SKF Q3 pretax rises on strong volumes, margins; below market expectations UPDATE

SKF Q3 pretax rises on strong volumes, margins; below market expectations UPDATE

	Published : Tue, 16 Oct 2007 07:37 By : Agencies Print this Story

(Updating with sales, currency effects, cash flow, divisional breakdown)

STOCKHOLM (Thomson Financial) - SKF AB said its third-quarter pretax profit rose to 1.646 bln skr from the 1.422 bln posted in the corresponding period of last year on strong volume growth and improving margins.

Market expectations were for a pretax profit of 1.683 bln skr, according to a survey of analysts by SME Direkt.

The ball-bearing manufacturer said it sees higher market demand for its products and services in the fourth quarter of 2007 compared with the third.

Demand is expected to be higher in Europe, significantly higher in Asia and Latin America, and relatively unchanged in North America.

SKF said that demand was expected to be higher in all divisions in the fourth quarter as compared with the previous quarter.

It said the manufacturing level for the fourth quarter 2007 will be unchanged compared to the third quarter of 2007, while higher in absolute terms due to normal seasonality and significantly higher than the fourth quarter of 2006.

Net sales totaled 14.155 bln skr, up from the 12.544 bln. SKF said the 12.8 pct increase in sales was attributable to: volume, representing 9.0 pct of the increase, changes in the corporate structure, representing 3.7 pct, price/mix changes, representing 2.0 pct and currency effects, representing minus 1.9 pct.

Sales calculated in local currencies and compared to sales in the same quarter last year were significantly higher for the group and for each of the divisions.

'Sales were significantly higher in Europe, Asia and Latin America. Sales in North America were higher,' SKF said.

The operating margin rose to 12.7 pct from 12.3 pct, while cash flow after investments and before financing rose to 1.274 bln skr from minus 143 mln.

Changes in exchange rates had a negative impact effect on SKF's operating profit of approximately 100 mln skr.

SKF said that, based on current assumptions and exchange rates, it estimates that there will be a negative effect of approximately 130 mln skr for the fourth quarter and of approximately 630 mln skr for the full year.

At its Industrial division, operating margin slipped slightly to 11.0 pct from 12.0 pct on sales including intra-group sales, while net sales rose 13.5 pct to 4.585 bln skr.

SKF said some segments that showed significantly higher sales were renewable energy, mining, railways, pumps, fans and metal.

At Service, operating margins increased to 12.7 pct from 11.8 pct, while net sales rose 11.0 pct to 4.875 bln skr.

At the Automotive division, operating margins improved to 5.6 pct from 4.3 pct, while net sales increased 13.9 pct to 4.676 bln. Organic sales growth amounted to 11.1 pct.

hans.chumakonde@thomson.com

hc/ms1/hc/bsd

The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.