Sales Expected to Decline in Q1
Swedish ball-bearing maker SKF reported a lower-than-expected net profit for the fourth quarter, primarily due to restructuring costs. The company also cautioned that sales are expected to decline in the first quarter.
SKF’s net profit for Q4 dropped to 623 million Swedish kronor ($59.8 million) compared to SEK893 million in the previous year. Sales also fell by 3.6% to SEK24.44 billion.
Analysts had predicted a net profit of SEK1.52 billion on sales of SEK24.99 billion.
The decline in earnings can be attributed to SEK1 billion in costs associated with restructuring, factory closures, cost reduction activities, currency devaluation in Argentina, and impairments resulting from the consolidation of factories.
Although customer demand decreased in all regions due to the economic slowdown, effective price and mix management partially offset the impact.
Strategic Initiatives for 2024
Moving forward, SKF aims to implement various strategic initiatives in 2024. These include optimizing their supply chain and footprint, managing and restructuring their portfolio, and strengthening their position within sustainability and low-friction products and services. However, the company anticipates ongoing market volatility and geopolitical uncertainty.
Looking ahead to the first quarter of 2024, SKF expects a mid-single-digit organic sales decline. For the full year, they anticipate a low single-digit organic sales decline compared to 2023.
To reward shareholders, SKF has increased its dividend to SEK7.50 from SEK7.00 in the previous year.