-1.1	-1.6
Industrial	—	—	+/-	+/-	–
Automotive	—	—	—	–	+++

Outlook and guidance

Demand for Q1 2021 compared to Q1 2020
The industries and regions in which SKF operates are still impacted by the effects related to the spread of COVID-19. We expect to see mid-single digit organic sales growth in the first quarter of 2021 compared to the first quarter of 2020.

Guidance Q1 2021

Currency impact on the operating profit is expected to be around SEK -600 million compared with Q1 2020, based on exchange rates per 31 December 2020.

Guidance 2021

Tax level excluding effects related to divested businesses: around 28%.
Additions to property, plant and equipment: around 3,600 SEK million.

A teleconference will be held on 2 February 2021 at 14:00 (CET), accessible via:

https://investors.skf.com/en

Website: http://investors.skf.com/en/result-centre

Aktiebolaget SKF

(publ)

This is information that AB SKF is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 13.00 CET on 2 February 2021.

For further information, please contact:

Press Relations: Theo Kjellberg, +46 31-337 6576; +46 725-776 576; theo.kjellberg@skf.com

Investor Relations: Patrik Stenberg, +46 31-337 2104; +46 705-472 104; patrik.stenberg@skf.com

For further information, please contact:
PRESS: Theo Kjellberg, Director, Press Relations

tel: 46 31 337 6576, mobile: 46 725-776576, e-mail: theo.kjellberg@skf.com

INVESTOR RELATIONS: Patrik Stenberg, Head of Investor Relations

Patrik Stenberg, 46 31-337 2104; 46 705-472 104; patrik.stenberg@skf.com