AB SKF Reports Decline in Revenue and Operating Margins in Q2

AB SKF reports a 9.5% drop in Q2 revenue and decreased operating margins. Wall Street analysts maintain a "Hold" status with no expected upside in the near term. GuruFocus estimates suggest a potential downside based on the GF Value metric, with a fair value of $19.78 and a predicted downside of 14.92% from the current trading price of $23.25.

Swedish industrial group SKF reported a significant 9.5% drop in Q2 revenue, according to its latest financial report. The company's operating profit also fell short of expectations, with adjusted operating profit exceeding analyst estimates. SKF anticipates relatively unchanged organic growth year-on-year in the third quarter [1].

Revenue declined by 9.5% to 23,166 million SEK (25,606), compared with analyst consensus from Modular Finance, which stood at 22,882 million SEK. Organic sales growth was -0.2% (-6.6). Operating profit came in at 1,300 million SEK (2,489), well below the expected 2,802 million SEK. The operating margin was 5.6% (9.7). Adjusted operating profit was 3,090 million SEK (3,324), surpassing the expected 2,857 million SEK, with an adjusted operating margin of 13.3% (13.0). Net profit amounted to 583 million SEK (1,663). Earnings per share were 1.13 SEK (3.36), while adjusted earnings per share stood at 5.06 SEK (5.19) [1].

SKF's CEO, Rickard Gustafson, noted that the adjusted operating margin improvement year-over-year is encouraging despite relatively unchanged organic sales and significant currency effects. The company announced plans to implement savings measures impacting approximately 1,700 positions, mainly white-collar roles in Europe, to save around 2 billion SEK, which will more than offset negative synergies from the separation of the automotive business [1].

Wall Street analysts maintain a "Hold" status on SKF, with no expected upside in the near term. GuruFocus estimates suggest a potential downside based on the GF Value metric, with a fair value of $19.78 and a predicted downside of 14.92% from the current trading price of $23.25 [2].

References:
[1] https://www.marketscreener.com/news/skf-reports-larger-than-expected-drop-in-operating-profit-projects-stable-organic-growth-for-q3-ce7c5cdeda81ff2d
[2] https://www.ainvest.com/news/amd-fair-estimate-rises-140-reverses-ban-sales-china-2507/