SKF year-end report 2016

Release Time：03 Feb,2017

Alrik Danielson, President and CEO: “In 2016 we have seen market conditions gradually improve 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 gradual strengthening in demand during the quarter and less of the seasonal pre-buying which is otherwise associated with that time of year. Operating profit, excluding one-time items, was SEK 1 741 million, which was slightly higher than last year. Our operating margin, excluding one-time items, was 9.3%. The cost in the quarter for our new ERP-system amounted to SEK 280 million and impacted the margin negatively by 1.5 percentage points. Our industrial business delivered an operating margin, excluding one-time items, of 11.0%. We saw higher demand in Asia, especially in industrial distribution, but also in industrial drives. Total demand in Europe was relatively unchanged but we saw growth in our distribution business as well as in the rail and industrial general industries. In North America, market conditions continue to be challenging, but the development in the market is stabilizing. Our automotive business delivered an operating margin, excluding one-time items, of 5.3%. Organic sales increased by 3.3% in the quarter, compared to the corresponding quarter last year, driven mainly by strong growth in Asia for both cars and trucks. Our cash flow continued to be strong, at SEK 1 428 million in the fourth quarter. Net debt decreased by SEK 3 billion and strengthened the balance sheet and brought us close to our net debt/equity target of 80%. In the past month, we have announced further strategic investments in our factories in Schweinfurt, Germany and Dalian, China. During the last 18 months, investments have been announced in our manufacturing facilities and distribution centres across the world. The first of the investments to be completed is the new spherical roller bearing channel in Gothenburg, where the first customer trial orders are now being produced. Our new ERP-system went live in Sweden and Finland on 4 January. This is a significant investment for the Group and I am pleased to say that the launch went according to plan. For the first quarter 2017, demand for our products and services is expected to be slightly higher compared to last year and relatively unchanged compared to the fourth quarter of 2016.” Dividend Proposal The Board has decided to propose an unchanged dividend of SEK 5.50 per share to the Annual General Meeting. Outlook for the first quarter 2017 Demand compared to the first quarter 2016 The demand for SKF’s products and services is expected to be slightly higher for the Group and for Industrial. Demand for Automotive is expected to be higher. Demand is expected to be slightly higher in Europe, North America and in Latin America and higher in Asia. Demand compared to the fourth quarter 2016 The demand for SKF’s products and services is expected to be relatively unchanged for the Group and for Industrial. Demand for Automotive is expected to be higher. Demand is expected to be higher in Europe and North America, slightly lower in Latin America and significantly lower in Asia. A teleconference will be held on 2 February 2017 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 SKF Year-end report 2016 on the IR website.