Gothenburg, 2 February 2017
Alrik Danielson, President andCEO:
“In 2016 we have seen market conditions graduallyimprove and SKF is now growing again. In the fourth quarter,organic sales increased by 1.2% compared to last year.Sequentially, sales were slightly higher, mainly driven by Asia.Net sales in the quarter were SEK 18.8 billion. We saw a gradualstrengthening in demand during the quarter and less of the seasonalpre-buying which is otherwise associated with that time ofyear.
Operating profit, excluding one-time items, was SEK 1741 million, which was slightly higher than last year. Ouroperating margin, excluding one-time items, was 9.3%. The cost inthe quarter for our new ERP-system amounted to SEK 280 million andimpacted the margin negatively by 1.5 percentage points.
Our industrial business delivered an operatingmargin, excluding one-time items, of 11.0%. We saw higher demand inAsia, especially in industrial distribution, but also in industrialdrives. Total demand in Europe was relatively unchanged but we sawgrowth in our distribution business as well as in the rail andindustrial general industries. In North America, market conditionscontinue to be challenging, but the development in the market isstabilizing.
Our automotive business delivered an operatingmargin, excluding one-time items, of 5.3%. Organic sales increasedby 3.3% in the quarter, compared to the corresponding quarter lastyear, driven mainly by strong growth in Asia for both cars andtrucks.
Our cash flow continued to be strong, at SEK 1 428million in the fourth quarter. Net debt decreased by SEK 3 billionand strengthened the balance sheet and brought us close to our netdebt/equity target of 80%.
In the past month, we have announced furtherstrategic investments in our factories in Schweinfurt, Germany andDalian, China. During the last 18 months, investments have beenannounced in our manufacturing facilities and distribution centresacross the world. The first of the investments to be completed isthe new spherical roller bearing channel in Gothenburg, where thefirst customer trial orders are now being produced.
Our new ERP-system went live in Sweden and Finland on4 January. This is a significant investment for the Group and I ampleased to say that the launch went according to plan.
For the first quarter 2017, demand for our productsand services is expected to be slightly higher compared to lastyear and relatively unchanged compared to the fourth quarter of2016.”
| Key figures, SEKm | Q4 2016 | Q4 2015 | FY 2016 | FY 2015 |
| Net sales | 18 785 | 18 215 | 72 787 | 75 997 |
| Operating profit excl. one-time items | 1 741 | 1 726 | 7 544 | 8 655 |
| Operating margin excl. one-time items, % | 9.3 | 9.5 | 10.4 | 11.4 |
| One-time items in operating profit | -155 | -687 | -17 | -1 687 |
| Operating profit | 1 586 | 1 039 | 7 527 | 6 968 |
| Operating margin, % | 8.4 | 5.7 | 10.3 | 9.2 |
| Financial one-time items | - | -286 | - | -336 |
| Profit before taxes excl. operating and financialone-time items | 1 531 | 1 626 | 6 756 | 7 857 |
| Profit before taxes | 1 376 | 653 | 6 739 | 5 834 |
| Net cash flow after investments beforefinancing | 1 428 | 1 966 | 7 717 | 6 416 |
| Net sales change y-o-y, % | Organic | Structure | Currency | Total |
| Q4 2016 | 1.2 | -1.8 | 3.7 | 3.1 |
| FY 2016 | -1.6 | -2.2 | -0.4 | -4.2 |
| Organic sales change in local currencies, per regiony-o-y, %: | Europe | North America | Latin America | Asia | Middle East and Africa |
| Q4 2016 | 0.9 | -4.4 | -4.5 | 8.1 | 6.6 |
| FY 2016 | 1.7 | -7.3 | -4.1 | -0.9 | 2.3 |
Dividend Proposal
The Board has decided to propose an unchanged dividend ofSEK 5.50 per share to the Annual General Meeting.
Outlook for the first quarter2017
Demand compared to the first quarter 2016
The demand for SKF’s products and services isexpected to be slightly higher for the Group and for Industrial.Demand for Automotive is expected to be higher. Demand is expectedto be slightly higher in Europe, North America and in Latin Americaand higher in Asia.
Demand compared to the fourth quarter2016
The demand for SKF’s products and services isexpected to be relatively unchanged for the Group and forIndustrial. Demand for Automotive is expected to be higher. Demandis expected to be higher in Europe and North America, slightlylower in Latin America and significantly lower in Asia.
A teleconference will be held on 2 February2017 at 14:00 (CEST):
SE: +46 8 5352 6408
UK: +44 20 7136 2051
US: +1 718 354 1158
You will find all information regarding the SKFYear-end report 2016 on the IR website.
Aktiebolaget SKF
(publ)
The information in this press release is informationwhich AB SKF is required to disclose under the EU Market AbuseRegulation (EU) No 596/2014. The information was provided by theabove contact persons for publication on 2 February 2017 at 13.00CET.