SKF reported an increase of 10.4% in net sales to SEK16,734m (US$2,546m) in the first quarter 2014 as compared to SEK15,152m in the previous year. Operating profit rose 36.7% to SEK2,024m as compared to SEK1,480m. Profit before tax stood at SEK1,787m, registered a growth of 44.5% as compared to SEK1,237m. Net profit for the quarter jumped 55.9% to SEK1,275m as compared to SEK818m.
Operating profit for the period includes net positive effect of one-time items totalling around SEK120m. As a result of the settlement with the European Commission a reversal of SEK150m was made related to the provision taken in fourth quarter 2013. The quarter also contained one-time items of around SEK30m related to restructuring as well as a negative revaluation effect due to the devaluation of the Argentine peso.
Sales in the first quarter in local currencies and excluding structure increased by 4.4% in Europe, by 2.9% in North America, by 4.1% in Latin America, by 10.6% in Asia and by 21.4% in Middle East and Africa. Manufacturing in the first quarter was higher compared to last year.
Tom Johnstone, president and CEO of SKF said, "Sales developed well in the first quarter compared to the low first quarter last year and were relatively unchanged compared to the fourth quarter. We continued to have a negative mix in our sales with a stronger development of our automotive business and our industrial OEM sales in Asia. The possible pre-buy ahead of the price increase in the aftermarket in Europe and North America was not as anticipated."
"During the quarter we received a number of awards and continued to strengthen SKF by gaining new business, launching a number of new products and making good progress with our cost reduction programme. Kaydon is developing well and had a first good quarter. The integration is proceeding according to plan with a strong focus on both sales and cost synergies. Agreement was reached in the quarter with the European Commission regarding their investigation and is within the amount taken as a provision in the fourth quarter last year. This will be paid in June and will impact cash flow in the second quarter. Going forward we expect demand to develop positively both sequentially and compared to the second quarter last year. Manufacturing will be higher year on year and slightly higher compared to the first quarter," added Johnstone.
Outlook for the second quarter of 2014
Demand compared to the second quarter 2013
The demand for SKF's products and services is expected to be slightly higher for the Group, North America and Asia. It is expected to be relatively unchanged for Europe and slightly lower for Latin America. For Strategic Industries and Automotive it is expected to be slightly higher and for Regional Sales and Service relatively unchanged.
Demand compared to the first quarter 2014
The demand for SKF's products and services is expected to be slightly higher for the Group, for North America and Asia. It is expected to be relatively unchanged for Latin America. For Strategic Industries and Automotive it is expected to be slightly higher and for regional sales and service relatively unchanged.
Manufacturing is expected to be higher year over year and slightly higher compared to the first quarter.